# Potential Indirect Economic Impacts and Benefits

Associated with Guidance Clarifying the Scope of

Clean Water Act Jurisdiction

U.S. Environmental Protection Agency

April 27, 2011

# 2 Acknowledgements

The U.S. Army Corps of Engineers contribute d estimates of unit cost values for wetlands

mitigation by state, a data base of aquatic resource records with associated jurisdictional

determination status from ORM (FY 2009-2010), esti mates of baseline mitigation, and an expert

review analysis of the percentage of “other ” waters that may become jurisdictional if

implementing programs follow the proposed guidan ce. Corps staff also reviewed the cost

estimate methodology, suggested perspectives for interpretation of cost estimate results, and

contributed material on poten tial government costs.

# 3 I. Introduction

This preliminary economic analysis is inte nded to provide an estimate of the possible

range of indirect impacts associated with im plementing the proposed Guidance on Identifying

Waters Protected by the Clean Water Act. 1 

# The proposed guidance itself is not binding:

existing statutory and regulatory programs and requirements, such as the 402 and 404 permitting

programs, impose costs and provide benefits. In addition, neither field staff nor courts are

required to follow the guidance -- it is only to the extent that the non-binding guidance is

followed that these indirect costs and benefits a ccrue. While this proposed guidance represents a

reasonable interpretation of these requirements in light of the recent Supreme Court decisions, it

may not apply to a particular s ituation depending on the circumst ances. Nevertheless, the U.S.

Environmental Protection Agency (EPA) has attemp ted to estimate these possible indirect costs

and benefits associated with implementing the proposed guidance when compared to

implementation of existing guidance. 2



# Among its many provisions, the Clean Water Ac t (CWA) establishes oil spill prevention

programs (section 311); requires permits for polluta nt discharges (section 402); requires permits

for filling in wetlands or streams (section 404); calls for states to set standards for meeting water

quality goals and develop plans to restore polluted waters (section 303); establ ishes state roles in

approving federal permits (section 401); and allows the federal government, states, and

communities to enforce the law. Any water found not to be a “water of the U.S.” generally is not

protected by the Clean Water Act’s programs and strategies.

In January 2001, the U.S. Supreme Court in Solid Waste Agency of Northern Cook

County v. U.S. Army Corps of Engineers (SWANCC) held that intrastate, non-navigable, isolated

waters could not be protected as “waters of the US” under the CW A based solely on the presence

of migratory birds. Since SWANCC , no isolated waters have been declared jurisdictional by a

federal agency. In June 2006, a split Suprem e Court vacated and remanded judgments of the

Sixth Circuit Court of Appeals in Rapanos v. United States. The pivotal opi nions are those by

the plurality (indicating that jurisdictional wate rs include “relatively permanent waters” and

wetlands with a continuous surface connecti on to such waters) and by Justice Kennedy

(indicating that waters are jurisdictional where they have a “significant nexus” to a traditional

navigable water). The government position since Rapanos has been that a water is jurisdictional

under the CWA when it meets either the plurality or Kennedy standard.

The effect of the SWANCC decision is primarily on so-cal led “isolated” waters. These

waters include vernal pools, prai rie potholes and playa lakes—wate rs that lie entirely within a

1 

### The proposed guidance clarifies and interprets requirements of th e CWA and the agencies' implementing regulations in light of SWANCC and

Rapanos and provides guidance on waters protected by the CWA. The CWA provisions and supporting regul ations contain legally binding

requirements. The guidance does not substitute for those provisions or regulations and is not its elf a regulation. It does no t impose legally

binding requirements on EPA, the Corps, or the regulated communi ty, and may not apply to a par ticular situation depending on th e circumstances. Any decisions regarding a particular water will be based on the applicable stat utes, regulations, and case law. The proposed

guidance does represent a change in practic e from existing guidance which did not make full use of the authority provided by th e CWA to include

waters within the scope of the Act, as in terpreted by the Court. The agencies expect , based on relevant science and recent fie ld experience, that

the extent of waters over which the agenci es will assert jurisdiction will increase comp ared to the extent of waters over which jurisdiction has

been asserted under existing guidance, though not to the full extent that it was typical ly asserted prior to the Supreme Court' s decisions. This

economic analysis was developed to provide rough estimates of the range of possibl e indirect effects from a change in practice, but it is the

statute, regulations and caselaw which determine the scope of CWA jurisdiction.

2 

### This particular baseline was deemed most useful for the purpose of comparing the potential outcome of proposed guidance.

# single state and lack a direct, su rface water connection to the rive r network. The effect of the

Rapanos decision has been primarily on some small stream s, rivers that flow for part of the year,

and nearby wetlands.

Current practice may be under-representing Cl ean Water Act jurisdiction. EPA and the

Army Corps of Engineers (Corps) have prep ared joint proposed guidance to clarify the

regulatory definition of “waters of the Unite d States” affecting all CWA programs. The

proposed guidance would replace existing gui dance documents on CWA jurisdiction. Any

impacts examined that are associated with this proposed guidance are both indirect (because any

impact would be as a result of actions of th e CWA implementing programs) and contingent on

parties following the guidance. To the extent that additional indirect costs are incurred,

additional mitigation costs associated with CW A Section 404 are expected to be the largest

category of such costs.

EPA does not believe that much reduction in 402 permits has occurred as a result of

SWANCC and Rapanos , and thus both costs and benefits of increased 402 permits are expected

to be minimal. There are several potential explan ations for this. The first is that EPA has

delegated operation of th e 402 permit program to most (46) stat es, and states apply jurisdiction to

“waters of the state” which must be as inclusive as “waters of the U.S” but may be more

inclusive. In contrast, only tw o states have assumed the 404 program (to the extent it can be

assumed for “non-navigable” waters). It is also possible that a permitted discharger may have

the effect of creating a permanent water where there once was an intermittent or ephemeral water

because of continuous discharge (i.e., an “efflue nt dependent” or “effluent dominated” water).

In these cases, jurisdiction may not come under question. Additionally, facilities may have

invested the capital in treatm ent and simply be willing to continue operating under their permit

and see no need to challenge jurisdiction.

4

# 5 II. Assessing Potential Indirect Costs

Economic analyses examine the differences be tween a baseline, the “world without the

action taken”, and the “world with the result of the action taken” (i.e., assuming the guidance

would be followed in regulatory decisions). An alyses of costs are applied to the incremental

change between the baseline and the effect of the action. EP A typically conducts such an

economic assessment in conjunction with proposed rules, and is providing a general assessment

of potential indirect economic impacts of the prop osed guidance to help inform decision-makers

and the public. This analysis is based on the 2009-2010 period of time, af ter issuance of the

most recent guidance interpreting the SWANCC and Rapanos Supreme Court decisions.

To the extent costs would be incurred, the majority of such costs would result from

permitting costs and mitigation expenses incurred by entities seeking CWA 404 permits. These

indirect costs may include wetlands mitigation, stream mitigation, and project re-design and

relocation expenses. In addition, to the extent the guidance is followed, there would be program

management, training, and associated environmenta l compliance costs to government associated

with administering the CWA. For example, the Corps would process permit requests, conduct

jurisdictional determinations (JDs) if needed, ma nage data, coordinate with federal and state

resource agencies, and determine compensatory mitigation needs. There would be costs

associated with these additional actions. This rough estimate is intended to identify the potential

order of magnitude of potent ial indirect cost impacts to the regulated community and

implementing agencies.

Two estimates are presented to represent poten tial incremental indirect costs on an annual

basis. Each estimate shares a common baseline of 53,000 3 

# acres of wetland mitigation and 530

miles of stream mitigation to represent activity in the baseline period. This baseline level of

mitigation was apportioned to each state, in propo rtion to the number of positive jurisdictional

determination (JD) status 4 

# records (FY2009-10) for wetla nd aquatic resources.

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

estimates of stream mitigation, the Corps examin ed published studies and survey results, made

phone inquiries to Corps District s and mitigation banks, and resear ched web sites. A team of

Corps experts came to agreement on a range of values for each state. For this analysis, the

midpoint of this range was also used. The “high” of this range represents the most expensive

mitigation found for each state. The midpoint likel y represents more of a high-end value because

for a majority of projects, costs are expect ed to be in the lowe r half of the range. 5 

# Thus, EPA

3 

## Based on approximately 44,000 acres of permittee responsible mitigation documented in the ORM2 data base in

FY2010, approximately 7,000 acres of bank mitigation documented in the RIBITS data base in FY2009, and 2,000

of in-lieu fee (ILF) mitigation estimated from the ratio of ORM entries for banks (26%) and ILF (7%) in FY2010.

This total may be incomplete, but it is consistent with the level of mitigation the Corps has estimated for the past 10-

15 years, for example as presented in the 2008 Compensatory Mitigation Rule economic analysis.

4 

## For this report, JDs mean the jurisdictional authority deci sion (Y/N) entered for all aquatic resource (AR) types in

the ORM2 database. It does not represent the number of Corps JDs completed and provided to applicants that are

reported in various annual reports. There may be multiple ARs associated with a JD.

5 

## This is based on the judgment of th e team that examined the range of per acre cost estimates; the primary intent

was to identify the range, yet most of the costs would be anticipated to be in the lower half of the range.

# 6 and the Corps consider cost estimates based on the low to mid range to be most representative of

actual costs in the aggregate.

Each estimate represents a different incr emental amount of acres and stream miles

mitigated. The increment is determined using data records (FY2009-10) of Corps jurisdictional

status decisions associated with various aquatic resource types: “iso lated waters” (a term used in

ORM2 data base to represent intrastate, non-na vigable, waters that lack a direct surface

connection to other waterways; consistent with the usage in the proposed guidance, these waters

are hereafter referred to as “oth er waters”), relatively permanen t waters, traditional navigable

waters, non-relatively permanent waters, and wetla nds associated with these categories. The

method assumes that all permits associated with projected additional jurisdictional waters would

require mitigation at the same rate as baseline jurisdictional waters. The estimates build upon

one other, with estimate 1 representing only the ch anges that may result fr om application of the

proposed guidance to waters not in the “other waters” category and estimate 2 representing an

additional increment from applying the proposed guidance to the “other waters” category.

estimate 2 represents the best estimate of cha nges that may result from application of the

proposed guidance. The difference between estima te 1 and estimate 2 helps show the potential

impact of applying the guidance to “other wate rs” and highlights the un certainty in knowing

precisely how many of these waters would be c onsidered jurisdictional if the new guidance is

implemented. The full results of this an alysis are presented in Appendix A.

Estimate 1- “Significant Nexus Test” Waters

In estimate 1, it is assumed that all negative JDs for aquatic resources not in the “other

waters” category are instead dete rmined to be jurisdictional. For example, some wetlands

adjacent to relatively permanent waters or asso ciated with non-relatively permanent waters are

associated with a negative JD in the ORM da ta base (FY 2009-2010). In estimate 1, it is

assumed that these negative JDs would be dete rmined to be jurisdictional. The level of

incremental wetland acres mitigated is calcula ted in proportion to the subsequent percent

increase in wetlands that are assumed to be determined jurisdictional. 6 

# Nationally, 1.5 percent of

JDs are negative for non-isolated wetlands. 7 

# The increase in jurisd ictional wetlands corresponds

to an estimated increase of 803 acres of we tland mitigation (a 1.5 percent increase from the

baseline of 53,000 acres of estimated wetlands mitigation per year under current guidance).

All streams in the non-relatively permanent water, relatively permanent water, and

traditionally navigable water categories were assume d to be determined to be jurisdictional in

this estimate. On the national level, 2 percen t of records in these ca tegories of streams are

associated with negative JDs in ORM data from FY2009-2010 8 

# . Assuming these are determined

to be jurisdictional, and applying stream mitigati on to the same extent as associated with the

jurisdictional streams in FY2009-2010, this results in 9.3 miles of additional stream mitigation (a

6 

## The formula used to make this calculation is presented in Appendix A.

7 

## Percent is calculated by taking the number of “no” resp onses for aquatic resource (AR) jurisdictional authority for

wetlands adjacent to non-RPWs, wetlands abutting and adj acent to (not abutting) RPWs , and wetlands adjacent to

TNWs, and dividing by the total of all of these AR types.

8 

## For streams, the percent is calculated by taking the total number of “no” responses for non-RPWs, RPWs, TNWs,

and combinations of both non-RPWs and RPWs, and dividing by the total for these types.

# 2 percent increase from baseline of 530 miles of estimated stream m itigation per year under

current guidance). In estimate 1, no other waters are assumed to be determined jurisdictional.

Estimate 2 – “Significant Nexus Test ” Waters +17% of Other Waters

Estimate 2 includes the incremental increase in mitigation (acres of wetlands and miles of

streams) calculated in estimate 1, and adds additional acres of wetland mitigation assuming 17

percent of aquatic resource reco rds in the “other waters” cat egory from ORM FY2009-2010 data

are determined to be jurisdictional. These “other waters” comprise less than 5 percent of all

aquatic resource records in the ORM data base (FY 2009-2010). EPA and the Corps assumed all

waters in this “other waters” category are non-ju risdictional in the baselin e. Additional acres of

wetland mitigation are added proportionally by stat e based on the number of “other water”

records associated with JDs in each state. Th e increase in wetlands that are assumed to be

jurisdictional corresponds to an estimated incr ease of 2,517 acres of wetland mitigation (a 5.0

percent increase from baseline), including the 803 acres for “signi ficant nexus test waters” in

estimate 1. The 9.3 miles of additional stream mitig ation for “significant ne xus test” waters from

estimate 1 are also included in estimate 2.

To select a percent increase in other waters for this estimate, a team of Corps experts

examined a sample of 262 project files previ ously coordinated with Corps headquarters from

June 2008 – January 2011, representing over 1,000 indivi dual waters in 30 states. Based on data

available in record files, the team judged whether or not the Agencies would determine the

waters to be jurisdictional us ing the new proposed guidance. Overall, the team found that 17

percent of these other waters w ould be determined to be jurisdictional using the new proposed

guidance. 9 

# Additional details on the methods and resu lts of this analysis are presented in

Appendix B. An EPA team independently examin ed a sub-sample of 50 JD project files and

similarly estimated that 15 percent of those othe r waters would become jurisdictional. Of the

other waters examined by the Corps, 73 percent were wetlands, and the remaining waters were

ponds, streams, or other resource types. To be conservative for this an alysis, EPA assumed that

wetlands mitigation would be required for all other waters determined to be jurisdictional. EPA

further assumed the amount of m itigation per jurisdictional decisi on on these other waters would

be to the same extent as ju risdictional wetlands in FY2009-2010.

