Accelerating Action, Luncheon Keynote by Jerry Kauffman, University of Delaware

Gerald KauffmanUniversity of Delaware

Delaware River Redux

Oct 29, 2013

Water

Wooter

PolicyHistoryScienceEconomics

Federalist model of shared power in water management

1961 DRBC Compact manages “without regard to political boundaries.”

Global model of efficient watershed governance.

4 states, 24 counties, and 838 municipalities

8 Senators, 25 Members of HR19 federal, 43 state, 14

interstate agencies Use charges on water

allocations ($0.08/1000 gal.).

United StatesPresident

Barack Obama

New YorkGovernor

Andrew Cuomo

PennsylvaniaGovernor

Corbett

New JerseyGovernor

Chris Christie

DelawareGovernor

Jack Markell

Delaware RiverBasin Commission

USDANRCSUSFS

Congress

25Congressmen

8SenatorsHomeland

SecurityFEMA

Coast Guard

InteriorNPS

USFWSUSGS

EPA

DefenseUSACOE

CommerceNOAANWS

6 Countiies

New York City35 Towns

17 Counties

PhiladelphiaAllentown125 Towns

CamdenTrenton

330 Towns

11 Counties

Wilmington37 Towns

3 Counties

Del. RiverkeeperNatural Lands Trust

Del. Estuary ProgramNature Conservancy

Sierra ClubWRADRB

13,000 sq mi8.2 million people11th most populous stateDrinking water: 5% of

U.S.1st, 7th largest metro.

economiesDel. (74% of pop.)NJ (35% of pop.)NY (55% of pop.)Pa. (43% of pop.)

The Delaware River Basin

PopulationDelaware River Basin

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Population ChangeDelaware Basin, 2000-2010

80,155843

94,752

3,708

313,485

492,942

0

100,000

200,000

300,000

400,000

500,000

600,000

Population Change by CountyDelaware Basin, 2000-2010

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

1609

1682

1682

1739

1800s

1885

1945

HMS Nelson

1945

1961

DO in the Delaware River (Sharp 2010)

1961: JFK signs DRBC Compact.1972: Congress authorizes Clean Water Act1996: Congress adds Del. Estuary to National Estuary Program.2013: Delaware River revival is underway.

Bald Eagle Nesting Pairsin the Delaware River Basin

0

10

20

30

40

50

NestingPairs

Delaware New Jersey New York Pennsylvania

Bald Eagles

American shad

Wastewater treatment 90% BOD removal: $95 M/year

Natural recycling capacity of wetlands reduces 3.5 lb/acre/day of BOD per day to treat remaining 10%.

463,000 acres of wetlands in Del. Estuary watershed

Can treat 590 million lb of waste/yearWetlands removal costs: $2.00/lb BOD/yearWetlands replacement value: $1.18 billion/year

123,000 jobs$4.3 billion wages$24 billion sales$25 million sport fishing non-market value$1 million in commercial fish landingsWetlands replacement value $638 million.

The Delaware River Basin in Del., NJ, NY, and Pa. contributes:

1. $25 billion in annual economic value from recreation, water quality, water supply, ecotourism, forest, agriculture, open space, and port benefits.

2. Ecosystem goods and services worth $21 billion per year, net present value (NPV) = $683 billion.

3. Over 600,000 jobs with $10 billion in wages.

Fish Landings

$34 million$0.60/lb58 million lbsource: NMFS

Skiing

$325 million1,753 jobs9 ski areas1,005 acres1 mgd1.9 million ski visits

source: PSAA 2010

Paddling

$362 million4,226 jobsGear: $66 milTrips: $296 mil620,860 paddlers

source: Outdoor Industry Assoc. 2006

Upper Del. & Del. Water Gap NRA

$41.2 million448 jobs367,000 visitors113 miles Natl.

Wild & Scenic River

Over 70,000 acres

source: Cordet et al. USNPS, USFS 1990

USFWS (Carver and Caudill 2007)16,000 acres4th most visited refuge271,000 recreational visits (2006)80% visitors from other states6th most valuable refuge$20.2 million to economy, food, lodging, equip.,

travel$13.4 million from bird watching alone198 jobs with $5.5 million incomeFY06 annual budget $804,000, benefits $20.2

millionBenefit-cost ratio of 23:1.

Canoe/Kayak/Rafting

$9 million225 jobs37 liveries225,000 visits

source: Canoe Liveries in Del., NJ, NY, Pa.

