Concentrated Animal Feeding Operations (CAFO):

1
Concentrated Animal Feeding Operations (CAFO)

• Example of Benefits Analysis in Support of EPA
  Regulations

2
CAFO Background

• Proposed Rule (Dec. 2000) to replace 25-year old
  technology requirements and permit regulations
• Final Rule (Dec. 2002)
• Reduces manure and wastewater pollutants from
  feedlots and land application of manure,
• Removes exemptions for stormwater-only
  discharges,
• Covers 15,500 large operations (originally
  4,500) (beef, poultry, swine, and dairy).

3
Model CAFO Facility
Volatilization
Manure Application
Feedlot/Waste Lagoon
Groundwater
4
Pollutants
Nitrogen runoff, leaching, air deposition
Phosphorus Runoff
Salts/potassium Runoff, leaching
Organic comp/BOD Runoff
Solids Runoff, air deposition
Pathogens Runoff, leaching
Trace elements Runoff
Pesticides/antibiotics Runoff
Volatile Compounds NH3,methane,CO2
5
Model facility pollutant loading estimates
Define model facilities from 76 representative
farms
Benefits modeling flow diagram
Calculate feedlot area runoff
Calculate seepage And leaching
Develop Non-water quality inputs
Calculate edge-of-field loading
Nitrogen (N), phosphorus (P), sediments (SED),
fecal coliform (FC), fecal streptococcus (FS),
and metals loads are estimated.
Estimate county- Level counts
Groundwater Quality and benefits
Surface water Modeling NWPCAM
Non-water Quality (air And energy) Analysis
Surface water Recreation Benefits
Air benefits modeling
Reduced shell- Fish bed closures
Reduced Fish Kills
Other benefit endpoints
Internal deliberative draft - do not cite, quote,
or distribute
6
Potential Use Benefits
In-stream Commercial fisheries, navigation Recreation (fishing,boating,swim,etc) Subsistence Fishing Human health risk
Near stream Non-contact recreation (camping) Nonconsumptive (wildlife viewing)
Option value Future supply/demand for services
Water Diversion Industrial/commercial water use Agriculture/irrigation Drinking water (treatment)
Aesthetic Residing/working/traveling near water
7
Potential Non-Use Benefits
Ecological (aquatic and other species) Reduced mortality/morbidity Improved reproductive success Increased diversity Improved habitat/sustainability
Bequest Intergenerational equity/insurances
Existence Stewardship/preservation Vicarious consumption
8
Benefits ( million/yr, 2001)
Recreational use and non-use 170 - 300
Drinking water wells (Ben. Transf. WTP) 31 - 46
Animal water supply (Averted/Repl. Cst) 5
Public water treatment (Averted Cst) 1 - 2
Improved shellfish harvest (Market value) 0.3 - 3
Estuary Rec. fishing (Case study only) 0.2
Reduced fish kills (Replacement Cst) 0.1
TOTAL (benefits that can be monetized) 200 - 360
Note Total Annual Pre-tax Costs 290 million
9
Overview of Recreational and Nonuse Method
Land Use data for Nonpoint loads, Point sources
NWPCAM
Model CAFO Loads
Assign loads to Agriculture Cells
Route loads to stream reaches
Predict concentrations
?Water Quality Index
?Water Quality Ladder
Apply WTP/Index unit
Apply WTP/Use
10
Benefit Valuation Methods (cont)

• Surface Water Recreation (N,P,BOD,Fec,TSS,DO)
• Estimate Aggregate WQ index by stream reach
• Apply WTP values (Carson and Mitchell, 1993) to
  WQ index change
• Drinking Water wells (N)
• Derive well NO3 conc. f(nitrate load, )
• Predict change in number of wells exceeding
  nitrate criterion
• Apply WTP values (Poe and Bishop, 1991)
  Crutchfield (1994) for wells lt nitrate criteria

11
Benefit Valuation Methods (cont)

• Animal GW Water Supply (N, pathogens)
• Obtain baseline animals using GW and mortality
  due to N and pathogens
• Model change in subsurface loads (GLEAMS)
• Assume mortality changeload change
• Replacement price per animal value animal saved

12
Benefit Valuation Methods (cont)

• Public Water Treatment (TSS)
• Estimate change in influent TSS
• Estimate engineering cost savings from TSS
  change
• Improved shellfish harvest (pathogens)
• Estimate harvest/acre and acres closed due to
  CAFOs
• Estimate fecal coliform load changes (NWCAM)
• Assume change acres closed load change
• Estimate change in consumer surplus using prices,
  harvests and elasticities