It is also possible that impacts are curr ently occurring without going through the JD

process at all. Landowners and developers coul d be assuming that waters on their property are

non-jurisdictional and not request a JD or engage in the permitting process, and thus not be

represented in the ORM 2009-2010 data base. While such landowners might continue to assume

that their waters are not jurisdictional, some ma y request a JD from the Corps or otherwise have

their waters determined jurisdictional as a result of implementation of this guidance. To account

for this contingency, mitigation costs were incr eased an additional 10 percent to calculate the

9 

## The analysis indicated than none of the 145 waters examined in the state of California would become

jurisdictional. As a result, an alternative percent increas e was assigned for CA mitigation increase. Rather than

apply a 0 percent increase, 5 percent was selected as a conservative estimate.



# 7

# 8 total cost estimate for each scenario. 10 

# To the extent unknown impact s are occurring and to the

extent that these activities w ould be subject to permitting, the amount of mitigation potentially

required would be reduced by efforts to avoid and minimize impacts, which are the first steps in

the 404 process.

Estimate 1 Low Mid High

Wetland Mitigation Costs $19,604,617 $38,551,811 $57,499,006

Stream Mitigation Costs $8,690,922 $12,983,640 $17,276,358

Additions for Impacts w/o JDs $2,829,554 $5,153,545 $7,477,536

Total Mitigation Cost: $31,125,093 $56,688,996 $82,252,900

Estimate 2 Low Mid High

Wetland Mitigation Costs $62,901,417 $123,863,396 $184,825,374

Stream Mitigation Costs $8,690,922 $12,983,640 $17,276,358

Additions for Impacts w/o JDs $7,159,234 $13,684,704 $20,210,173

Total Mitigation Cost: $78,751,573 $150,531,739 $222,311,906

$

‐ $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000

Low Mid High Low Mid High

Estimate 1 Estimate 2 

# Figure 1. Preliminary Estimate of Incremental

Indirect Annual 404 Mitigation Costs

Additions for Impacts w/o JDs

Stream Mitigation Costs

Wetland Mitigation Costs

10 

## Some stakeholders assert there is a substantial amount of impacts to waters that project proponents believe are

beyond the scope of CWA under current post- SWANCC and Rapanos policies. While not possible to quantify

absent a major independent study, informed observers conclude some level of impacts to waters for which JDs are

not now being requested is likely. Without an ability to sp ecifically estimate the degree, yet to avoid a systematic

source of error, the cost analysis assu mes a 10 percent increase in the number of JDs. This provides a reasonably

safe margin to capture these difficult to quantify impacts.

# 9 Summary of Mitigation Cost Estimates

Overall, the best representation of potential indirect mitigation costs is the low-mid range

of estimate 2: $79-$151 million. This suggests a small increase (approximately 4%) in

proportion to the current baseline estimate of between $2.1 and $3.9 billion. The baseline cost

range is calculated by summing the products of the low and mid-rang e unit cost estimate for each

state multiplied by the baseline mitigation apportioned to each state. The total estimated baseline

mitigation is 53,000 wetland acres and 530 stream miles. Detailed results of this analysis are in

Appendix A. In addition, the amount of incrementa l acres mitigated is within the range of interannual variability based on Corps esti mates over the past 10-15 years.

Administrative Costs

It is also important to addr ess governmental costs that may be incurred in managing the

program and administrative costs to permit app licants. The following discussion focuses on the

costs to the federal government of administeri ng the CWA 404 program, but it is important to

note that states and tribes ma y also incur additional costs as part of the CWA Section 401

certification process.

Additional Federal agency costs may result from additional jurisdictional determination

(JD) requests. The increase in waters determin ed by the agencies to be jurisdictional from the

2008 guidance may result in an increase in request s for JDs. Some changes contained in the

proposed guidance, such as the ex pectation that tributaries of sp ecified physical characteristics

will generally satisfy the significant nexus test, have the potential to reduce the administrative

costs of establishing jurisdiction. If such changes balance the exp ected increase in JD requests,

no incremental administrative costs would occur. Alternatively, administrative costs could either

increase or decrease. 11 

# The Corps expects that more waters determined to be jurisdictional by

the agencies will lead to an in crease in permit applications and JD documentation. This, in turn,

will increase the need for required consultations under the Endangered Species Act (ESA) and

section 106 of the National Historic Preservation Act. This could increase costs for other federal

agencies, such as the Fish and Wildlife Service. There may also be an increase in enforcement

situations, potentially increasing the after-the-fact permit workload.

In addition to the number of permit applicati ons, the complexity of permit applications

may increase. A greater abundance of waters dete rmined by the agencies to be jurisdictional on

a project site may reduce the ability to avoid or minimize impacts. As a result, there may be a

larger scope of analysis. The increase in waters on a site may increase impacts such that an

individual permit is required rather than gene ral permit coverage, or that an Environmental

Impact Statement (EIS) is required in some cases. The increase in waters at a site could also

result in increases in the amount of mitigation required.

The Corps expects that applicants will con tinue to use “preliminary JDs” (PJDs),

whereby a permit applicant elects to set aside the ju risdictional question, and voluntarily “opts

in” to the permitting process because it can be fast er in terms of the permit evaluation process.

Because most non-isolated waters are expected to be jurisdictional following the proposed

11 

## Further analysis and deliberation may inform any futu re quantitative assessment of these administrative costs.

# guidance, PJDs may continue to be an attract ive option for applicants to avoid a longer

“approved JD” (AJD) process. In FY 2010, 58 percent of JDs were PJDs (42 percent were

AJDs). PJDs are less time-consuming to docum ent than AJDs, but application processing may

require more information describing jurisdictiona l waters (e.g., to assess impacts and formulate

compensatory mitigation requirements). Alternativ ely, some applicants may request an AJD as a

means to potentially reduce mitigation requirements and associated costs. If more landowners

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

An additional effect on costs is that many AJDs may become easier to document on the

one hand, but some may become more costly an d time consuming on the other (because of the

larger potential scope). The agencies are likely to determine more waters to be traditionally

navigable waters (TNWs), so those TNWs and their adjacent wetlands will be jurisdictional

without the need for significant nexus (SN) ev aluation, and the distance to the nearest TNW will

be shorter for many waters. The larger watershe d scale for SN evaluations, coupled with the

broader interpretation of si gnificant functions, will make SN determinations less timeconsuming. Furthermore, once a SN has been dem onstrated in a watershed, future JDs in that

watershed may be able to incorporate or refere nce it, rather than requiring the Corps to conduct

an entirely new analysis. There may also be an increase in appeals of AJDs. However, the

increased clarity of the proposed guidance may m ean more appeals are able to be resolved

expeditiously.

The Corps estimates the costs incurred by bot h the Corps and applic ants (excluding costs

for compensatory mitigation) to range between approximately $7,900,000 and $20,000,000. The

estimates are based on noting the incremental incr ease in workload associated with implementing

the proposed guidance, and applying low end and hi gh end cost estimates to applicants based on

previous cost determinations. 12 

# These totals are comprised of a $4,800,000 to $8,700,000 in

Corps costs (incremental increase in workload related tasks, low and high end estimates for HQ

review of more JDs and additional time to condu ct a SN for isolated waters) and a range of

$3,100,000 to $11,300,000 in applicant costs (not includi ng compensatory mitigation costs) for

permit and JD associated costs. If these costs ar e added to the mitigation cost estimate range of

$79-151 million per year previously presented, the result is $87-171 million per year.

12 

## Costs to the Corps were determined by applying an incr emental increase to certain ba seline task hour formulas

used in the current budget allocation process. Costs to applicants were determined using "Cost Analysis for the

2000 Issuance and Modification of Nationwide Permits" (IWR unpublished draft report, 2001}. The 2001 report

estimates were based on data and information gathered in informal interviews with wetland permitting consultants

and Corps district regulatory staff. The unit costs estimated for the different permit types were presented in a low to

high range. While 10 years has passed since that report, th e likely increases in costs are presumed to within an order

of magnitude for the purpose of this cost estimate and consis tent with other levels of uncertainty for this analysis.

Direct costs to permit applicants, excluding compensatory mitigation costs, can be broken out into several

application components: (1) delineation and survey of special aquatic site s; (2) project/impact drawings; (3)

alternatives analysis; (4) preparation of the compensato ry mitigation proposal; and (5) application submission.

Costs for each of these can vary widely and in terms of order of magnitude among the components for different

permit types.



# 10

# 11 III. Assessing Potential Indirect Benefits

Although costs are a very important compone nt of any economic analysis, equally

important is the value of the bene fits received. Failure to account for the full economic values of

ecosystems could result from a lack of recognition of benefits that 1) may not be adequately

captured by traditional market valuati on techniques, 2) may be public goods 13 

# that are not subject

to any valuation reporting, or 3) may be intang ible by their nature (these categories are not

mutually exclusive). A common concern is that Agencies might not effectively manage what

they do not measure, and they might undervalue re sources that are not id entified or quantified.

Valid procedures for estimation of econom ic benefits are described in EPA’s Guidelines

for Preparing Economic Analyses (2011). Many of the procedures from the Guidelines could be

applied to estimating the benef its of following the proposed guidance. However, there are

several difficulties to briefly mention. One is that the benefits of water quality improvement are

generally spread diffusely over large populations. It is difficult to quantify the generally small

benefits enjoyed by generally la rge numbers of people and aggreg ate up to a meaningful overall

number. More importantly, the great majority of benefits from water quality improvements are

typically public goods – things that cannot be bought and sold in markets – and so must be

estimated by indirect means rather th an observed in market prices. The Guidelines anticipate

this possibility, and note several th ings. First, the fact that va lues are not easily estimated does

not mean that they do not exist, nor even that th ey are small. Second, when it is not possible to

monetize benefits – that is, to express them in dollar terms – it may still be useful to present

whatever quantitative physical, chemical, or biological inform ation is available.

A. Categories of Benefits

One category of benefits includes goods and services that are ge nerated by a proposed

action or activity. Although potenti ally easier to identify than other categories, these benefits

may or may not be easy to measur e or ascribe value. In terms of protecting small streams and

wetlands, an example benefit might be the suppo rt of fish and shellfish populations in

downstream waters as well as protection of the waters themselves. These types of waters

provide habitat for a robust and diverse assembla ge of organisms that are necessary to support

the whole aquatic community structure and ecological function. Some associated attributes may

have market value (such as the fish themselves ) and some may have non-market value (such as

biodiversity).

A related economic impact is the stream of revenues that are supported by the action

taken. These are activities that may increase in occurrence and value as a resource is protected,

or that may decrease in value or not happen at all if the resource is not protected. Provisioning of

water supply for manufacturing, energy generation, a nd agriculture is an example of a benefit

that may be affected. Tourism is perhaps the best ex ample of this type of benefit. It is often the

natural beauty or recreational opportunities provided by nature that spur the investment and

revenue generated by tourism. The revenue st reams supported include not just fees for the

13 

## A public good is a good that is non-rival (my enjoyment of clean water does not prevent you from enjoying it as

well) and nonexclusive (when water is cleaned so that I may enjoy, it is also available for you to enjoy).

# 12 recreational activity itself, but also the hotels, restaurants, and other support services provided.

The multi-billion dollar sport fishing industry is an example of a revenue stream supported by

small streams and wetlands. It is essential to distinguish the marginal or incremental

contribution of environmental factors to such values. For example, the value of a hotel is not, in

general, entirely attributable to the environmental conditions of its locale.

Another category of benefits are costs a voided. Costs avoided represent what you don’t

have to pay because of the action you have taken. An ecosystem function that has an effect of

resulting in “costs avoided” is floodplain preservation a nd avoidance of more frequent or severe

flooding due to failure to preserve floodplains. Although dams a nd levees are built to control

potential flooding, much of the alteration of the natural hydrologic regime has contributed to the

potential for flooding. Small streams and wetla nds serve to store wa ter and slow down its

movement across the landscape. When these systems no longer perform this function, the

potential losses from flooding may increase

Protection of small streams a nd wetlands may be an effective “insurance policy” when

considering the flooding losses alre ady manifested and the potentia l magnitude of losses in the

future if a great deal more of these small str eam and wetland systems are lost without appropriate

mitigation. These gains in avoided costs would no t only apply to individuals directly affected by

a flood, but also to society as a whole because everyone ultimately pays the price of lost

revenues and lost investment to fellow members in some way. For example, where people are

insured or governments compensate for losses, the insurance company could raise premiums,

lose shareholder value, or reduce investments or the government could reduce services, incur

debt, or have to find revenue to cover expenses from other sources.

1. Ecosystem Services and Public Welfare

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

ecosystems, and the species they include, sustain and fulfill human life. 14 

# In other words,

ecosystem services are the direct or indirect contri butions that ecosystems make to the wellbeing of human populations. 15 

# Protection of these waters is important for public health, safety,

and quality of life. Pollution or destruction of these waterways can affect drinking water, places

where people recreate, the fish and shellfish peop le eat, the irrigation water used on food crops,

and how floods affect people and property. Abou t 60% of streams are intermittent or ephemeral

and they contribute to water supplies that provid e, at least in part, drinking water for 117 million

people. While a substantial majority of these intermittent and ephemeral streams are already

being found jurisdictional under cu rrent guidance, those that are currently not being found

jurisdictional may be found to be so under the proposed guidance. Small streams and wetlands

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

and contaminants, reduce flooding, stabilize s horelines and prevent erosion, recharge ground

water, and maintain biogeochemical cycling. Estimates of fishing and hunting expenditures,

major flood losses, and the value of wetlands for stor m protection services all total in the tens of

billions of dollars per year. In any economic va luation exercise, the incremental portion of these

14 

## Daily, G. (1997) Nature’s services: So cietal dependence on natural ecosystems. Island Press: Washington D.C.

15 

## U.S. EPA (2009) Valuing the Protection of Ecological Systems and Services: A Report of the EPA Science

Advisory Board. EPA-SAB-09-012.

# 13 values attributable to the incremental number of small streams and wetlands protected by

implementing the new proposed guidance versus th e previous guidance would have to be taken

into account. Appendix C of this document provi des additional details on specific ecosystem

services.

2. Administrative Cost Savings to Government

The federal government and states are curren tly spending significan t resources on siteby-site evaluations of jurisdicti on against a standard that is unclear and somewhat ambiguous.

This represents an investment of resources thatcould be put to other use (and may in fact be

needed to process additional 404 permits) if the d ecision criteria were more clearly articulated.

While potentially incurring additional costs to process additional permits, and potentially having

a short-term backlog of actions as the federal government transitions to implementing new

guidance, the proposed guidance may reduce some permitting costs and speed the permit review

process in the long-term by clarif ying jurisdictional matters that have been time-consuming and

confusing for field staff and th e regulated community. The eff ect of the two Supreme Court

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

limited resources to understand and apply comple x jurisdictional standards. The uncertainty

surrounding jurisdictional que stions has increased the paperwork, costs, and time associated with

jurisdictional determinations. Ho wever, any cost savi ngs will be at leas t partially offset by

increases in mitigation planning and implementati on costs, associated environmental compliance

for larger permit areas, and additional documenta tion and data management requirements.