Powerboating$395 million232,000 registrationsNY, Del., Pa., NJ

ranked 3rd, 7th, 17th, and 23rd in sales

source: National Marine Manufacturers Assoc. 2010

Fishing, Hunting, Bird Watching

Fishing $576 million(18 trips/angler, $53/trip)

• Hunting $340 million(16 trips/hunter, $50/trip)

• Bird Watching $561 million(13/trips/yr, $27 trip)

Source: USFWS 2006

America’s Founding Fish

Shad Fishing

$6.5 million63,000 trips$102/trip

Pa. Fish & Boat Commission, 2011

Wild Trout Fishing

$29 million350 jobs

(Maharaj, McGurrin, and Carpenter, 1998)

Delaware Water Gap Natl. Rec. Area

$100 million 7,600 jobs 4,900,000 visits490,000 local trips3,600,000 non-local trips490,000 motel visits240,000 camp overnights

Stynes and Sun (2002)

Public Water SupplyState Supply (mgd) Value ($4.78/1000

gal)Del. 40 $70NJ 284 $495NY 800 $1,396Pa. 679 $1,185

1,803 mgd $3,146 million

Public Water Supply WithdrawalsDelaware River Basin

PA, 679 mgd

NY, 800 mgd

NJ, 284 mgd

DE, 40 mgd

Wetlands - $6.8 billionFarms - $4.8 billionForests – $8.6 billion

Ecosystem Goods and Services

Ecosystem Services ValueDelaware River Basin

0

2

4

6

8

10

Del. NY NJ Pa.

$ b

illio

n/y

r

Natural Capital Value of Ecosystems in the Delaware River Basin

$44 M $166 M $180 M $412 M$1,055 M

$4,823 M

$5,759 M

$8,591 M

0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

$/yr

Marine & Water-related Construction

Fishing & AquacultureShip/Boat BuildingTourism/RecreationMarine Transportation Hunting/Fishing/

Wildlife Recreation-related

FarmingWater/Wastewater

UtilityPortsWatershed

Protection/Management

>600,000 jobs ($10 billion in wages)

0

100

200

300

400

500

600

0 1 2 3 4 5

Ca

pit

al a

nd

O&

M C

os

ts($

mil

lion

)

Summer Average DO (mg/l)

Costs to Achieve DO Objectives (1975-1980)Delaware Estuary near Philadelphia

Max Cost Min Cost

Recreational benefits of improved water quality in the Delaware Estuary (FWPCA 1966)

Objective DO

Summer (mg/l)

BOD/COD Residual (lb/day)

% Pollution Removal

Total Benefits ($1964)

($ million)

Marginal Benefits ($1964)

($ million)

I 4.5 100,000 92%-98%

160-350

II 4.0 200,000 90% 140-320 20-30

III 3.0 500,000 75% 130-310 10-10

IV 2.5 500,000 50% 120-280 10-30

V 0.5 status quo 0 0

River basin firm internalizes the externalities

Effluent charges should be considered as a method for attaining water quality improvement.

At an effluent charge of 10 cents per pound of BOD, the agency would collect $7 million per year (rent on the assimilative capacity of the stream).

A charge of 8 to 10 cents per pound of oxygen-demanding material discharged produces relatively large increases in critical dissolved oxygen levels;

Consumer surplus is the difference between the amountthat consumers actually pay and the amount that they would have been willing to pay.

Price ($/1000 gal)

Quantity (gal)

Demand

SupplyConsumer Surplus

$

D.O. (mg/l)

Marginal Benefits (MB)

Marginal Costs (MC)

qp

StateUrban(%)

Ag(%)

Forest(%)

NY 2% 11% 87%

PA 23% 20% 57%

NJ 17% 29% 54%

DE 25% 28% 46%

DRB 17% 20% 62%

River Basin Drainage

Area (mi2)

Nitrogen Load

(ton/yr)

Unit N Load

(ton/mi2/yr) Susquehanna 27,490 73,040 2.7 Delaware 11,819 50,525 4.3 Potomac 14,658 44,707 3.0 Hudson 13,363 28,711 2.1 James 10,339 17,482 1.7 Connecticut 11,261 17,236 1.5

Nitrogen LoadsDelaware River Basin

Agriculture14,625 tons/yr

29%

Suburban/Urban

7,073 tons/yr14%

Atmospheric Deposition

6,063 tons/yr12%

Wastewater23,241 tons/yr

45%

3%

8%7%

28%

16%

9%

29%

Per-Pound Costs of Reducing Nitrogen Pollutionin the Chesapeake Bay Region

$75.00

$27.65$21.90

$7.00 $4.70 $3.30 $3.20 $3.20 $3.10 $1.50 $1.20

$92.40

0

20

40

60

80

100

($/lb

N)