13
Benefit Valuation Methods (cont)

• Reduced Fish Kills (N, P)
• reduction N and P loads fish kills/yr ?fish
• /fish ?fish, where /fish based on
• (1) WTP from recreation value database
• (2) replacement cost (AmFishSoc data)
• Estuarine Recreational Fishing (N, P)
• Catch f(nutrient loads)
• WTP f(catch) from travel cost/Random utility
  models
• Smith and Palmquist (1988) (trip demand)
• Kaoru (1995) (RUM site choice)

14
Information/Modeling Gaps

• ? ecological endpoints f(water quality)??
• Fish kills, fish catch f(N or P loads)?
• Stream diversity f(pollutant loads/conc)?
• Are other habitat factors or pollutants are
  affecting ecological health?
• Baseline resource and WQ conditions?
• Current fish/shellfish status
• Current diversity/forage fish status
• Other pollutants (toxics) may constrain uses
• Absence of monitoring data (surface and
  groundwater) Are models and benefits accurate?

15
Information/Modeling Gaps (cont)

• Nonuse values for changes in surface water
  quality and ecological health are not monetized
  or highly uncertain
• Carson and Mitchell values dont capture all
  nonuse (survey focus is recreation)
• Basis for measuring nonuse values?
• Value f(?WQ parameters),
• Value f(?WQ aggregate index)
• Value f(? ecological endpoints or health index)
• Value f(? services derived from ecol endpoints)

16
General Questions

• Values for small marginal changes?
• Few or no studies available (e.g., Carson and
  Mitchell provides WTP for national change)
• Marginal values f(baseline quality/condition)
• What is fair/equitable baseline?
• Do Case studies or National-level analysis?
• When to bite the bullet and do primary study?
• Standard methods for presenting uncertainty?
• Use Standard errors from studies?
• Should disbenefits be presented as part of a
  range?

17
Applications of Benefits Results

• Support Rule development (e.g., EO 12866)
• Primary Target Audience (to satisfy rule
  development process)
• Other EPA offices (OPEI, Regional)
• Other Agencies (USDA)
• OMB
• Public (Public comment period after proposal)

18
Other Applications

• Reports to Congress/retrospective studies
• Thompson Report (annual summary of costs and
  benefits of new rules)
• Communication - Press releases/Fact Sheets
• Future Rule makings (e.g., Meats rule)
• Apply same (approved) methods for baseline
  consistency across rules
• Improve upon prior benefits groundwork

19
Appendix A

• First CAFO presentation to SAB
• April, 2004

20
Concentrated Animal Feeding Operations (CAFO)

• Benefits Analysis for Effluent Guidelines and
  NPDES Regulations

21
CAFO Background

• Industry consolidation in large livestock
  operations
• Final Rule (Dec. 2002) replaces 25-year old
  technology requirements and permit regulations
• Reduces pollutants from feedlots and land
  application,
• Removes exemptions for stormwater-only
  discharges,
• Coverage expands to include additional poultry,
  immature swine, and immature dairy facilties,
• Covers 15,500 large operations (originally
  4,500)

22
Benefits ( million/yr, 2001)
Recreational use and non-use 170 - 300
Drinking water wells (Ben. Transf. WTP) 31 - 46
Animal water supply (Averted/Repl. Cst) 5
Public water treatment (Averted Cst) 1 - 2
Improved shellfish harvest (Market value) 0.3 - 3
Estuary Rec. fishing (Case study only) 0.2
Reduced fish kills (Replacement Cst) 0.1
TOTAL (benefits that can be monetized) 200 - 360
Note Total Annual Pre-tax Costs 290 million
23
Methodology Decisions

• METHOD for Recreational Use and Nonuse
• National Water Pollution Control Assessment Model
• Water quality indices, and
• Benefit transfer
• Efficient approach for
• Estimating national-level benefits (use nonuse)
• Addressing variety of conditions across nation,
• Filling in data gaps (e.g., baseline
  concentrations)
• Relatively cost-effective versus primary
  valuation study (Lack of options?)