3. Prevention, Enforcemen t, and Cleanup Facilitation

The U.S. government is shifting enforcem ent priorities away from waters where

jurisdiction is a potential issue because of the uncertainty in realizing the benefits. Because of

difficulties establishing where the CWA applies after the Supreme Court’s decisions in SWANCC

in 2001 and Rapanos in 2006, EPA enforcement managers have indicated that enforcement

efforts are shifting from protec ting small streams high in the wa tershed and instead are moving

down river. In short, EPA is focusing efforts on larger streams and rivers, where there is more

certainty of establishing jurisd iction. Guidance to mo re clearly identify and protect small

streams and wetlands may ultimately save the cost s of additional drinking water filtration, stream

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

necessary to apply CWA programs, including wate r pollution protection, o il spill prevention and

response, and protection of stream s, rivers, lakes, and wetlands.

4. Certainty in Business Investment and Planning

Land developers and other businesses face uncertainty surrounding the jurisdiction

question that may lead to reduced willingness to invest in projects or lost investment when

project plans must be altered or abandoned. Bu sinesses operate best in an environment of

regulatory certainty. Business pr ofessionals are equipped to plan accordingly for known factors.

However, uncertainty can lead businesses to s it on capital rather than take unknown risks. The

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

developing natural resources, and engaging in other activit ies where CWA 404 permits are

# 14 needed. Guidance to more clearly identify and protect small streams and wetlands that require

protection under the CWA may reduce uncertainty and the costs that go with it. As noted in the

discussion of costs, permit applicant costs associ ated with the new guidance are estimated to be

between $3 and $11 million. Depending on how signifi cant costs related to uncertainty prove to

be, the proposed guidance might ultimately re duce net costs for people seeking CWA permits,

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

B. Example Valuation of Benefits

The benefits calculated in a cost-benefit anal ysis are a monetized measure of the societal

gains realized from adoption of a proposed policy relative to those that would have been realized

in the absence of the policy. Such gains are al ways calculated as an increment to a baseline

describing what would have happene d if the policy had not been adopt ed. It is essential to bear

this in mind when reviewing aggregate statistics. Intermittent or ephemeral streams contribute to

the drinking water supplies consumed by 117 million Americans. Freshwater anglers spent over

$25 billion on trips and equipment in 2006, and a lmost two and a half million Americans hunted

migratory birds. However, absent a determina tion of how much water quality would change in

areas affected by the proposed guidance, thes e values cannot be used to adduce monetary

benefits.

In addition to confining analysis to the in cremental effects of proposed policy changes,

benefit estimation also requires careful evaluation and categoriza tion of expenditures. The $25

billion spent on fishing trips and equipment is not itself an estimate of value; consumer value is

typically measured not by what consumers spen d on something, but by the excess of what they

would be willing to spend over wh at they actually do spend. As the former is typically not

directly observed, inferring consumer willingness to pay from observed data often requires

drawing some subtle inferences.

One way to attempt an estimate of potential incremental indirect benefits is to examine

studies of ecosystem services th at report a monetized value on a per unit basis, such as a dollar

value per wetland acre, or a dollar value per wetl and acre per year. For this exercise, it is

necessary to express values on a “per acre” basis ra ther than a “per acre per year” basis to be

comparable to the cost figures presented in sect ion IV. The cost figures are annual values, but

they reflect an annual summation of one-time compen satory mitigation costs. These “unit costs”

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

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

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

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

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

Researchers have published a great deal of studies on the values of ecosystem services

provided by wetlands, and these studies offer the mo st readily available basis for comparison to

potential costs. Appendix D provides a literatu re review of potentially relevant studies.

Estimation of benefits varies widely and suffers from incomplete knowledge of factors affecting

the total value. Wetlands vary greatly in thei r functionality and relativ e value based on their

relative scarcity, location within a watershed, and th e degree of human impact s in their vicinity.

# 15 As such, estimates of their worth can vary by several orders of magnitude. The following are

important points to keep in mind when cons idering these indirect benefit estimates:

• Not all wetlands provide all the service categories exam ined in the literature. In addition,

the relative value of each type of service va ries from wetland to wetland. For some, the

value for flood protection may be the greatest benefit, wher eas for others the value of

habitat provisioning may be greatest.

• Variability in benefit estimates may reflect flaws in the estimation methods, incomplete

knowledge of survey responders or the source of the estimate, or re al variation in the

physical attributes and th eir associated values. 16



# • Values published in the literature may have a selection bias, where wetlands are chosen

for study because they have a perceived value. 17



# • Limitations on determining “willingness to pay” include that most wetland services are

not traded in markets and their value cannot be revealed, people may not be aware of all

their services and unable to express how much they would be willing to pay if they were,

estimates based on “replacement costs” do not ne cessarily reflect an actual willingness to

pay that amount, and it may not be possible to trace and measure the value of all the

myriad services that a wetland provides. 18



## • 

# The relative value of wetland depends in part on relative scarcity w ithin its watershed and

the degree of human impact on the watershed. In general, a temperate-zone watershed

should optimally have between 3 and 7 percent of its area covered by wetlands to provide

adequate services. 19 

# A wetland’s value will likely refl ect the extent to which it is “in

excess” or very scarce. However, as a la ndscape becomes highly modified and a wetland

is small, fragmented and cut off from other waters, its value diminishes rapidly because it

can no longer provide any of th e valued services regardle ss of its rela tive scarcity. 20



# The overall message is that determining the preci se value of a particular wetland is very sitespecific exercise, and one that poses many challenges.

Most published studies tend to examine a por tion of the services provided by a wetland.

A few have undertaken a holistic assessment, al though they are still cons idered incomplete by

their authors. One synthesis study 21 

# presents average wetland function values for a fairly

comprehensive set of categories. While these au thors do not present an aggregate, the following

examination of data presented in this paper yields the following composite:

16 

## Heimlich, R.E., R. Claassen, K.D. Wiebe, D. Gadsby, and R.M. House. 1998. Wetland s and Agriculture: Private

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

17 

## Brouwer et al. (1999). “A meta-analysis of wetland valu ation studies.” Regional Environmental Change (1): 47-

57..

18 

## King, Dennis. The Dollar Value of Wetlands: Trap Se t, Bait Taken, Don’t Swallo w. 1998. National Wetlands

Newsletter, vol 20, no 4.

19 

## Mitsch and Gosselink. Ecological Economics 35 (2000) 25-33.

20 

## Mitsch and Gosselink. Ecological Economics 35 (2000) 25-33.

21 

## Heimlich, R.E., R. Claassen, K.D. Wiebe, D. Gadsby, and R.M. House. 1998. Wetland s and Agriculture: Private

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

# 16 Heimlich et al data (6% discount over 50 years in 1992$)

Mean Low High Location

market fish

AVERAGE 7 7 7 FL

22 16 30 FL

547 547 547 LA

702 651 702 LA

1,205 35 4,372 VA

1,259 1,259 1,259 FL

1,390 696 2,783 MI

43,928 43,928 43,928 Australia

6,133 5,892 6,704 ALL

market fur 137 13 261 US, LA

nonmarket nonuser habitat

AVERAGE 115 88 154 Scotland

15,956 10,079 21,857 Austria

49,850 31,489 68,386 Austria

68,055 42,989 93,223 Austria

133,860 84,558 183,366 Austria

1,248 865 1,632 Canada

2,850 1,165 4,536 NE

14,916 7,487 22,345 NE

1,155 1,155 1,155 New England

52,848 24,679 80,532 Kentucky

309,511 250,459 382,816 CA

347,548 325,394 371,087 CA

83,159 65,034 102,591 ALL

fishing

AVERAGE 95 95 95 LA

356 356 356 LA

273 224 323 MI

362 280 444 MA

942 942 942 Canada

15,126 3,725 26,528 FL

28,845 14,413 43,257 MI

6,571 2,862 10,278 ALL

hunting 1,019 1,019 1,019 US/Can

recreation 1,139 1,139 1,139 US

filtering 3,965 2,428 5,501 Cornbelt

flood control 35,075 3,916 66,233 MA

scenic 2,722 2,722 2,722 US

ALL (1992$) 133,348 82,163 186,169

2010 $ 209,356 128,996 292,286

*Numbers in bold represent mean values reported in Heimlich et al applied to both low and high columns

# 17 Existing studies offer a basis for a first orde r approximation of partia l potential indirect

benefits of implementing the new proposed guidance based on an average composite value and a

range inferred from selected literature values . While there may be some overlap in these

categories, adding up the categories from Heimlich et al yields a rough “unit benefit” range from

$129,000-$292,000 ($2010). This total “unit benefit” a bove is comparable to the wetland value

($148,000 in 2010$ at a 6 percent discount rate ) reported in another synthesis study. 22



# This unit benefit estimate can be applied to the potential incremental number of wetland

mitigation acres (i.e., 803 acres for estimate 1 and 2,517 acres for estimate 2) to estimate

potential indirect benefits (see Figure 2). Becau se the unit benefit presum ably applies to the preproject wetlands that will be impacted at th e site, and typically more mitigation acreage is

required to compensate for a given amount of im pacted acres, an assumed ratio of mitigation

acres to impacted acres of 2:1 is applie d for purposes of the benefit calculation. 23 

# This analysis

suggests that the indirect bene fits of increased coverage of wetlands under the CWA derived

from implementation of this new guidance will exceed the indirect costs. Note that indirect

benefits of incremental stream mitigation resulting from the proposed guidance are not

considered.

Potential Indirect Wetland Mitigation Costs

Estimate 1 Estimate 2

High $57,499,006 $184,825,374

Mid $38,551,811 $123,863,396

Low $19,604,617 $62,901,417

Potential Indirect Wetland Mitigation Benefits

Estimate 1 Estimate 2

High $117,352,718 $367,841,582

Mid $84,056,473 $263,474,650

Low $51,792,042 $162,341,929

22 

## Costanza et al., The value of the world’s ecosystem servi ces and natural capital. Nature. Vol 387. 15 May 1997.

23 

## In other words, the “unit benefit” applies to the numbe r of “impacted” acres not the number of “mitigation” acres,

which is typically larger. So for estimate 2, for exampl e, the 2,517 acres of projected new mitigation are adjusted

downward by a factor of 2 to reflect the presumed number of impacted acres these are inte nded to compensate for.

A 2:1 mitigated to impacted acre ratio may be a conser vative assumption. A recent Ecosystem Marketplace study

(2010) puts this ratio at approximately 5:4. Using a lowe r ratio would raise the benef its estimates because it would

mean that the 2,517 acres of proj ected new mitigation correspond to a higher number of impacted acres.

# 18 $

‐ $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000

Benefits Costs Benefits Costs

Estimate 1 Estimate 2 

# Figure 2. Potential Wetlands Mitigation Indirect

Costs Compared to Potential Value of Indirect

Benefits Provided (annual basis)

High

Mid

Low



# Because the circumstances of different we tlands and other areas that might be found

jurisdictional under the proposed gui dance vary so greatly from one locality to another, it is

difficult to derive estimates of nationwide benefi ts of the proposed guidance. Economists are

wary of benefits transfer in general, and of large scale benefits tran sfer without knowledge of

how comparable situations are between where be nefits are assessed and where they are applied

in particular. Although the "unit benefit" aggrega tion avoids use of replac ement cost studies and

avoids double-counting to the best of our knowledge, it must be emphasized that values from

many disparate locations and studies are combined a nd then applied to wholly distinct locations.

This is indeed a speculative application and, as such, the accuracy and precision of results are

highly uncertain. However, even considering this uncertainty, this analysis does suggest that

benefits are likely to justify costs.

An alternative approach would be to look at states or regions for which some data are

available and consider the relations hip of benefits to costs by state or region. Examples for the

handful of states/regions for whic h such information is available are presented below. A number

of caveats should be kept in mind in interpreting this an alysis, including:

• It is difficult to link the types of wetlands and water bodies for which economic analyses

have been conducted with the types likely to be found jurisdictional under the proposed

guidance. For this reason, we need to take ca re in our inferences, e. g., fishery values to

# 19 waters that might or might not be instrumental in fish reproduction (and similarly for

water purification, storm protection, etc.)

• These examples should be regarded as illustrative, not dispositive.

• The above and all other caveats notwithstandin g, there is no existing study that estimates

all of the benefits provided by potentially jurisdictional wa ter bodies. Whatever other

issues might arise in interpreting these examples, it should be remembered that estimates

of benefits are necessarily incomplete.

All values are in 2010 $/acre. Bene fits accrue in perpetuity at a 5% discount rate. All estimates

in this section are tota l (not annual) values per acre. Th e costs presented below are the statespecific mitigation cost estimates used in the cost estimate portion of this analysis (see Section II

and Appendix A). They are provided here for comparison purposes; costs of mitigation were not

estimated by the various study authors, whos e focus was rather on estimating benefits.

Example 1: Coastal wetlands of Louisiana

A couple of studies have estimated the benefits of wetlands along the Louisiana coast. In 1987

Stephen Farber and Robert Costanza estimated the value of recreationa l and storm protection

services of coastal wetlands. In 1996 Farber conducted anothe r study of the region, which was

also informed by his 1989 storm protection st udy. The 1987 Farber and Costanza and the 1996

Farber papers differ by about a factor of five in their estimates of value, but this difference is

almost entirely explained by the more robust estim ate of storm protection values in the later

study. The results of the later study have also been buttressed by subsequent work on storm

protection services of co astal wetlands (Costanza, et al . 2008).

Low estimate High estimate Low estimate High estimate

of benefits of benefits of costs of costs

$2,465 $19,704 $15,000 $50,000

In this case only the higher estimate of benef its exceeds the lower estimate of costs, although the

caveat above that benefit estimates are necessarily incomplete should always be borne in mind.

Example 2: Wetlands in the “cornbelt”

In 1997 Poor presented a paper on the value of wetla nds in Nebraska. Three years later Lant and

Richards published a paper on we tlands in the “cornbelt”. Po or focused on nonuse values of

wildlife, Lant and Richards on water quality and recreation.

Low estimate of benefits High estimate of benefits Cost

$18,967 $42,892 $15,000

# 20 The low and high benefit estimates differ in which of the benefit estimates from the Poor study

are included, as he cited a range. In eith er case, however, benefits exceed costs.

Example 3: Florida coastal wetlands

Lynne, et al . (1981), Fischer et al . (1989), and Bell (1989) have estimated the value of wetland

contributions to commercial and recreational fish eries for the state of Florida. The low value

estimate below comes from summing the lower of the non-overlapping values generated for

commercial and recreational fisheries. The hi gh value estimate comes from summing the higher

values plus extrapolating stor m protection services as estim ated by Farber (1989) for the

Louisiana coast, and nutrient reten tion services as estimated by Jenkins et al . (2008) for the

Mississippi Alluvial Valley, to the coast of Florida.