$45M

$130M $132M$141M

$448M

0

100

200

300

400

500

Co

st (

$/yr

) Mill

ion

s

Cost by Source for Median 32% Nitrogen ReductionDelaware Basin

0

100

200

300

400

500

Cost

s ($/

yr)

Mill

ions

Cost by State for Median 32% Nitrogen ReductionDelaware Basin

Agriculture

Urban/Suburban

Wastewater

Atmospheric NOX

0

50

100

150

200

Co

sts

($/y

r) Mill

ions

Cost by Watershed for 32% Nitrogen ReductionDelaware Basin

Agriculture

Urban/Suburban

Wastewater

Atmospheric NOX

$132M

$13M$32M$37M

$124M$104M

AgricultureConservation

0

10

20

30

40

50

0 100 200 300 400 500 600 700 800 900

N L

oad

Red

uct

ion

(mil

lio

n lb

/yr)

Cost to Reduce N Loads ($ million/yr)

Nitrogen Marginal Abatement Cost (MAC)Delaware Basin

Reduce N by 20% (25thPercentile)

Reduce N by 32% (Median)

Reduce N by 48% (75thPercentile)

WastewaterTreatment

AtmosphericDeposition

Urban/Suburban Stormwater

Nitrogen Marginal Abatement Cost CurveDelaware Basin

AgriculturalConservation

0

10

20

30

40

50

0 100 200 300 400 500Costs to Reduce N Loads by 32% ($ million)

N L

oad

Red

uct

ion

(mill

ion

lb/y

r)

WastewaterTreatment

AtmosphericDeposition

Urban/Suburban Stormwater BMPs

0 0$6M $6M

$23M $26M$19M

$68M

0

20,000,000

40,000,000

60,000,000

80,000,000

An

nu

al B

enef

its

($)

Benefits of Improved Water QualityDelaware Basin ($2010)

Medium WQ High WQ

0 0 0 1 $4M $6M0 $1M

$5M

$16M

$46M

$68M

0

10

20

30

40

50

60

70

80

An

nu

al B

enef

its

($)

Mill

ions

Benefits of Improved Water QualityDelaware Basin ($2010)

Medium WQ High WQ

0

10

20

30

40

50

1980 1985 1990 1995DO

(m

g/l

x 1

0)

an

d C

atc

h p

er

Ha

ul

Catch per Haul vs. Dissolved OxygenDelaware River at Ben Branklin Bridge

Ben Franklin Br DO American Shad White Perch Striped Bass

American ShadCPH = 0.47(DO) - 3.27R2 = 0.66

White PerchCPH = 0.68(DO) - 2.29R2 = 0.46

Striped BassCPH = 0.13(DO) - 0.40R2 = 0.53

Increased Property ValueDue to Improved Water Quality (EPA 1973)

0%

5%

10%

15%

20%

0 1000 2000 3000 4000 5000

Distance from Water (ft)

Inc

rea

se

d V

alu

e (

%)

Resources for the Future water quality ladder (Carson and Mitchell 1993)

$102M$76M

$178M$151M

$115M

$266M

0

50

100

150

200

250

300

Boatable Fishable Total WQ

An

nu

al W

TP

($) M

illio

ns

Water Quality Use Support

Willingness to Pay for Improved Water Quality Delaware Basin ($2010)

Low Bound High Bound

Benefits of improved water quality in the Delaware River in $2010

Category Activity Existing Value (DO 3.5 mg/l) ($ million/yr)

Benefits (DO 5 mg/l) ($ million/yr)

Low High Low High Use Recreation Viewing, Boating, Fishing 4.5 5.6 55 68 Boating 159 350 46 334 Fishing 216 337 129 202 Shad fishing 0 6.5 0 3.9 Bird/Wildlife Watching 307 325 15 33 Waterfowl Hunting 1.4 16 0.1 1.6 Swimming 0 0 0 0 Beach Going 6 50 2 16 Commercial Fishing 34 34 0 17 Agriculture 0 0 8 188 Navigation 81 81 7 16 Indirect Use Property Value 333 333 13 27 Water Supply Municipal Water Supply 196 196 12 24 Industrial Water Supply 140 140 8 17 Nonuse Existence/Bequest WTP Boatable to Fishable WQ 102 151 76 115 Total 1,580 2,025 371 1,063

0 0 7 2 8 0 12 13

56

15

76

8

130

46

0 2 4 16 16 17 17 24 27

68 74

115

188203

334

050

100150200250300350400

($ m

illio

n/yr

)