24
Overview of Recreational and Nonuse Methods
Land Use data for Nonpoint loads, Point sources
NWPCAM
Model CAFO Loads
Assign loads to Agriculture Cells
Route loads to stream reaches
Predict concentrations
?Water Quality Index
?Water Quality Ladder
Apply WTP/Index unit
Apply WTP/Use
25
Water Quality Characterization
WQ Index
WQ Ladder
100
90
80
70
?SWIMMABLE SAFE FOR SWIMMING
60
?FISHABLE GAME FISH CAN LIVE IN IT
50
40
30
?BOATABLE OK FOR BOATING
20
10
0
26
Definitions of WQ

• BOD, Fecal coliform, NO3, PO4, TSS for 830,000
  reach miles. For each reach

Index Approach

• Ladder Approach
• Compare concentrations to criteria
• All criteria must be satisfied for Use
  designation
• - Determine if recreational
• use improvement occurs

100
Index WQIi
0
Concentrationi
WQIagg ? (WQIi)?i
27
Water Quality Valuation

• Benefit Transfer Carson and Mitchell 1984
  (survey), 1993 (publication)
• National Contingent Valuation Survey (564
  respondent observations)
• Incorporates the WQ Ladder
• FormatWhat are you WTP to raise the minimum
  level (of WQ) to where 99 or more of freshwater
  bodies would be swimmable (or boatable, or
  fishable)?

28
Water Quality Valuation (cont)

• Transfer Household Willingness to Pay (WTP)
• Index Approach WTP f(WQI values, income)
• Ladder Approach WTP for Use attainment
• Apply Fraction of WTP based on fraction of stream
  miles affected.
• Allocate 2/3 of WTP to in-state improvements and
  1/3 of WTP to out-of-State improvements.

29
Water Quality Valuation (cont.)
EXAMPLE Benefits for State j B(instate, j)
B(out-of-state, j) WQ change X Boatable to
fishable, WTP(x) WTP(fishable)
WTP(boatable) B(in,j) Miles(x,j)/Miles(j)
H(j) 2/3WTP(x) B(out,j) Miles(x,n)/Miles(n)
H(j) 1/3WTP(x)
B(xf(ladder)) 170 million/yr B(xf(index))
300 million/yr
30
Other Applications of Method

• Retrospective Benefits Assessment of Water
  Pollution Control Programs since 1972 (1999)
• Stormwater Phase II Final Rule
• Meats and Poultry Products Effluent Limitations
  Guideline (2004)
• Construction and Development ELG (2004)

31
Uncertainty/Sensitivity Analysis

• Water Quality Modeling
• No statistical analysis for CAFO
• Conducted Monte Carlo analysis for NWPCAM
  concentration predictions for Meats and Poultry
  Products Final Rule
• Valuation
• Two approaches for valuing changes in water
  quality (WQI function and discrete uses)
  generates range of benefits

32
Strengths of Analysis

• Direct estimation of Benefits (no extrapolation)
• Aggregates multiple water quality parameters of
  concern for CAFO
• Accounts for use and some nonuse values
• Addresses marginal changes in WQ
• Integration of national databases
• Links environmental output and valuation data

33
Shortcomings

• WQ modeling
• Excludes Great Lakes, estuaries, and smaller
  streams
• Limited calibration of concentration estimates
  (at the time)
• Steady state stream flow assumed (e.g., no storm
  events)
• Index and Use Attainment
• Other pollutants (toxics) not acknowledged
• Use criteria and WQI curves may be dated
• Valuation
• CV survey may not capture all nonuse value
• Original WTP values based on national change
• One-dimensional index consistent with Use
  classifications?

34
Future Options Water Quality Modeling

• Considerations
• Integration with other models or modeling systems
  (other agencies)?
• Case-studies with extrapolation vs National
  model?
• Develop estuarine and Great Lakes modeling
  capacity within National model?
• More calibration (partially addressed)

35
Future Options Valuation

• Considerations
• Multi-dimensional measures of water quality
• Service classification (e.g., fishing)
• Quality classification (e.g., high/low,
  sport/nonsport)
• Scale of valuation (national vs regional vs
  local)
• Example WTP for Safe Swimming in X of water
  bodies within 100 mile radius. (Harvard/Duke
  study)
• Conduct rule-specific primary valuation surveys
• Refine benefit transfer methods (e.g., meta
  analysis)

36
Appendix B

• Additional Draft Conceptual Model Diagrams for
  CAFO

37
Conceptual model 3 Lakes, estuaries, large streams
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
38
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.A
5
1
2
4
3
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
39
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.B
9
3
4
1
2
7
5
6
8
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
40
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.C
1
4
3
2
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
41
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.D
3
9
10
11
12
13
6
2
4
8
5
7
1
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
42
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.E
6
2
5
1
4
7
8
11
9
10
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
43
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.F
8
9
3
4
10
Waterfowl population/community characteristics
7
2
6
1
5
11
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints
44
Conceptual model 3 Lakes, estuaries, large
streams Diagram 3.G
3
2
4
1
Waterfowl population/community characteristics
Tidal area/riparian zone ecology, biogeochemistry
Estuary- based terrestrial ecosystem endpoints