Low estimate High estimate Low estimate High estimate

of benefits of benefits of costs of costs

$30,007 $59,200 $35,000 $145,000

The low estimate of benefits approaches that of the low estimate of costs, while the high estimate

of benefits exceed the low estimate of costs. Th e high estimate of costs exceeds either estimate

of benefits. Note that these estimates ar e based only on commercial and recreational fishing

benefits.

Example 4: Wetlands surrounding La ke St. Clair Michigan/Ontario

Lake St. Clair is located near De troit, MI. Its basin lies in bot h the state of Michigan and the

Canadian province of Ontario. Studies of the be nefits of its surrounding we tlands in the state of

Michigan have been conducted by Amacher, et al . (1989), and by Van Vuren and Roy (1993).

The latter study is used to generate the lower estimate of benefits. Amacher, et al . estimate

almost $60,000 in fishery-related benefits to the U.S. wetlands. It is not cl ear if this would be

indicative of the value of juri sdictional wetlands under the propos ed guidance, as such waters

may not support fisheries. At the same time, however, neither Amacher nor Van Vuren and Roy

have estimated the water purification values of these wetlands, and it se ems very likely that

wetlands in the Midwest would provide the service of nutrien t retention. As noted above,

Jenkins, et al . estimate the value of this service to be some worth some $10,000 per acre on the

lower Mississippi River, while Thibodeau and Os tro (1981) value it at over $100,000 per acre for

riverine wetlands in Massachusetts (although, beca use Thibodeau and Ostro adopt a replacement

cost approach to valuation, they may overstate true social benefits). It may be reasonable, then,

to add the Jenkins, et al . (2008) estimate of nutrient re tention value to the Amacher et al . (1989)

fisheries value to arrive at the high estimate of benefits

Low estimate High estimate Low estimate High estimate

of benefits of benefits of costs of costs

$6,395 $67,346 $40,000 $80,000

# 21 Example 5: Riverine we tlands in Massachusetts

In 1981 Thibodeau and Ostro completed a very t horough study of the value of riverine wetlands

in Massachusetts. The catalogued several categories of recreati onal, amenity, flood control, and

water quality benefits. Regretta bly, however, they estimated wa ter purification and nutrient

retention values using replacement cost approach es. Replacement costs may or may not reflect

true social values; they are only valid if society w ould, in fact, pay to replace such lost services.

So, we form our low and high estimates of bene fits by either excluding the replacement-costbased estimates or including them, respectively. Because it seems unlikely that there would be

no benefit to the nutrient retention/water purificat ion services of such wetlands, we substitute the

Jenkins et al . (2008) estimates of values to form the low estimate.

Low estimate High estimate Low estimate High estimate

of benefits of benefits of costs of costs

$153,620 $645,051 $124,000 $160,000

The higher benefit estimation figure may beg again the question of whether the wetlands

considered in this study would be representative of those likely to be found jurisd ictional under

the guidance. More generally, however, the Massachusetts example underscores a general

principle: the costs and benefits of wetland pr eservation are likely to be correlated. Wetlands

are valuable largely inasmuch as they provide goods and services that can be enjoyed by people

nearby: if they purify water, protect against storms, provide recreational and scenic amenities,

etc., in locations where there large numbers of people. However, locatio ns in which there are

large numbers of people are also locations in which property values, a nd hence the opportunity

costs of wetland preservation, are high.

Studies cited:

Costanza, R., O. Perez-Maqueo, M. L. Martinez, P. Sutton, S. J. Anderson and K. Mulder. 2008.

The Value of Coastal Wetlands for Hurricane Protection. Ambio 37 (4). 241 – 248.

Farber, S. 1987. "The Value of Coastal Wetlands for Protection of Property Against Hurricane

Wind Damage," Journal of Environmental Economics and Managment 14(2):143-151.

Farber, S. 1996. "Welfare Loss of Wetla nds Disintegration: A Louisiana Study," Contemporary

Economic Policy 14(2):92-106.

Farber, S. and Costanza, R. 1987. "The Economic Value of Wetland Systems," Journal of

Environmental Management 24:41-51.

Fischer, A.C., M. Hanemann, J.Harte, A. Horne, G. Ellis, and D. Von Hippel. 1986. Economic

Valuation of Aquatic Ecosystems . Final report to the U.S. EPA, Cooperative Agreement No.

811847, October.

# 22 Lant, C.L., and R.S. Roberts. 1990. "Greenbelts in the Cornbelt: Riparian wetlands, intrinsic

values, and market failure," Environment and Planning 22:1375-1388.

Lynne, G.D., P. Conroy, and F. Pochasta. 1981. "Ec onomic Valuation of Marsh Areas to Marine

Production Processes," Journal of Environmental Economics and Management 8(2):175-186

Poor, P.J. 1997. "The Contingent Valuation of Ne braska's Rainwater Basin Wetlands." Selected

paper presented at the American Agricultur al Economics Associa tion meetings, Toronto,

Canada, July, 36 pp.

Thibodeau, F.R. and B.D. Ostro. 1981. "An Ec onomic Analysis of Wetland Protection," Journal

of Environmental Management 12:19-30.

van Vuuren, W., and P. Roy. 1993. "Private and Social Returns from Wetland Preservation

versus Those from Wetland C onversion to Agriculture," Ecological Economics 8(1993): 289-

305.

# 23 APPENDIX A: Indirect Cost Estimate Tables

Preliminary Estimate of 404 Wetland Mitigation Costs: Baseline

Baseline Mitigation Baseline Costs Wetland Mitigation Unit Cost Stream Mitigation Unit Cost

Wetland Stream Wetlands Wetlands Streams per acre per acre per lin. ft. per lin. ft.

Acres Linear Feet low mid

‐ range mid

‐ range Low High Low High

STATE BASE WETMIT BASE STRMIT BASE$ LOW BASE$ MID BASE STR COST UC LOW UC HIGH UC LOW UC HIGH

AK 1065.4 3,834.7 $532,685 $ 16,246,877 $ 931,839 $ 500 $ 30,000 $ 170 $ 316

AL 638.1 69,808.0 $6,380,970 $ 9,571,455 $ 43,211,152 $ 10,000 $ 20,000 $ 350 $ 888

AR 504.6 25,200.7 $1,009,149 $ 1,766,011 $ 6,123,758 $ 2,000 $ 5,000 $ 170 $ 316

AZ 43.6 36.0 $392,135 $ 697,128 $ 8,748 $ 9,000 $ 23,000 $ 170 $ 316

CA 5585.5 192,492.4 $103,330,955 $ 889,484,036 $ 46,775,658 $ 18,500 $ 300,000 $ 170 $ 316

CO 1113.2 9,945.0 $35,620,992 $ 73,468,297 $ 2,416,635 $ 32,000 $ 100,000 $ 170 $ 316

CT 125.1 $15,511,098 $ 17,762,709 $

‐ $ 124,000 $ 160,000 $ 170 $ 316

DE 136.3 $5,453,340 $ 5,453,340 $

‐ $ 40,000 $ 40,000 $ 170 $ 316

FL 2823.6 30,582.4 $98,827,733 $ 254,128,457 $ 7,431,533 $ 35,000 $ 145,000 $ 170 $ 316

GA 1983.2 109,443.2 $23,797,926 $ 132,871,755 $ 21,833,912 $ 12,000 $ 122,000 $ 106 $ 293

IA 653.6 18,040.5 $9,803,363 $ 9,803,363 $ 4,383,842 $ 15,000 $ 15,000 $ 170 $ 316

ID 337.3 46,406.0 $13,492,800 $ 13,492,800 $ 11,276,658 $ 40,000 $ 40,000 $ 170 $ 316

IL 756.2 26,249.0 $30,246,360 $ 90,739,081 $ 6,378,507 $ 40,000 $ 200,000 $ 170 $ 316

IN 1232.6 384,647.7 $49,304,940 $ 73,957,411 $ 93,469,391 $ 40,000 $ 80,000 $ 170 $ 316

KS 357.0 328,949.3 $17,849,850 $ 17,849,850 $ 79,934,687 $ 50,000 $ 50,000 $ 170 $ 316

KY 477.9 195,235.0 $14,336,100 $ 14,336,100 $ 55,251,511 $ 30,000 $ 30,000 $ 170 $ 396

LA 2756.2 53,874.8 $41,342,783 $ 89,576,030 $ 13,091,586 $ 15,000 $ 50,000 $ 170 $ 316

MA 95.6 0.0 $11,851,176 $ 13,571,508 $

‐ $ 124,000 $ 160,000 $ 170 $ 316

MD 378.1 11,210.0 $4,158,875 $ 13,043,743 $ 4,954,820 $ 11,000 $ 58,000 $ 250 $ 634

ME 278.3 3,905.6 $34,786,125 $ 38,125,593 $ 949,056 $ 125,000 $ 149,000 $ 170 $ 316

MI 189.7 2,935.0 $7,589,700 $ 11,384,550 $ 713,205 $ 40,000 $ 80,000 $ 170 $ 316

MN 1955.1 1,200.0 $7,820,202 $ 92,864,900 $ 291,600 $ 4,000 $ 91,000 $ 170 $ 316

MO 746.3 53,585.0 $11,194,808 $ 14,926,410 $ 7,769,825 $ 15,000 $ 25,000 $ 90 $ 200

MS 988.1 14,360.3 $2,964,200 $ 13,832,931 $ 3,489,560 $ 3,000 $ 25,000 $ 170 $ 316

MT 576.3 14,472.0 $23,050,200 $ 23,050,200 $ 3,516,696 $ 40,000 $ 40,000 $ 170 $ 316

NC 2061.9 138,035.1 $47,422,976 $ 87,629,412 $ 40,996,413 $ 23,000 $ 62,000 $ 256 $ 338

ND 847.5 14,049.8 $12,712,748 $ 12,712,748 $ 3,414,089 $ 15,000 $ 15,000 $ 170 $ 316

NE 723.8 3,994.0 $10,857,488 $ 10,857,488 $ 970,542 $ 15,000 $ 15,000 $ 170 $ 316

NH 247.4 22,214.0 $34,136,784 $ 41,557,824 $ 5,398,002 $ 138,000 $ 198,000 $ 170 $ 316

NJ 125.1 $10,007,160 $ 30,021,480 $

‐ $ 80,000 $ 400,000 $ 170 $ 316

NM 74.5 12,277.6 $2,979,660 $ 3,724,575 $ 2,983,445 $ 40,000 $ 60,000 $ 170 $ 316

NV 87.1 900.0 $4,792,755 $ 5,228,460 $ 218,700 $ 55,000 $ 65,000 $ 170 $ 316

NY 1903.0 23,163.9 $95,152,351 $ 114,182,821 $ 5,628,818 $ 50,000 $ 70,000 $ 170 $ 316

OH 1963.5 90,969.9 $29,452,253 $ 29,452,253 $ 22,105,688 $ 15,000 $ 15,000 $ 170 $ 316

OK 59.0 19,847.0 $708,372 $ 1,829,961 $ 4,822,821 $ 12,000 $ 50,000 $ 170 $ 316

OR 952.9 4,200.2 $40,975,947 $ 80,046,037 $ 1,020,641 $ 43,000 $ 125,000 $ 170 $ 316

PA 3374.6 229,011.2 $40,495,266 $ 45,557,175 $ 55,649,712 $ 12,000 $ 15,000 $ 170 $ 316

RI 49.2 $6,099,870 $ 6,985,335 $

‐ $ 124,000 $ 160,000 $ 170 $ 316

SC 2820.8 6,450.2 $70,520,963 $ 176,302,408 $ 886,903 $ 25,000 $ 100,000 $ 75 $ 200

SD 358.4 0.0 $5,376,038 $ 5,376,038 $

‐ $ 15,000 $ 15,000 $ 170 $ 316

TN 591.7 54,712.0 $4,142,009 $ 7,988,159 $ 6,839,000 $ 7,000 $ 20,000 $ 50 $ 200

TX 3255.1 185,639.3 $48,827,070 $ 97,654,141 $ 26,267,960 $ 15,000 $ 45,000 $ 80 $ 203

UT 1381.6 263,404.8 $75,988,358 $ 82,896,391 $ 64,007,366 $ 55,000 $ 65,000 $ 170 $ 316

VA 1815.9 48,455.0 $29,054,496 $ 141,640,669 $ 29,073,000 $ 16,000 $ 140,000 $ 300 $ 900

VT 160.2 $17,624,970 $ 19,387,467 $

‐ $ 110,000 $ 132,000 $ 170 $ 316

WA 986.7 37,774.9 $98,666,101 $ 172,665,677 $ 9,179,296 $ 100,000 $ 250,000 $ 170 $ 316

WI 2246.0 $89,839,561 $ 89,839,561 $

‐ $ 40,000 $ 40,000 $ 170 $ 316

WV 278.3 45,665.0 $8,348,670 $ 12,523,005 $ 27,399,000 $ 30,000 $ 60,000 $ 400 $ 800

WY 839.1 20.0 $12,586,253 $ 12,586,253 $ 4,860 $ 15,000 $ 15,000 $ 170 $ 316

53000 2,797,196 $1,367,416,585 $ 3,220,649,871 $ 721,070,435

Average Cost per Acre: $25,800 $ 60,767

Average Cost per Linear Foot: $ 258

Total Wetland and Stream Baseline Cost: $2,088,487,020 $3,941,720,306

# 24 Amount of Wetland Acres Increased Annual Costs Unit Cost Per Acre Mitigated

2009

‐ 2010 Aquatic Resource/JD Records, ACOE Mitigated

Total

Isolated Total

Wetland Neg JD

Wetland % Neg JD

Wetland Baseline

Mitigation Increased

Wetlands Low

Cost Mid

Cost High

Cost Unit Cost

Low Unit Cost

High

STATE ISO TOT WET TOT WET NO %WET NO BASE MIT WET INC WET COSTS LOW WET COSTS MID WET COSTS HIGH UNIT COST LOW UNIT COST HIGH