Annual Benefits of Improved Water Qualityin the Delaware River

Lower BoundUpper Bound

Viewing, Boating, Fishing, $68M, 6%

Boating, $334M, 30%

Recreational Fishing, $202M,

18%

Shad fishing,

$3.9M, 0%

Bird/Wildlife Watching, $33M, 3%

Waterfowl Hunting,

$1.6M, 0%

Swimming, 0, 0%Beach Going, $16M,

2%

Commercial Fishing, $17M, 2%

Agriculture, $188M, 17%

Navigation, $16M, 2%

Property Value, $27M, 2%

Municipal Water Supply, $24M, 2%

Industrial Water Supply, $17M, 2%

Nonuse Benefits,

$115M, 10%

Annual Benefits of Improved Water Qualityin the Delaware River

0

200

400

600

800

1,000

1,200

3.0 3.5 4.0 4.5 5.0 5.5

Mar

gina

l Ben

efits

($ m

illio

n)

DO (mg/l)

Marginal Benefits of Improved Water Qualityin the Delaware River

Recreation (high) Commercial Fishing (high) Agriculture (high) Navigation (high)Property Value (high) Water Supply (high) Nonuse (high)

0

200

400

600

800

1,000

1,200

3.0 3.5 4.0 4.5 5.0 5.5 6.0

$ m

illio

n/y

r

DO (mg/l)

Optimal Water Qualityin the Delaware River

Marginal Cost (Low) Median 32% N Reduction Marginal Cost (High) 75th Percentile

Marginal Benefits (Low) Marginal Benefits (High)

MB (High)

MB (Low)

MC (High)

MC (Low)

DRBC, $6PDE, $2 USDA NRCS, $33

USDA FSA, $2U.S. Forest Service, $6

NOAA, $51 Corps of Engineers, $22

FERC, $28

EPA, $97

Coast Guard, $1

FEMA, $9

USGS, $6USFWS, $21

National Park Service, $10DNREC, $63

NJDEP, $152

NYSDEC, $9

PADEP, $20

PADCNR, $11PFBC, $8

Phila. Water Dept., $81

New York City DEP, $102

Funding ($ million) in the Delaware Basin (FY12) DRBC

PDE

USDA NRCS

USDA FSA

U.S. Forest Service

NOAA

Corps of Engineers

FERC

EPA

Coast Guard

FEMA

USGS

USFWS

National Park Service

DNREC

NJDEP

NYSDEC

PADEP

PADCNR

PFBC

Phila. Water Dept.

New York City DEP

0

50

100

150

200

250

1985 1990 1995 2000 2005 2010 2015

$ m

illio

n

EPA Section 319 Clean Water ActFederal Appropriations

0.74

10 10

50 50

0

10

20

30

40

50

60

Delaware Estuary Lake Champlain Long Island Sound San Francisco Bay Chesapeake Bay Puget Sound

Appr

opria

tion

($ m

illio

n)

Congressional Interstate Basin Appropriations (FY 2011)

France: Agencies de L’eau collect user charges (redevance) from dischargers. Water parliaments advise on water use fees.

Germany: Ruhr Water Associations

(Genossenschaften) financed by user charges.

Mexico: National Water Commission oversees 25 river basin councils and 6 basin commissions funded by user fees.

Portugal: 15 river basin authorities funded by user

(withdrawal) and polluter (discharger) pays principles.

Australia: In 1985, Murray Darling Basin Ministerial Council organized. Funded by user/discharge fees and water trade market.

Beneficiary Pays Approach

WatershedConservation

$1.5 B

Forest Buffers$3.10/lb N

Wetlands$0.47/1000 gal

Water Filtration Plant$10 B Wastewater

Treatment$8.56/lb N

Conventional WWTP$3.24/1000 gal

0

2

4

6

8

10

12

New York City Chesapeake Bay N Reduction Wastewater Treatment

Savings from Payment for Environmental Services

1,660

291416

905

47

449

45130 141 132

0

500

1,000

1,500

2,000

Del. Basin Atmospheric Wastewater Urban/Suburban Agriculture

Cost

($

mill

ion/

yr)

Costs to Reduce N Loads by 32%Delaware Basin

W/O WQ Trading With WQ Trading

0

25

50

75

100

125

$ m

illio

n/yr

Funding Options to Improve Water Qualityin the Delaware Basin

AtmosphericDeposition

WastewaterTreatment

AgriculturalConservation

Urban-Suburban

$2.8B

$4.8B

$403M

$917M

Annual Economic ValueDelaware River Basin

$4.2 billion

$2.8 billion

$0.9 billion

$0.4 billion

0

1

2

3

4

5

Marcellus ShaleGas

Recreation/WaterQuality

Drinking WaterSupply

Forests

$ b

illi

on

/yea

r

Questions?