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The Costs and Benefits of Nutrient Reduction Programs

Chuan Tang (chuan@iastate.edu), Yau-Huo Shr (yhshr@iastate.edu), Gabriel E. Lade (gelade@iastate.edu), David Keiser (dkeiser@iastate.edu), and Catherine Kling (ckling@cornell.edu)

In the fall of 1997, the Mississippi River/Gulf of Mexico Watershed Nutrient Task Force was established to better understand and address hypoxia concerns in the Gulf of Mexico. The task force includes representatives from numerous state and federal agencies including the US Army Corps of Engineers, USDA, the US Department of Commerce, US Department of Interior, US Fish and Wildlife Service, EPA, and the National Tribal Water Council. In 2008, the Task Force released an action plan outlining a national strategy to tackle recurrent hypoxic conditions in the Northern Gulf of Mexico and improve water quality in the Mississippi River Basin (Gulf Hypoxia Action Plan 2008). The report suggests that at least a 45 percent reduction in riverine total nitrogen and phosphorus is needed in order to control the size of the hypoxic zone in the Gulf of Mexico. Complementary efforts by EPA have encouraged individual states to establish frameworks to reduce nutrient pollution in their states (US EPA 2011; 2016). The EPA underscores that nitrogen and phosphorus pollution could become “one of the costliest and the most challenging environmental problems [in the United States].”

In response to the 2008 action plan and EPA’s calls, Iowa developed the Iowa Nutrient Reduction Strategy (INRS) in 2013. The INRS provides a scientific assessment of the effectiveness of a range of conservation practices and estimates the costs of the suite of practices that could achieve the state’s water quality goals. The state has already invested substantial resources in implementing the INRS. The estimated financial costs of INRS-related efforts—including education and outreach, research, practice implementation, and water monitoring—for 2016 and 2017 were $388 million and $420 million, respectively (Iowa State University 2017). In January 2018, the Iowa Legislature passed a $282 million water quality bill to further mitigate the level of nitrogen and phosphorus in the state’s waterways, mostly by providing financial support for farmers to implement land conservation practices.

Key questions remain around these water quality programs in the state. For example, are the current suite of water quality programs worth the cost to taxpayers? Should we be spending more or less on these programs? Economists and policymakers have answered these sorts of questions for decades using cost-benefit analyses (CBAs). The idea behind CBAs for policy evaluation is simple but powerful: a key metric of whether a policy is worthwhile is whether benefits accrued to all citizens outweigh the costs.

The key to successfully performing a CBA is to quantify all costs and benefits associated with the policy accurately. This is a tall order, especially for environmental policies, since a substantial part of benefits may not be obvious or are difficult to quantify (Keiser, Kling, and Shapiro 2018). Reducing nutrients in Iowa’s waterways could have many benefits for residents both in the state and in downstream areas. While the costs are relatively well-known, much less is known about the economic value of many of the benefits from implementing the strategy.

Earlier this year, we released a report summarizing the current state of knowledge on the benefits of reducing nutrient pollution to the citizens of Iowa. Unlike previous studies that focus on benefits from decreasing the Gulf of Mexico hypoxic zone, our report focuses on in-state benefits from the INRS.1 We highlight three broad benefits to Iowa citizens of meeting the INRS targets: reduced drinking water treatment costs, improved recreational benefits for all Iowans, and decreased exposure to nitrates in drinking water and associated human health impacts.

Nitrates end up in Iowa waterways from a variety of sources including point sources (e.g., wastewater treatment plants) and non-point sources (e.g., runoff from agricultural or urban areas). Nitrate levels in Iowa’s waters in a given year depends on many factors, including the condition of the farm economy, weather, geology of the land, and land use. While levels fluctuate, average nitrate levels in many rivers, streams, and groundwater sources in the state are elevated.

The cost of treating drinking water with elevated nitrate levels is high. Many public water supply systems in the state must either invest in treatment technologies that remove nitrates from their water sources or blend water from multiple sources to ensure nitrate concentrations in their drinking water are below acceptable levels. Since 2000, five public water supply systems in Iowa have invested at least $1.8 million (2015 dollars) in nitrate-removal equipment. Small public water supply systems, those serving less than 500 people, in areas with high nitrates face difficult choices. Nitrate reduction equipment in those communities is typically too costly to justify, and smaller communities often do not have multiple water sources for blending.