AK 14 760 2 0.3% 1065.4 2.8 $ 1,406 $ 42,868 $ 84,330 $ 500 $ 30,000

AL 7 460 6 1.3% 638.1 8.4 $ 84,330 $ 126,495 $ 168,660 $ 10,000 $ 20,000

AR 13 363 4 1.1% 504.6 5.6 $ 11,244 $ 19,677 $ 28,110 $ 2,000 $ 5,000

AZ 0 31 0 0.0% 43.6 0.0 $

‐ $

‐ $

‐ $ 9,000 $ 23,000

CA 1463 3991 17 0.4% 5585.5 23.9 $ 442,030 $ 3,805,040 $ 7,168,050 $ 18,500 $ 300,000

CO 215 837 45 5.4% 1113.2 63.2 $ 2,023,920 $ 4,174,335 $ 6,324,750 $ 32,000 $ 100,000

CT 5 92 3 3.3% 125.1 4.2 $ 522,846 $ 598,743 $ 674,640 $ 124,000 $ 160,000

DE 14 98 1 1.0% 136.3 1.4 $ 56,220 $ 56,220 $ 56,220 $ 40,000 $ 40,000

FL 309 2033 24 1.2% 2823.6 33.7 $ 1,180,620 $ 3,035,880 $ 4,891,140 $ 35,000 $ 145,000

GA 100 1432 21 1.5% 1983.2 29.5 $ 354,186 $ 1,977,539 $ 3,600,891 $ 12,000 $ 122,000

IA 52 469 4 0.9% 653.6 5.6 $ 84,330 $ 84,330 $ 84,330 $ 15,000 $ 15,000

ID 22 244 4 1.6% 337.3 5.6 $ 224,880 $ 224,880 $ 224,880 $ 40,000 $ 40,000

IL 277 547 9 1.6% 756.2 12.6 $ 505,980 $ 1,517,940 $ 2,529,900 $ 40,000 $ 200,000

IN 320 891 14 1.6% 1232.6 19.7 $ 787,080 $ 1,180,620 $ 1,574,160 $ 40,000 $ 80,000

KS 19 257 3 1.2% 357.0 4.2 $ 210,825 $ 210,825 $ 210,825 $ 50,000 $ 50,000

KY 58 341 1 0.3% 477.9 1.4 $ 42,165 $ 42,165 $ 42,165 $ 30,000 $ 30,000

LA 28 1990 29 1.5% 2756.2 40.8 $ 611,393 $ 1,324,684 $ 2,037,975 $ 15,000 $ 50,000

MA 1 68 0 0.0% 95.6 0.0 $

‐ $

‐ $

‐ $ 124,000 $ 160,000

MD 5 349 80 22.9% 378.1 112.4 $ 1,236,840 $ 3,879,180 $ 6,521,520 $ 11,000 $ 58,000

ME 0 200 2 1.0% 278.3 2.8 $ 351,375 $ 385,107 $ 418,839 $ 125,000 $ 149,000

MI 2 139 4 2.9% 189.7 5.6 $ 224,880 $ 337,320 $ 449,760 $ 40,000 $ 80,000

MN 198 1422 31 2.2% 1955.1 43.6 $ 174,282 $ 2,069,599 $ 3,964,916 $ 4,000 $ 91,000

MO 53 538 7 1.3% 746.3 9.8 $ 147,578 $ 196,770 $ 245,963 $ 15,000 $ 25,000

MS 10 705 2 0.3% 988.1 2.8 $ 8,433 $ 39,354 $ 70,275 $ 3,000 $ 25,000

MT 49 410 0 0.0% 576.3 0.0 $

‐ $

‐ $

‐ $ 40,000 $ 40,000

NC 59 1473 6 0.4% 2061.9 8.4 $ 193,959 $ 358,403 $ 522,846 $ 23,000 $ 62,000

ND 1388 612 9 1.5% 847.5 12.6 $ 189,743 $ 189,743 $ 189,743 $ 15,000 $ 15,000

NE 157 517 2 0.4% 723.8 2.8 $ 42,165 $ 42,165 $ 42,165 $ 15,000 $ 15,000

NH 0 178 2 1.1% 247.4 2.8 $ 387,918 $ 472,248 $ 556,578 $ 138,000 $ 198,000

NJ 34 89 0 0.0% 125.1 0.0 $

‐ $

‐ $

‐ $ 80,000 $ 400,000

NM 14 53 0 0.0% 74.5 0.0 $

‐ $

‐ $

‐ $ 40,000 $ 60,000

NV 237 62 0 0.0% 87.1 0.0 $

‐ $

‐ $

‐ $ 55,000 $ 65,000

NY 530 1382 28 2.0% 1903.0 39.4 $ 1,967,700 $ 2,361,240 $ 2,754,780 $ 50,000 $ 70,000

OH 582 1438 41 2.9% 1963.5 57.6 $ 864,383 $ 864,383 $ 864,383 $ 15,000 $ 15,000

OK 2 47 5 10.6% 59.0 7.0 $ 84,330 $ 217,853 $ 351,375 $ 12,000 $ 50,000

OR 37 682 4 0.6% 952.9 5.6 $ 241,746 $ 472,248 $ 702,750 $ 43,000 $ 125,000

PA 375 2410 9 0.4% 3374.6 12.6 $ 151,794 $ 170,768 $ 189,743 $ 12,000 $ 15,000

RI 2 35 0 0.0% 49.2 0.0 $

‐ $

‐ $

‐ $ 124,000 $ 160,000

SC 474 2021 14 0.7% 2820.8 19.7 $ 491,925 $ 1,229,813 $ 1,967,700 $ 25,000 $ 100,000

SD 310 260 5 1.9% 358.4 7.0 $ 105,413 $ 105,413 $ 105,413 $ 15,000 $ 15,000

TN 31 425 4 0.9% 591.7 5.6 $ 39,354 $ 75,897 $ 112,440 $ 7,000 $ 20,000

TX 266 2332 16 0.7% 3255.1 22.5 $ 337,320 $ 674,640 $ 1,011,960 $ 15,000 $ 45,000

UT 53 991 8 0.8% 1381.6 11.2 $ 618,420 $ 674,640 $ 730,860 $ 55,000 $ 65,000

VA 91 1296 4 0.3% 1815.9 5.6 $ 89,952 $ 438,516 $ 787,080 $ 16,000 $ 140,000

VT 6 117 3 2.6% 160.2 4.2 $ 463,815 $ 510,197 $ 556,578 $ 110,000 $ 132,000

WA 25 703 1 0.1% 986.7 1.4 $ 140,550 $ 245,963 $ 351,375 $ 100,000 $ 250,000

WI 146 1645 47 2.9% 2246.0 66.1 $ 2,642,340 $ 2,642,340 $ 2,642,340 $ 40,000 $ 40,000

WV 115 208 10 4.8% 278.3 14.1 $ 421,650 $ 632,475 $ 843,300 $ 30,000 $ 60,000

WY 41 637 40 6.3% 839.1 56.2 $ 843,300 $ 843,300 $ 843,300 $ 15,000 $ 15,000

8209 38280 571 1.5% 53000.0 802.5 $ 19,604,617 $ 38,551,811 $ 57,499,006

Average Cost per Acre: $ 24,428 $ 48,037 $ 71,646

Total Cost, Including Stream Mitigation: $ 28,295,539 $ 51,535,451 $ 74,775,364

Plus 10% Allowance for Current Impacts w/o JDs: $ 31,125,093 $ 56,688,996 $ 82,252,900 

### Preliminary Estimate of 404 Wetland Mitigation Costs

Preliminary Estimate of 404 Wetland Mitigation Costs: Estimate 1

‐ Significant Nexus Waters

# 25 2009

‐ 2010 Aquatic Resource/JD Records, ACOE Amount of Wetland Acres Increased Annual Costs Unit Cost Per Acre Mitigated

Total

Isolated Total

Wetland Neg JD

Wetland % Neg JD

Wetland Baseline

Mitigation Plus 17%

Isolated Low

Cost Mid

Cost High

Cost Unit Cost

Low Unit Cost

High

STATE ISO TOT WET TOT WET NO %WET NO BASE MIT +0.17 ISO INC WET COSTS LOW WET COSTS MID WET COSTS HIGH UNIT COST LOW UNIT COST HIGH

AK 14 760 2 0.3% 1065.4 6.2 $ 3,078 $ 93,880 $ 184,683 $ 500 $ 30,000

AL 7 460 6 1.3% 638.1 10.1 $ 101,055 $ 151,583 $ 202,111 $ 10,000 $ 20,000

AR 13 363 4 1.1% 504.6 8.7 $ 17,456 $ 30,549 $ 43,641 $ 2,000 $ 5,000

AZ 0 31 0 0.0% 43.6 0.0 $

‐ $

‐ $

‐ $ 9,000 $ 23,000

CA 1463 3991 17 0.4% 5585.5 126.7 $ 2,344,058 $ 20,177,903 $ 38,011,748 $ 18,500 $ 300,000

CO 215 837 45 5.4% 1113.2 114.6 $ 3,667,793 $ 7,564,823 $ 11,461,853 $ 32,000 $ 100,000

CT 5 92 3 3.3% 125.1 5.4 $ 670,986 $ 768,387 $ 865,788 $ 124,000 $ 160,000

DE 14 98 1 1.0% 136.3 4.8 $ 190,024 $ 190,024 $ 190,024 $ 40,000 $ 40,000

FL 309 2033 24 1.2% 2823.6 107.6 $ 3,764,702 $ 9,680,662 $ 15,596,623 $ 35,000 $ 145,000

GA 100 1432 21 1.5% 1983.2 53.4 $ 640,908 $ 3,578,403 $ 6,515,898 $ 12,000 $ 122,000

IA 52 469 4 0.9% 653.6 18.0 $ 270,699 $ 270,699 $ 270,699 $ 15,000 $ 15,000

ID 22 244 4 1.6% 337.3 10.9 $ 435,143 $ 435,143 $ 435,143 $ 40,000 $ 40,000

IL 277 547 9 1.6% 756.2 78.8 $ 3,153,380 $ 9,460,139 $ 15,766,899 $ 40,000 $ 200,000

IN 320 891 14 1.6% 1232.6 96.1 $ 3,845,448 $ 5,768,172 $ 7,690,896 $ 40,000 $ 80,000

KS 19 257 3 1.2% 357.0 8.8 $ 437,813 $ 437,813 $ 437,813 $ 50,000 $ 50,000

KY 58 341 1 0.3% 477.9 15.3 $ 457,912 $ 457,912 $ 457,912 $ 30,000 $ 30,000

LA 28 1990 29 1.5% 2756.2 47.4 $ 711,745 $ 1,542,115 $ 2,372,484 $ 15,000 $ 50,000

MA 1 68 0 0.0% 95.6 0.2 $ 29,628 $ 33,929 $ 38,230 $ 124,000 $ 160,000

MD 5 349 80 22.9% 378.1 113.6 $ 1,249,981 $ 3,920,396 $ 6,590,811 $ 11,000 $ 58,000

ME 0 200 2 1.0% 278.3 2.8 $ 351,375 $ 385,107 $ 418,839 $ 125,000 $ 149,000

MI 2 139 4 2.9% 189.7 6.1 $ 243,995 $ 365,992 $ 487,990 $ 40,000 $ 80,000

MN 198 1422 31 2.2% 1955.1 90.9 $ 363,519 $ 4,316,782 $ 8,270,046 $ 4,000 $ 91,000

MO 53 538 7 1.3% 746.3 22.5 $ 337,531 $ 450,041 $ 562,551 $ 15,000 $ 25,000

MS 10 705 2 0.3% 988.1 5.2 $ 15,601 $ 72,805 $ 130,009 $ 3,000 $ 25,000

MT 49 410 0 0.0% 576.3 11.7 $ 468,313 $ 468,313 $ 468,313 $ 40,000 $ 40,000

NC 59 1473 6 0.4% 2061.9 22.5 $ 518,194 $ 957,532 $ 1,396,870 $ 23,000 $ 62,000

ND 1388 612 9 1.5% 847.5 344.3 $ 5,164,369 $ 5,164,369 $ 5,164,369 $ 15,000 $ 15,000

NE 157 517 2 0.4% 723.8 40.3 $ 604,857 $ 604,857 $ 604,857 $ 15,000 $ 15,000

NH 0 178 2 1.1% 247.4 2.8 $ 387,918 $ 472,248 $ 556,578 $ 138,000 $ 198,000

NJ 34 89 0 0.0% 125.1 8.1 $ 649,903 $ 1,949,710 $ 3,249,516 $ 80,000 $ 400,000

NM 14 53 0 0.0% 74.5 3.3 $ 133,804 $ 167,255 $ 200,705 $ 40,000 $ 60,000

NV 237 62 0 0.0% 87.1 56.6 $ 3,114,518 $ 3,397,656 $ 3,680,794 $ 55,000 $ 65,000

NY 530 1382 28 2.0% 1903.0 166.0 $ 8,299,478 $ 9,959,373 $ 11,619,269 $ 50,000 $ 70,000

OH 582 1438 41 2.9% 1963.5 196.7 $ 2,950,285 $ 2,950,285 $ 2,950,285 $ 15,000 $ 15,000

OK 2 47 5 10.6% 59.0 7.5 $ 90,064 $ 232,666 $ 375,269 $ 12,000 $ 50,000

OR 37 682 4 0.6% 952.9 14.5 $ 621,892 $ 1,214,858 $ 1,807,824 $ 43,000 $ 125,000

PA 375 2410 9 0.4% 3374.6 102.3 $ 1,227,002 $ 1,380,377 $ 1,533,752 $ 12,000 $ 15,000

RI 2 35 0 0.0% 49.2 0.5 $ 59,256 $ 67,858 $ 76,459 $ 124,000 $ 160,000

SC 474 2021 14 0.7% 2820.8 132.9 $ 3,323,305 $ 8,308,262 $ 13,293,219 $ 25,000 $ 100,000

SD 310 260 5 1.9% 358.4 81.1 $ 1,216,460 $ 1,216,460 $ 1,216,460 $ 15,000 $ 15,000

TN 31 425 4 0.9% 591.7 13.0 $ 91,203 $ 175,891 $ 260,580 $ 7,000 $ 20,000

TX 266 2332 16 0.7% 3255.1 86.0 $ 1,290,671 $ 2,581,341 $ 3,872,012 $ 15,000 $ 45,000

UT 53 991 8 0.8% 1381.6 23.9 $ 1,314,916 $ 1,434,453 $ 1,553,991 $ 55,000 $ 65,000

VA 91 1296 4 0.3% 1815.9 27.4 $ 437,841 $ 2,134,477 $ 3,831,112 $ 16,000 $ 140,000

VT 6 117 3 2.6% 160.2 5.7 $ 621,512 $ 683,663 $ 745,815 $ 110,000 $ 132,000

WA 25 703 1 0.1% 986.7 7.4 $ 737,888 $ 1,291,303 $ 1,844,719 $ 100,000 $ 250,000

WI 146 1645 47 2.9% 2246.0 100.9 $ 4,037,720 $ 4,037,720 $ 4,037,720 $ 40,000 $ 40,000

WV 115 208 10 4.8% 278.3 41.5 $ 1,245,976 $ 1,868,964 $ 2,491,952 $ 30,000 $ 60,000

WY 41 637 40 6.3% 839.1 66.0 $ 990,245 $ 990,245 $ 990,245 $ 15,000 $ 15,000

8209 38280 571 1.5% 53000 2517 $ 62,901,417 $ 123,863,396 $ 184,825,374 $ 39,286 $ 85,102

