Panel weighs water's economic impact as EPA girds for political combat

As congressional Republicans and industry advocates assailed U.S. EPA for a suite of new air regulations last year, the Obama administration responded with peer-reviewed studies and statistics showing that protecting air quality provides an economic boost by improving public health and protecting natural resources.

But in the fight over water regulations, EPA and its allies find themselves lacking ammunition.

"There's nothing comparable in the water sector," said Steve Polasky, a professor of ecological-environmental economics at the University of Minnesota.

EPA has moved to fix that, assembling a panel last November of 19 economists, engineers and scientists to figure out how to put a price on clean water in the U.S. economy. The panel, which Polasky chairs, is expected to produce a final report by the end of this year.

The study, EPA says, will focus on the value of clean water to various economic sectors -- tourism, farming, fishing, manufacturing, housing and energy. Such information, the agency says in a Nov. 14 Federal Register notice, "is critical to support decision-making."


"This study is intended to help people make better public and private decisions related to managing the nation's waters, and to identify gaps where further research would be helpful," EPA spokeswoman Enesta Jones said in an email.

Industry groups and Capitol Hill Republicans are suspicious. They say the panel will try to justify regulations that would force businesses and cities to build expensive new treatment systems for stormwater, sewage and other liquid wastes.

"It'll overestimate the value, be looked at in a vacuum and be really very useless -- except in a very specific, regulatory context," said Deidre Duncan, an attorney for the Waters Advocacy Coalition, an alliance of farming, mining, homebuilding and other industries.

Glynn Rountree, environmental policy analyst for the National Association of Homebuilders, which is suing to block EPA from tightening pollution rules across the six-state Chesapeake Bay watershed, is also expressing skepticism.

"EPA, with the backing of the environmental community, is certainly going to push for every benefit they can think of," Rountree said.

There is a precedent for the current EPA study: the Clinton EPA's "Liquid Assets 2000: America's Water Resources at a Turning Point."

Timed to precede the rollout of new pollution standards, the 20-page report includes data and illustrations showing the dependence of various industries on clean water and describing pollution threats. Every year, it said, Americans spend $44 billion on visits to beaches and coastlines; farmers use water to produce $197 billion worth of food; manufacturers consume 9 trillion gallons of fresh water; and the Great Lakes, Gulf of Mexico and coastal areas produce 10 billion pounds of fish and shellfish.

The report noted that nearly 300,000 miles of rivers and streams and more than 5 million acres of lakes fail to meet state water quality goals. And in l998, about a third of 1,062 beaches on which EPA collects data had at least one health advisory or closing and states issued more than 2,500 fish consumption advisories or bans.

More policy statement than scientific study, "Liquid Assets" was seen as contributing to the Clinton administration regulatory push, said Ben Grumbles, EPA water chief under George W. Bush and now head of the nonprofit, nonpartisan Clean Water America Alliance.

Grumbles said the timing of the new study was sure to draw criticism for being politically motivated. But he said such a study was needed.

"The timing is one aspect of it that makes critics of EPA leery of where they're going on this," Grumbles said. "I understand why they feel this is just going to be done to justify some regulatory program. But I think it can have a much broader and nobler purpose, because there isn't enough scientific literature or policy awareness of the value of water."

'Very hard'

Little about the current study's focus or structure appears to be decided, Polasky and others said. The scientific advisory panel will soon issue nonbinding recommendations on how to proceed to EPA's Office of Water, which is leading the study.

"They're free to take or ignore," Polasky said.

Among objections of the Waters Advocacy Coalition is that its members were blindsided by EPA announcing the study and the formation of the panel on Nov. 14. There was also notice then of a Dec. 5 conference call on the study.

Duncan said she was the only person to speak during the public-comments segment of the conference call. The low participation, she said, was a result of EPA's "not really publicizing what they were doing."

"This is going to be under the radar of the vast majority of the public, but it's going to have huge impacts on the public," she said.

Duncan also said the EPA-selected advisory panel does not have enough economists and that there are no experts in the fields of the affected industries.

While Polasky disagrees with the industry group about the economists -- 13 of the panel's 19 members are economists -- he said the concern about industry experts is valid.

"If you're looking at the mining industry and how the mining industry uses water and what the costs are, you should be talking to the mining industry about the report on mining," Dunan said. "Same with agriculture, manufacturing, energy, etc. But the process doesn't seem to be set up in such a way that those industry groups will have any input or feedback in that process."

The coalition also questioned whether the study should break down the value of water by region rather than by industry. For example, water is far less valuable to a farm on the edge of Lake Michigan than to one in the parched Southwest.

"Issues of scarcity of water are going to be very important in the West and less important in areas that have water," Polasky said.

Assessing the health and economic value of water is also inherently more complex than assessing the value of air.

People are not in constant contact with water, and pollution is not so easily dissipated. For example, a contaminated beach may hurt an economy relying on tourism but not necessarily have adverse health effects if people don't go into the water. Likewise, health problems associated with some water contaminants, such as improperly disposed prescription drugs that can disrupt the human hormone system, are poorly understood.

These complications explain the relative dearth of research into water's overall value.

"It's easy to calculate the cost of producing another gallon of water by building infrastructure," said Peter Gleick, the president of the Pacific Institute and a water expert. "It's easy to calculate the agricultural production that might be lost during a drought -- not easy, but it's do-able. But it's very hard to truly value all the services that water provides us. Which is part of the reason why no one's done it."

Gleick listed several vexing questions. How do you draw the boundaries of such a study? How do you account for the fact that if we lose access to clean water, we lose everything?

"Think about irrigated agriculture," Gleick said. "What's it worth to irrigated agriculture? Well, it's priceless. It's like the American Express commercial. We know the value of goods and services, but the value of the water itself is priceless."

He added, "I'm now all of sudden glad I'm not on this committee."

Click here to see the committee roster.

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