In addition to public water suppliers, private well owners would also benefit from reduced nitrate pollution. As few as 7 percent and as many as 25 percent of private wells in Iowa may contain unhealthy nitrate levels.2 While many state programs are available to help public water supply systems and homeowners manage nitrates in their drinking water, a key benefit of the INRS is reduced expenditures for cleaning up our drinking water.

Recreational users are another important benefactor of meeting INRS targets, as Iowa’s lakes provide tremendous recreational opportunities. However, nutrient pollution is a well-established contributor to poor water quality, including harmful algal blooms and beach closures. Nutrient pollution not only leads to visibly poorer water quality, but there is strong evidence that people change their behavior in response to poor water quality. Using data from the CARD Iowa Lakes Survey,3 we estimate the annual value for recreational users of meeting INRS water quality goals at $30 million dollars. These recreational benefits would be even greater if we included benefits from improved water quality in rivers and streams.

A final, but uncertain, benefit of meeting the INRS is human health. Researchers have known since the 1940s that extremely high nitrate levels in drinking water can cause blue baby syndrome, a potentially fatal disease. Thanks to advanced treatment technologies and water quality regulations, blue baby syndrome is largely non-existent in the United States. However, much less is known about the impacts of long-run exposure to drinking water that contains lower, but still elevated nitrate levels. Several studies have documented associations between long-term exposure to nitrates and chronic conditions like colorectal cancer, thyroid disease, and neural tube defects (Ward et al. 2018). However, more data and research are needed to explore these issues for decision-makers and policy analysts to identify health benefits of the INRS.

Both here and in our report, we highlight key benefits of meeting the INRS, but much more work remains. In addition to these three areas, there are likely even more categories, including broad, difficult-to-measure benefits of improvements to ecosystems. To be useful, we must quantify all of these benefits and compare their magnitudes to the program’s costs. The estimated recreation benefits alone suggest that the benefits of significant reductions in nutrient pollution in the state are high, but more research is needed to conduct a comprehensive analysis. Thus, while this pilot study is certainly not a full CBA, it serves as an informative building block for further research. Formal and comprehensive CBAs have played an important role in decision making at the federal level since the Reagan administration. Similar analyses on INRS could help Iowans better understand the fuller picture of this policy and mobilize stakeholders and local government to achieve proposed goals.

References

Gulf Hypoxia Action Plan. 2008. “For Reducing, Mitigating, and Controlling Hypoxia in the Northern Gulf of Mexico and Improving Water Quality in the Mississippi River Basin.” Washington, DC: Mississippi River/Gulf of Mexico Watershed Nutrient Task Force.

Iowa State University. 2017. “Iowa Nutrient Reduction Strategy Annual Progress Report 2016-2017.” INRC 0015.

Keiser, David A., Catherine L. Kling, and Joseph S. Shapiro. 2018. “The Low but Uncertain Measured Benefits of US Water Quality Policy.” Proceedings of the National Academy of Sciences.

Nutrient Innovations Task Group. 2009. “An Urgent Call to Action — Report of the State-EPA Nutrient Innovations Task Group.” Washington, D.C.: State-EPA Nutrient Innovations Task Group.

United States Environmental Protection Agency (US EPA). 2011. “Working in Partnership with States to Address Phosphorus and Nitrogen Pollution through Use of a Framework for State Nutrient Reductions.” Memo, US EPA.

United States Environmental Protection Agency (US EPA). 2016. “Renewed Call to Action to Reduce Nutrient Pollution and Support for Incremental Actions to Protect Water Quality and Public Health.” Memo, US EPA.

Ward, Mary, R. Jones, J. Brender, T. de Kok, P. Weyer, B. Nolan, C. Villanueva, et al. 2018. “Drinking Water Nitrate and Human Health: An Updated Review.” International Journal of Environmental Research and Public Health 15 (7): 1557.

Footnotes

1. Download the full report.
2. Data are summarized based on data from Iowa Drinking Water Treatment Inventory and Iowa Private Well Tracking System, both provided by the Iowa Department of Natural Resources.
3. See more information about the Survey at the Iowa Lakes Valuation Project website.