Average Cost per Acre: $ 24,989 $ 49,207 $ 73,425

Total Cost, Including Stream Mitigation: $ 71,592,339 $ 136,847,036 $ 202,101,732

Plus 10% Allowance for Current Impacts w/o JDs: $ 78,751,573 $ 150,531,739 $ 222,311,906 

### Preliminary Estimate of 404 Wetland Mitigation Costs: Estimate 2

‐ Significant Nexus Waters and 17% of Isolated Waters

# 26 Preliminary Estimate of 404 Stream Mitigation Costs

2009

‐ 2010 Aquatic Resource/JD Amount of Stream Linear Increased Annual Costs Unit Cost Per Linear Foot

Records, ACOE Feet Mitigated Mitigated

Total

Streams Neg JD

Streams % Neg JD

Streams Baseline

Mitigation Increased

Streams Low

Cost High

Cost Unit Cost

Low Unit Cost

High

STATE STR TOT STR NO %STR NO BASE MIT STR INC STR COSTS LOW STR COSTS HIGH UNIT COST LOW UNIT COST HIGH

AK 1060 7 0.7% 3,834.7 25.5 $ 4,334 $ 8,055 $ 170 $ 316

AL 1335 11 0.8% 69,808.0 580.0 $ 202,992 $ 515,019 $ 350 $ 888

AR 2968 78 2.6% 25,200.7 680.2 $ 115,627 $ 214,929 $ 170 $ 316

AZ 417 46 11.0% 36.0 4.5 $ 759 $ 1,411 $ 170 $ 316

CA 3452 113 3.3% 192,492.4 6514.4 $ 1,107,451 $ 2,058,556 $ 170 $ 316

CO 2068 62 3.0% 9,945.0 307.4 $ 52,253 $ 97,130 $ 170 $ 316

CT 604 1 0.2% 0.0 $

‐ $

‐ $ 170 $ 316

DE 143 2 1.4% 0.0 $

‐ $

‐ $ 170 $ 316

FL 5053 32 0.6% 30,582.4 194.9 $ 33,135 $ 61,591 $ 170 $ 316

GA 2588 40 1.5% 109,443.2 1718.1 $ 182,119 $ 503,404 $ 106 $ 293

IA 787 20 2.5% 18,040.5 470.4 $ 79,971 $ 148,652 $ 170 $ 316

ID 1319 22 1.7% 46,406.0 787.1 $ 133,815 $ 248,739 $ 170 $ 316

IL 1982 22 1.1% 26,249.0 294.6 $ 50,087 $ 93,104 $ 170 $ 316

IN 2746 19 0.7% 384,647.7 2680.0 $ 455,597 $ 846,874 $ 170 $ 316

KS 2085 54 2.6% 328,949.3 8746.1 $ 1,486,832 $ 2,763,757 $ 170 $ 316

KY 2294 10 0.4% 195,235.0 854.8 $ 145,315 $ 338,499 $ 170 $ 396

LA 3784 63 1.7% 53,874.8 912.2 $ 155,066 $ 288,240 $ 170 $ 316

MA 508 5 1.0% 0.0 0.0 $

‐ $

‐ $ 170 $ 316

MD 894 2 0.2% 11,210.0 25.1 $ 6,284 $ 15,935 $ 250 $ 634

ME 755 14 1.9% 3,905.6 73.8 $ 12,544 $ 23,318 $ 170 $ 316

MI 1424 8 0.6% 2,935.0 16.6 $ 2,819 $ 5,240 $ 170 $ 316

MN 1360 20 1.5% 1,200.0 17.9 $ 3,045 $ 5,660 $ 170 $ 316

MO 4352 66 1.5% 53,585.0 825.2 $ 74,264 $ 165,031 $ 90 $ 200

MS 1679 29 1.7% 14,360.3 252.4 $ 42,907 $ 79,756 $ 170 $ 316

MT 1167 12 1.0% 14,472.0 150.4 $ 25,561 $ 47,513 $ 170 $ 316

NC 2240 12 0.5% 138,035.1 743.5 $ 190,325 $ 251,288 $ 256 $ 338

ND 802 7 0.9% 14,049.8 123.7 $ 21,030 $ 39,092 $ 170 $ 316

NE 1325 29 2.2% 3,994.0 89.4 $ 15,193 $ 28,242 $ 170 $ 316

NH 441 89 20.2% 22,214.0 5616.6 $ 954,823 $ 1,774,848 $ 170 $ 316

NJ 252 1 0.4% 0.0 $

‐ $

‐ $ 170 $ 316

NM 635 10 1.6% 12,277.6 196.4 $ 33,395 $ 62,075 $ 170 $ 316

NV 592 72 12.2% 900.0 124.6 $ 21,185 $ 39,378 $ 170 $ 316

NY 3521 125 3.6% 23,163.9 852.6 $ 144,945 $ 269,427 $ 170 $ 316

OH 2363 39 1.7% 90,969.9 1526.6 $ 259,523 $ 482,407 $ 170 $ 316

OK 1482 57 3.8% 19,847.0 793.9 $ 134,960 $ 250,866 $ 170 $ 316

OR 1646 9 0.5% 4,200.2 23.1 $ 3,926 $ 7,297 $ 170 $ 316

PA 6403 114 1.8% 229,011.2 4151.3 $ 705,714 $ 1,311,798 $ 170 $ 316

RI 117 0 0.0% 0.0 $

‐ $

‐ $ 170 $ 316

SC 2097 17 0.8% 6,450.2 52.7 $ 3,954 $ 10,544 $ 75 $ 200

SD 599 11 1.8% 0.0 0.0 $

‐ $

‐ $ 170 $ 316

TN 3606 57 1.6% 54,712.0 878.7 $ 43,936 $ 175,744 $ 50 $ 200

TX 4171 77 1.8% 185,639.3 3491.5 $ 279,320 $ 708,776 $ 80 $ 203

UT 1878 2 0.1% 263,404.8 280.8 $ 47,739 $ 88,738 $ 170 $ 316

VA 4386 98 2.2% 48,455.0 1107.4 $ 332,224 $ 996,672 $ 300 $ 900

VT 425 24 5.6% 0.0 $

‐ $

‐ $ 170 $ 316

WA 1742 6 0.3% 37,774.9 130.6 $ 22,195 $ 41,256 $ 170 $ 316

WI 3029 60 2.0% 0.0 $

‐ $

‐ $ 170 $ 316

WV 2896 165 5.7% 45,665.0 2759.0 $ 1,103,585 $ 2,207,170 $ 400 $ 800

WY 2004 99 4.9% 20.0 1.0 $ 177 $ 328 $ 170 $ 316

95476 1938 2.0% 2,797,196 49,075 $ 8,690,922 $ 17,276,358

# 27 ISO TOT

WET TOT

WET NO

%WET NO



### BASE MIT

WET INC

+0.17 ISO INC

WET COSTS

0.17 ISO COSTS

(1)

(2)

(3) Total number of records in Army Corp JD Database associated with aquatic resoure type "Isolated Waters" (incl u

Total number of records in Army Corp JD Database associated with wetland aquatic resoure types (1)

Number of those total wetland records that have a negative JD associated with them (2)

Percent of isolated water records with negative JD, [ISO NO]/[ISO TOT]

This is the total area of compensatory wetland mitigation (53,000) apportioned by state in proportion to [WET T

Incremental Increase in Number Acres of Non

‐ Isolated Wetlands Mitigated (3) =[WET TOT]/([WET TOT]

‐ [WET NO

Incremental Increase in Number Acres of Isolated Wetlands Mitigated = ([WET TOT]+0.17*[ISO NO])/([WET TOT ]

Annual costs associated with [WET INC]

Annual costs associated with [+0.2 ISO INC]

Includes NRPW associated wetlands, wetlands abutting and adjacent to RPWs, TNW associated wetlands

In theory, wetlands abutting an RPW and TNW

‐ wetlands should all be jurisdictional

Wetlands adjacent to RPWs and associated with NRPW are subject to the significant nexus test

Assumes all negative JDs within [WET TOT] are jurisdictional under revised guidance, including all subject to SN t

# 28 APPENDIX B: Corps Analysis of Sample Ju risdictional Determin ations for “Other

Waters”

To better understand the effect of the proposed guidance on th e outcome of jurisdictional

determination decisions, the Corps of Engineer s evaluated a random sample of project files

previously determined to be non-jurisdictional un der the 2008 guidance. The randomly selected

files were chosen from a comprehensive list of 2,617 “isolated” (other water) project files

previously elevated to headquarters between the period of June 2008 and January 2011. The

Corps evaluated 10% or 262 of these files. The 262 project files contained approximately 1,211

aquatic resources (many files contained multiple types of waters, including streams, wetlands,

and non-wetland other waters (i .e. lakes/ponds and prairie pot holes). The Corps evaluated

whether the jurisdictional status of these wate rs would change based on application of the

proposed guidance. Potential changes to the jurisd ictional status were eval uated in terms of the

following:

1. the water had the capacity to provide commercial waterborne recreation and thus

would be considered a Traditional Naviga ble Water (TNW) (Section 1 of the proposed

guidance);

2. the water was a tributary to a newly id entified TNW (Section 1 and Section 4 of the

proposed guidance;

3. the water would now be considered ad jacent or physically proximate due to the

presence of hydrological or ecological connection a nd when considered in aggregate, may have a

significant nexus (SN) to a TNW (Section 3, 5, 6 of the proposed guidance); or

4. the water was isolated/not physically proximate but when considered individually

may have a SN. (Section 6 of the proposed guidance.)

For those waters that required a significant nexus (SN) evaluation (#3 and #4 listed

above), the Corps presumed adjacent wetlands would have a SN to a TNW and would be

jurisdictional so no SN evaluation was formally conducted. For all proximate non-wetland other

waters, we conducted a SN evaluation in accordan ce with the guidance a nd if an SN was found,

the water was jurisdictional a nd if a SN was not found, the water was determined not -

jurisdictional. For all isolat ed (not adjacent/not physically proximate) wetlands and other nonwetland waters, we presumed that those waters w ould not have a SN to a TNW and would not be

-jurisdictional so we did not conduct a SN evaluation.

Approximately 17% (204) of the 1,211 waters reviewed became jurisdictional under the

proposed guidance while 83% (1007) of the previously determined non-jurisdictional waters

under the 2008 guidance remained non-jurisdic tional. This is broken down as follows:

Jurisdictional: Fourteen (14) out of 1,211 (1.2%) other waters were determined to be TNWs

using the proposed guidance; about 5 out of 1,211 ( 0.4%) would be considered tributaries to the

newly identified TNWs and thus ju risdictional under the proposed guidance; twelve (12) out of

1,211 or (1%) were determined to be “physic ally proximate non-wetland waters” and were

evaluated and determined to have a significant nexus to a TNW when aggregated in the single

point of entry watershed; and 173 out of 1,211(14.3%) were wetlands that were determined to be

adjacent to jurisdictional waters with a hydrolog ic or ecological connection using the proposed

guidance and were presumed to have a significant nexus when aggregated in the single point of

# 29 entry watershed. The review results noted that these adjacent wetland de terminations were due

to a more robust description of the term adjacency, specifically, the potential hydrologic or

ecological connections to existing jurisdicti onal non-wetland waters (84%) or were now

considered adjacent to a newly identified TNW (16%).

Non-Jurisdictional: 717 out of 1,211 (59.2%) of the other waters were wetlands that remained

non-jurisdictional using the proposed guidance becau se they were not adjacent to jurisdictional

waters (i.e. no apparent hydrol ogic or ecological connection) ; 282 out of 1,211 (23.3%) of the

other waters were non-wetland waters that were no t proximate and were presumed not to have a

significant nexus to a TNW; and eight (8) out of 1,211 (0.7%) were determined to be physically

proximate non-wetland waters and were evaluate d and determined to not have a significant

nexus to a TNW when aggregated in th e single point of entry watershed.

# 30 APPENDIX C: Ecosystem Services Associ ated with Small Streams and Wetlands

Applying economic study and concepts to ecos ystem services helps illustrate two major

points: that prosperity depends on maintaining the flow of benef its from ecosystems and that

successful environmental protect ion needs to be grounded in sound economics that includes

recognizing costs and benefits. 24 

# This appendix briefly describes some of the most relevant

ecosystem services provided by small streams and wetlands.

A. Habitat and Biodiversity (genetic resources)

Small streams and wetlands meet a variet y of habitat needs for many plants, fish,

amphibians, birds, mammals, macroinvertebrates, and microorganisms. They provide shelter,

food, spawning sties, and nursery areas. These syst ems also often provide refuge for fish from

predators and downstream disturbances such as fl oods, as well as critical life-stage habitat found

nowhere else in the watershed. Some organisms spend a significant partof their lives in nonisolated aquatic systems, but require geographi cally isolated wetlands to complete their life

cycles.

Because small streams and wetlands typically exhibit variable conditions over time and

space, the type of habitat they provide is much different than what is provided by other water

systems. Small streams and wetlands contribute to maintaining species diversity in a landscape

by providing distinct habitat for native plan ts and animals, providing seasonally important

refuge, serving as stepping stones between a quatic habitats, and holding water to supply

terrestrial and avian species that live in the larg er, and typically drier, ecosystem. These species

collectively store a diversity of genetic material that defines important components of the ecosystem

at large and specific communities within the larger system. On a smaller scale, individual waters

may include populations or sub-populations with unique genetic resources, which ultimately may be

needed for re-colonization. A loss of species or populations ultimately affects the resilience,

adaptability, and sustainability of ecological structure and function by reducing the diversity of

genetic material to draw upon to meet naturally dynamic and/or human altered circumstances.



# B. Recreation and Fish and Game

Small streams and wetlands enhance opportuniti es for outdoor recreation such as fishing,

swimming, hunting, boating, and wildlife viewing. Th ey also protect multi-billion dollar fishing,

shellfishing, and tourism industries. The mone y spent on outdoor water-re lated recreation like

waterfowl hunting, fishing and boating supports major manufacturers, retailers, and small

businesses in communities across the country, as we ll as generating state and local tax revenues.

Provisioning for recreation and fish and game su pplies supports several large revenue streams.

Freshwater anglers spent $26.3 bill ion in 2006 on equipment, travel, licenses, guide fees, bait,

and other fishing-related expenditures. 25 

# More than 2.3 million Americans age 16 or older

24 

## TTEB (2010) The Economics of Ecosystems and Biodiversity: Mainstreaming the Economics of Nature: A

synthesis of the approa ch. conclusions, and recommendations of TEEB.

25 

## 2006 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation

# 31 hunted migratory birds last ye ar, spending about $1.3 billion on their trips and equipment,

supporting many private sector jobs in the process. 26



# Fishing is an American pastime and a bus iness that directly depends on good water

quality. Salmon, for example, are the third larges t commercial catch (by weight) in the U.S., and

they reproduce in small streams, including ma ny that do not flow year-round. Small and

intermittent streams are precisely those whose jurisd ictional status is most likely to be clarified

by this guidance. .The 40 million U.S anglers sp end $45 billion annually to fish all kinds of

waters. The commercial salmon fisher y is valued at $381 million annually.

Expenditures for hunting and fishing have a ripple effect on the economy. For example,

a 2006 estimate of the economic impacts of waterfo wl hunting (ducks and g eese) indicated that

total annual expenditures of $900 million result in a total economic activity of over $2.3

billion. 27 

# This is a result of what economists refer to as the “multiplier effect”. In addition, the

same study estimates that waterfowl hunti ng creates over 27,000 jobs, annual employment

income of over $800 million and annual state and federal tax revenue of almost $250 million.

Over 50 percent of the nation’s ducks are bor n in the prairie potholes region of the

northern Great Plains. However, about two-thirds of the prairie potholes have already been

mined, drained, plowed under, or built on. One study found that, because of these kinds of

impacts, a Midwestern pothole area once s upporting about two million breeding pairs now

supports less than ten percent of that number. While many prai rie potholes are isolated from

navigable waters, and thus not likely to be a ffected by this guidance, some may be deemed

“proximate” and thus jurisdictional if they ha ve a significant nexus to navigable waters.

The values reported above are related to produc ts and services that are affected by water

quality. A specific valuation w ould estimate how changes in wa ter quality that might result

would shift demand curves for these products an d services. Thus, the total figures reported

above are not benefit values direct ly attributable to the proposed gui dance. However, it is likely

that some incremental portion of those amounts would be associated with the expected

incremental increases in waters determined to be jurisdictional as a resu lt of using the proposed

guidance.

C. Water Supply (Drinki ng, Irrigation, Industrial)

Headwater streams and wetlands play a crucia l role in providing a continual flow to

downstream freshwater systems, as well as rechar ge of groundwater systems. Alteration of small

streams and wetlands disrupts the quantity and ava ilability of fresh water. One of the intended

outcomes of the proposed guidance is to help prov ide clean, safe water for public water supply as

well as manufacturing, irrigated agriculture, and othe r business sectors that use water. In the

continental United States, about 117 million people, over one third of the total U.S. population,

get some or all of their drinking water from lakes and rivers that rely at least in part on

intermittent, ephemeral, or headwater streams. 28 

# In the continental U. S., 357,404 total miles of

26 

## 2006 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation

27 

## 2006 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation

28 

## http://water.epa.gov/lawsregs/guidance/we tlands/surface_drinking_water_index.cfm

# 32 streams contribute water to lakes and rivers that supply public drinking water systems. Of that

total, 58% (207,476 miles) are intermittent, ephemeral, or headwater streams. Application of the

guidance and including more wa ters under CWA jurisdiction he lps protect the supply and

prevent contamination of drinking wa ter for these 117 million Americans. Figure 2 shows the

areas of the country where drinking water supply is most dependent on these types of stream

systems.

Figure C-1: Illustration of Contribution of Seasonal and Headwater Streams to Water

Supply



# Areas Dependent on Seasonal or Headwater

Streams for Drinking Water

(darkest orange are counties most dependent)

D. Water Regulation and Purification

Headwater streams, headwater wetlands, and other seemingly isolated wetlands

significantly influence water qual ity of downstream aquatic ecosys tems. As depicted in Figure

3, these small streams and wetlands filter and cl eanse water that pass through them and function

as the site of a large number of physical, chemical , and biological processes and transformations.

One commonly cited feature of wetlands is thei r ability to improve water quality by acting as

# 33 sedim ent sinks. Wetlands are part icularly effective at trapping sediments in slow moving water,

as the wetland vegetation slows wa ter velocity and particles settle out. Processes in headwaters

largely establish the physical and chemical co mposition of natural streams. Among the many

important water-quality related processes in small streams and wetlands are water chemistry

regulation, nutrient cycling, solute retenti on, organic matter (OM) production, OM processing,

and pollutant assimilation. Each of these pr ocesses have an influence on downstream water

quality, organic matter content, nutrient levels, and productivity. The se rvices these processes

provide can reduce the cost of dredging and water treatment, decrease human health risks, and

promote healthy fish and wildlife populations in la kes and rivers. These ar e closely related to the

supporting services related to nut rient cycling/storage and sustai ned productivity of downstream

waters.

Figure C-2: General Hydrology and F unction of a Typical Inland Wetland 29



# A related service provided by wetlands is ca rbon sequestration and its effect on climate

control. There is much ongoing research to inve stigate natural and artifi cial means of removing

carbon from the atmosphere and maintaining it in the land and water. Based on their potential

for primary production to exceed respiration, wetl ands can naturally sequester carbon. The

massive peat bogs in the northern U.S. and Canada are evidence of this service on a significant

scale. Filling, clearing, and dr aining wetlands releases carbon dioxide to the atmosphere.

29 

## Image appears in many locations on the internet (such as http://microbewiki.kenyon.edu/index.php/Wetlands )

without clear attribution of original source.

# 34 E. Floodplain Protection

Small streams and wetlands mitigate the downstream impacts of floods through the

retention of surface water. Wetla nds hold excess runoff after a stor m and then slowly release it

into receiving waters or groundwater. These systems do not prevent all flooding, but they do

lower flood peaks. It is generally the higher floo d peaks that cause the most significant damage.

Flooding damages crops, roads, and property. Sm all streams and adjacent wetlands act as

sponges, soaking up rainfall and snowmelt. They help prevent flooding downstream, especially

after small and medium-sized storms. For exampl e, prairie potholes and other isolated wetlands

hold onto water during and after inte nse rains, so not all of the wa ter ends up in major rivers at

the same time. Flooding very ofte n is an interstate issue. De struction of small streams and

prairie potholes in one state may lead to flooding in another. Floods lead to significant crop and

property damage across the United States each y ear. For example, the great Midwest flood of

1993 (see Figure 4) caused nearly $20 billion of economic damage, damaging or destroying

more than 50,000 homes and leaving at least 38 people dead. 30 

# Some increment of economic

damage such as this may be attributable to loss of small streams and wetlands. While it is

unlikely that floods of this magnitude would be eliminated by greater pr eservation of headwater

streams and wetlands, protecting these kinds of wa ters would help to mitigate such flooding, and

perhaps eliminate smaller floods altogether.

Figure C-3: Image of Midwest Flooding 31



# The importance of floodplain protection magnifi es when considering the likely future

demand for land development. For example, an ex amination of future U.S. housing trends helps

illustrate development pressure and reveals enor mous potential consequences. Projections of

growth in U.S. households from 2000 to 2025, along with allowances for demolition and

conversion, point to new construction needs for almost 60 million housing units (compared to

approximately 45 million built between 1980 and 2005). When considering associated

commercial and industrial facilities , the authors of these studies pr oject that “over half of all

30 

## Fitzpatrick, Tony. “Geologist decries floodplain devel opment: lessons unlearned from 1993 flood”. Washington

University in St Louis Newsroom. April 1, 2008.

31 

## http://water.usgs.gov/nwsum/WSP2425/functions.html

# 35 development on the ground in 2025 will not have existed in 2000”. 32 

# Even with the economic

downturn subsequent to this study, this demand will eventually manifest itself in some manner.

Based on preferences and prices, the authors also re port an expected complete reversal of trends

that had been toward expansion into less dense s uburbs and exurbs rather than urban centers.

This potentially offers an unparalleled opportuni ty for spatial reconfiguration. Clarifying CWA

jurisdiction and thus providing Section 404 protection to small streams and wetlands that may be

candidates for dredge and fill, along with enli ghtened planning of development within the

floodplain itself, will be important to avoid and/or mitigate future losses from flooding. Stronger

protection for small streams and wetlands can help direct growth to locations more beneficial to

society (e.g., away from floodplains, in areas w ith existing infrastructur e). Figure 5 depicts a

variety of ecosystem services protected by mainta ining natural functions within in a floodplain.

Figure C-4: Illustration of Floodplain Protection

F. Shoreline Stabiliza tion and Erosion Regulation

Wetlands at the margins of lakes, rivers, bays, and the ocean protect shorelines and

stream banks against erosion. 33 

# Wetland plants hold the soil in place with their roots, absorb the

energy of waves, and break up the fl ow of stream or river currents. When small streams and

wetlands are lost or altered in wa ys that diminish their retenti on ability, the resulting increased

flows can erode adjacent land and de-stabilize sh orelines. The erosion can send excess sediment

downstream where increased dredging costs and ha bitat loss may result. In addition, property

loss and diminished land value cannot be overlook ed, and represents a la rge potential avoided

cost.

32 

## Reported in Pitkin and Myers (2008). U.S Housing Trends: Generational Changes and the Outlook to 2050.

33 

## Note that the proposed guidance should not affect determinations regarding tidal wetlands, which should already

be considered jurisdictional in the baseline.

# 36 G. Groundwater Recharge/Water Cycling

Aquifers and groundwater are “re-charged” or replenished with water from precipitation

and surface flow that seeps into the ground. We tlands connected to groundwater systems or

aquifers are important areas for groundwater exchange because they provide time for the

infiltration or seepage to occur. Groundwater provides water supply for drinking and irrigation

and helps maintain streamflow a nd lake and reservoir levels.

Waters that appear geographically isolated on the surface may be connected to other

aquatic ecosystems through groundwater flows and intermittently through surface water flow.

Nearly all freshwater surface water features (streams, lakes, and wetlands) interact with

groundwater throughout a watershed – and ev en across surface watershed boundaries.

Groundwater moves underground from areas of rechar ge to areas of discharge, often providing

connections to surface water features. Likewise , surface waters are often integral parts of

groundwater systems, providing important rechar ge, purification, and maintenance of aquifer

depths and levels. The role of wetlands in r echarging groundwater vari es widely, but can be

significant.

H. Sustained Productivity of Downstream Waters

Small streams and wetlands contribute sign ificantly to the productivity of stream

ecosystem food webs by providing energy reso urces (e.g., organic matter) to downstream

ecosystems. In addition, small streams and wetland s provide sediment and large woody debris to

downstream channels during infrequent, but nece ssary high flow events. Under more typical

conditions, these systems trap and retain sedime nt, essentially filtering sediment rather than

flushing it downstream. In a similar manner, these systems will filter pollutants, such as heavy

metals and organic compounds, and prevent excess nitrogen and phosphorus from being

delivered downstream on a regular basis. Th e timing and amount of delivery of sediment and

nutrients to downstream waters is crucial to their well being. Either too much or too little at the

wrong time is a problem. Too little and downstrea m waters cannot sustain productivity because

of lack of provisions from upstream sources. To o much and habitat gets smothered, waters get

choked, and algal boom and bust cycles deplete disso lved oxygen levels in water and disrupt the

balance of natural flora and fauna. These probl ems may arise when connectivity between small

streams and wetlands and other waters goes unrecogni zed and is lost, or when modifications of

the landscape alters peak velo city and overall flow levels.

# 37 APPENDIX D: Literature Review of Benefits Quantification

EPA’s Guidelines for Preparing Economic Analyses (2011) suggest adopting an effectby-effect approach to benefit estimation, identifying the specific effects of policy options and

evaluating each in turn. 34 

# The first step to implement this approach for the proposed guidance is

to identify the most significant categories of e ffects. Waters affected by the proposed guidance

may confer a number of benef its to society, among them:

• Recharging groundwater

• Purifying water by trapping and neutralizing pollutants (including excessive nutrients)

• Enhancing the propagation of species that ma y be important in recreation and assuring

the survival of species whose continued existe nce may be valued for ethical or aesthetic

reasons

• Mitigating impacts of storms and flooding

The benefits provided by juri sdictional waters depend crucia lly on the context in which

they are placed. This is a restatement of the principle that economic va lue depends on relatively

scarcity. Things that are avai lable in abundance relative to the demand for them are cheap.

Things that are rare relative to the demand for them are expe nsive. Plentiful wetlands may

provide little value if no nearby population benefits from their services. 35 

# Conversely, a wetland

near a major city might provide a number of valuable functions in pr oviding water purification,

storm and flood protection, and recreational amenities.

The goal of the proposed guidance is to pres erve water resources and their associated

ecological assets in perpetuity. The benefits fr om doing so will, then, also accrue in perpetuity,

and must be discounted. The Guidelines also offer guidance for discounting.

Benefits might be affected by stochastic fact ors over time and protection of jurisdictional

waters might also afford insurance against adverse random events. These are important

considerations in inferri ng some types of benefits.

Groundwater recharge

Wetlands slow the transmission of surface wate r. Because water is retained in the

landscape for longer periods, more infiltrates and enters groundwater reservoirs. This

34 

## The Guidelines also note that in some instances a more overarching or top-down approach to benefit estimation

might be adopted, as might occur with the application of stated preference methods, where it is often impossible to

distinguish between the various values survey respondents might be considering in forming their answers.

35 

## A conspicuous exception to this observation might appear to be found in the case of an isolated wetland that

shelters endangered species. This is actually the exception that proves the ru le, however: endangered species are,

by definition scarce. Moreover, the existence value assigned to such species is really the canonical public good:

something that might be enjoyed by people all over the world.

# 38 groundwater may be a valuable resource, both because it is retained in or near areas that can use

the water and because it may be left underground until such as time as it is required for use.

Moreover, the higher is the volume of groundwater retained in an a quifer, the lower are typically

the costs of extracting it.

These values have been studies in a deve loping country by Acharya (2000), and Acharya

and Barbier (2000, 2002), who re late agricultural production to water availability and

groundwater availability to we tland preservation, findi ng that wetlands cont ribute significant

value to agriculture. Similar results might arise from comparable studies in the United States.

As always, values are dependent on context. If water is abunda nt, the service of groundwater

recharge would not be very valuable. Conversel y, in areas in which water is chronically or

seasonally scarce, groundwater recharge could be considerably more valuable. Groundwater

could be important as a type of “insurance polic y” against a lack of precipitation and surface

water.

Water purification

Natural wetlands can purify water by holding it until pollutants settle out, are taken up in

the growth of vegetation, or biochemically de grade into less damaging forms. A number of

biological studies have documented the ability of wetlands to perform this service (see, e. g., the

surveys in Mayer, et al . 2007; Rupprecht, et al . 2009). Economists have at tempted to value such

services. Breaux, Farber, and Day (1995) find that we tlands can be more valuable if preserved to

remove pollutants than if converted to other us es. In a widely cited study in France PerrotMaître (2006) reported that th e Vittel bottled water company f ound it profitable to compensate

local farmers for preserving the landscape around its wells.

In a recent study of wetlands al ong the lower Mississippi Jenkins, et al . (2010) estimated

that the nitrogen retention servic e provided by wetlands near the rive r could be valued at as much

as $500 per acre per year. While some of the areas considered in the Jenkins, et al ., study might

be comparable to areas that could become juri sdictional under the propose d guidance, the results

of the study should be interpreted with some caution for two reasons. First, the values derived in

the study are based on prices th at would obtain under pollution control markets that do not

presently exist. Jenkins, et al . extrapolate from an earlier study by Ribaudo, Heimlich, and

Peters (2005) that simulated pr ices in a hypothetical permit market for nitrogen loading in the

Gulf of Mexico. Such prices would only arise if the market were, in fact, created. Second, as is

often the case with a number of the services ge nerated be wetlands, different areas – in some

instances, even relative nearby areas – may gene rated radically different values depending on

land use, topography, etc. Estimates of denitrif ication rates differ by thre e orders of magnitude

(a factor of 1,000) between areas.

A closely related literature considers the use of retained natural areas in cost-effective

pollution control programs. A celeb rated case is found in New York City’s efforts to assure the

retention of drinking water qual ity in its Catskills watershed reservoir by enacting land use

restrictions (Chichilnisky and Heal 1998). Ribaudo, et al . (2001) use a large simulation model of

Midwestern agriculture and land use to show that retain ing natural wetlands may be less

# expensive than reducing the use of inputs in controlling the delivery of the nutrients to the “dead

zone” at the mouth of the Missi ssippi River. Mitsch and Gosse link (2001) report a number of

studies that find that the optimal area of wetlands to preserve in various nations of the world

would be something between current areas and the hi storic extent of wetla nds in the area.

Similarly, comparisons of alternative measur es for nutrient loading reductions to the

Chesapeake Bay suggest that recently announced TM DL targets might be most cost-effectively

met by preserving wetlands in combin ation with other measures (Jones, et al . 2010; Simpson in

press). The studies cited in this paragraph fall somewhat short of full valuation exercises in that

they document the ability of preserved natural sy stems to meet regulatory requirements at lower

costs than alternatives. Howeve r, one may reasonable surmise either that such regulatory

requirements are set so as to achieve benefits th at justify the costs of their imposition, or that,

however they are set, they must be met and hen ce that the opportunity co st savings of not having

to implement more costly measures represents an incremental social benefit.

Of course, the benefits of water purification arise only when 1) there are pollutants that

must be removed from the water; and 2) such pollutants would impose costs on society if they

are not removed. Such circumstances do not necessa rily obtain for all waters and all locations

(Sagoff 2002; Plummer 2009; Simp son 2010). It would, then, be improper to extrapolate water

purification values universally. By the same token, however, there are certainly instances in

which such services could be extremely valuable.

Wildlife habitat

Natural wetlands, small streams, and isolat ed water bodies are very important in the

reproduction and life cycles of many organisms. These plants and animals may be economically

valuable for several reasons. First, some, such as the various species of Pacific Salmon, are

caught and sold commercially. Second, others are important in recreation, either for

consumption in hunting and fishing, or for noncons umptive enjoyment, as in birdwatching or

tourism. Finally, many people attach a nonuse, or existence value to specie s on the basis of their

perceived ethical obligation to preserve other species.

An extensive literature in economics has attempted to estimate the value of natural

habitat in the provision of commer cially or recreationally important species. In some instances

reported values are relatively modest. In an early study Lynne, Conr oy, and Prochaska (1981)

found that coastal marshes on the Gulf Coast of Florida only contributed about $ 0.30 per acre in

terms of the value of enhanced blue crab pr oduction. Even adjusting for the considerable

inflation of the last 30 years, this would not be a large number. Similarly, while Jenkins et al

. (2010) found relatively high values for the nutrien t reduction services of wetlands near the

Mississippi, the estimated the value of increased waterfowl hunting was c onsiderably lower, at

about $6.50 per acre per year. An exception to these somewhat low estimates is found in Bell

(1997), who estimates values of approximately $6500 per acre for coastal wetlands supporting

recreational fisheries (coastal we tlands should not be affected by the proposed guidance as they

should be jurisdictional unde r the current guidance).

39

# 40 In each of these studies the researchers appl y a similar method for estimating the value of

environmental improvement to fisheries or other wildlife-based commercial activities. 36 

# A

schematic overview of that procedure is as foll ows. Fish and other living resources have a

natural reproductive process. Economically opt imal management of the population involves a

tradeoff between catching more fish now and le aving enough fish as to assure a thriving

population later (see, e. g., Clark 1990). The rate at which popul ation grows typically depends

on the size of the population, a species-specific biological paramete r that measures the inherent

fecundity of the animal, and th e carrying capacity of the envir onment – a biophysical limit on the

population that can be sustained. Environmental c onditions affect carrying cap acity. In this case

the extent of jurisdictional waters will determine the populations of fish, waterfowl, and other

organisms that can be sustained, and the harvests th at will then be allowed. As in all exercises in

economic valuation, context is crucial. When habitat, and, by extension, target species

populations are abundant relative to the dema nd for them, values will not be greater.

Conversely, as land and animals get scarce, their values increase.

Factors other than just the bi ological parameters can affe ct the estimation of wildlife

harvesting benefits. One is the institutional cont ext. When wildlife are subject to open access

competition between would-be harvesters may dissipa te any benefits regardless of environmental

circumstances (Freeman 1991). However, fisher ies are increasingly coming under more rational

management (Costello 2008). Over and above the benefits with respect to the maintenance of

the target species and the long-term satisfaction of cons umer preferences, such improved

management may also mean that preserving natural habitats may be more valuable.

Another consideration is that much of the ha rvesting of natural resources occurs outside

of the formal market economy. Recreational or subsistence hunting a nd fishing may also be

important activities. Benefit estimates analogous to those for commercial harvesting may also be

derived by substituting nonmarket valuation estimat es of willingness to pay to hunt and fish for

market prices. For example, Massey, New bold, and Gentner 2008 estimate the relationship

between water quality, fish population, and angler trip demand and show that anglers have a

positive willingness to pay for improvements in water quality. This result is common in the

literature. Other examples are provided in the literature reviews and meta-analysis conducted by

Van Houtven, Powers, and Pattanayak 2007 and Freeman (1995).

Existence and bequest values, which are often grouped toge ther as non-use values, may

also arise when natural wetlands, small streams, and isolated water bodies are either rare or

unique in their own right or if they provide habitat and shelter to rare and endangered species. In

this situation, existence values are the amount an individual would be willing to pay to ensure

that a native species exists in it s native habitat. Bequest value is the amount an individual would

be willing to pay to preserve a species or its habi tat for future generations. As stated earlier the

magnitude of existence or bequest values is closel y tied to the scarcity of the resources. Because

estimation requires using stated preference met hods, non-use values are generally more difficult

and uncertain to estimate than use values. Th is difficulty and uncertainty has not prevented

multiple studies from appearing in the lite rature. A number of wetland use and non-use

valuation studes are reviewed a nd included in a meta-analysis by Brouwer et al. (1999). They

36 

## There are also other studies in which less conceptually defensible approaches are taken. See, e. g., Lynne,

Conroy, and Prochaska (1981).

# estimate that non-use values are roughly half th e magnitude of use values. Loomis and White

(1996) conduct a similar review of the literature and meta-analysis on the economic benefits of

rare and endangered species. They find si gnificant WTP values across species, and not

surprisingly, over half of the variation in those estimates can be explained by the species

population levels.

Mitigation and Prevention of Flooding

Another service provided by natural wetlands is the mitigation and prevention of floods.

Resultant downstream damages can be extrem e. The Midwest floodi ng of 1993 caused nearly

$20 billion of economic damage, damaged or destr oyed more than 50,000 homes and left at least

38 people dead (Fitzpatrick 2008).

Again, however, the economically relevant concern is not the total damages from

flooding, but rather the incremental damages that could be avoided by preserving more waters.

Consideration of extreme cases underscores the point of incremen tal analysis. If weather is

favorable and precipitation is moderate th ere would be no flooding, and hence no flood

protection service. Conversely, if weather is so extreme that precipitation woul d overwhelm all

natural or man-made flood-control measures anyway, preserving wetlands for flood control

might make little difference to the extent of damages.

It can be helpful to think of the flood contro l services of natural we tlands as a form of

insurance policy. As such, their va lue is determined by the interaction of three factors: the level

of damages that would occur without the wetlands in place; the probability that such damage will

occur without the wetlands in place; and the incr emental effect of the wetlands in reducing that

probability. Wetlands will be most valuable for th e flood protection services they provide if they

significantly reduce the likelihood that flood waters would otherw ise reach levels at which

damages are greatest. For example, Hey and Phili ppi (1995) estimate that if wetland acres in the

Mississippi Basin had been roughl y doubled, to about seven percen t of the total land area, the

floods of 1993 would have been avoided. Even if increased to this level, the area in wetlands

would still represent only about 70% of their extent before Eu ropean settlement

41

# 42 Citations:

Acharya G.

ecosystems. 2000. Approaches to v

Acharya, Gayatri, and E Ecological Economics 35. 63‐74 aluing the hidden hydrological services of wetland

agricultural

Agricultural production in the H

Economics dward Barb

adejia‐Nguru wetlands ier.  2000.  Valuing groundwat er recharge through

22 (3).  247 – 259. in northe rn Nigeria.

Acharya, G. and E.B. Barbier. 20

American groundwater recharge in the Had

Journal of Agricultural 02. Using dom

Economics

1997. The econom e jia‐Jama'are floodplain in Nort estic water analys is to value

Bell, Frederick W. ic valu 84(2). 415‐426

ation of saltwater marsh supporting m hern Nigeria.

arine

recreational fishing in the s outheastern United States. Ecological Economics 21 (3). 243 – 254.

Brouwer, R., I.H. Langford, I.J. Bateman, and R. K. Turner, (1999). “A meta-analysis of wetland

valuation studies.” Regional Environmental Change (1): 47-57.

Chichilnisky, G., and G. Heal. 1998. Ec onomic returns from the biosphere. Nature 391. 629 –

630.

Clark, C. 1990. Mathematical bioeconomics )2 nd 

# edition). New York: Wiley.

Costanza, R., O. Perez-Maqueo, M. L. Martinez, P. Sutton, S. J. Anderson and K. Mulder. 2008.

The Value of Coastal Wetlands for Hurricane Protection. Ambio 37 (4). 241 – 248.

Ellis, Gregory, and Anthony Fisher. 1987. Valuing the environment as input. Journal of

Environmental Management

.

Freeman, A.M., (1995). “The benefi ts of water quality improvements for marine recreation: a

review of the empirical evidence.” Marine Resour ce Economics (10):385-406.

Hey, D.L., and N. S. Philippi. 1995. Flood reduc tion through wetland rest oration: the Upper

Mississippi River Basi n as a case history. Restoration Ecology . 3, 4–17

Jones, Cy, Evan Branosky, Mindy Selman, and Michelle Perez (2010) How nutrient trading

could help restore the Chesapeake Bay. Work ing Paper. Washington: World Resources

Institute

Massey, D. M., S. C. Newbold, and B. Gentner. (2006). "Valuing water quality changes using a

bioeconomic model of a coastal recreational fish ery." Journal of Environmental Economics and

Management 52(1): 482-500.

# Mayer, P. M., S. K. Reynolds, Jr., M. D. McCu tcheon and T. J. Canfield. 2007. Meta-analysis of

nitrogen removal in riparian buffers. Journal of Environmental Quality 36 (July – August):

1172–1180.

Mitsch, W. J. and J. G. Gosselink. 2000. Th e value of wetlands: importance of scale and

landscape setting. Ecological Economics 35 (2). 25 – 33.

Perrot-Maître, Danielle. 2006. The Vittel paymen ts for ecosystem services: A "perfect" PES

case? London: International Institu te for Environment and Development.

Plummer, M. L. 2009. Assessing benefit transfer for the valuation of ecosystem services.

Frontiers in Ecology 7 (1): 38–45.

Ribaudo, M., R. Heimlich, R. Claassenand M. Pete rs. 2001. Least-cost Management of Nonpoint

Source Pollution: Source Reducti on vs. Interception Strategies fo r Controlling Nitrogen Loss in

the Mississippi Basin. Ecological Economics 37: 183–197.

Ribaudo, M.O., Heimlich, R., Peters, M., 2005. Nitrog en sources and Gulf hypoxia: potential for

environmental credit trading. Ec ological Economics 52 (2), 159–168.

Rupprecht, R., C. Kilgore and R. Gunther. 2009. Riparian and Wetla nd Buffers for Water

Quality Protection. A Review of Current Literature. Stormwater: The Journal for Surface Water

Quality Professionals 10 (November – December): 8.

Sagoff, Mark. 2002. On the value of natu ral ecosystems: The Catskills parable . Politics and

the Life Sciences 21 (1). 19 – 25.

Simpson, R. D. 2010. The “ecosystem services fram ework”: a critical assessment. In Pushpam

Kumar and Michael D. Wood, editors. Valuatio n of Regulating Services of Ecosystems:

Methdology and Applications. London: Routledge.

Simonit, S., Perrings, C., Sustaina bility and the value of the ‘regulating’ services: Wetlands and

water quality in Lake Victoria, Ec

Simpson, R. D. ol. Econ. (2011), doi:10.1016/j.ecolecon.2011.01.017]

In press

Canadian

Journal nutrient r

of et

Ag

ent

ricu ion with an applicat

ltural Economics. .  Allocating

ion to the land for an ecosyst em service: A simple model of

Van Houtven, G., J. Powers, and S.K. Pattana yak. (2007). “Valuing wate Chesapeake Bay Waters

r quality improvem hed.

ents

in the Unites States using meta-analysis: Is the glass half-full or half-empty for national policy

analysis?” Resource and Energy Economics (29): 206-228.

43

# 44 Other Material:

Brander, L.M., Florax, R., Vermaat, J.E., 2006. The empirics of wetland valuation: a

comprehensive summary and a meta-analysis of the literature. Environmental &

Resource Economics 33 (2), 223–250.

Jenkins, et al

., EcolEcon 69 (5) Valuing ecosystem services from wetlands restoration in the

Mississippi Alluvial Valley

Mitsch, W.J., Gosselink, J.G., 2000. The valu e of wetlands: importance of scale and

landscape setting. Ecological Economics 35 (200), 25–33.

Morris, J., 1992. Agricultural land dr ainage, land use change and economic

performance; experience in the UK. Land Use Policy 185–198 (July).

Randall, A., 2007. A consistent valuation and pricing framework for non-commodity

outputs: progress and prospects. Agricu lture, Ecosystems, and Environment 120,

21–30.

Swinton, S.M., Lupi, F., Robertson, G.P., Ha milton, S.K., 2007. Ecosystem services and

agriculture: cultivating agricultural ecos ystems for diverse benefits. Ecological

Economics 64 (2), 245–252.

Woodward, R.T., Wui, Y.-S., 2001. The economic value of wetland services: a metaanalysis.

Ecological Economics 37 (2), 257–270.