The Evolution of Water Resource Planning and Decision Making

The Evolution of Water Resource Planning and Decision Making

The Evolution of Water Resource Planning and Decision Making Edited by

Clifford S. Russell Vanderbilt University, USA, AKF, Institute of Local Government Studies, Denmark and Bowdoin College, USA and

Duane D. Baumann Southern Illinois University, USA

In Association with the Institute for Water Resources

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Clifford S. Russell and Duane D. Baumann 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton, Massachusetts 01060 USA

A catalog record for this book is available from the British Library Library of Congress Control Number: 2009903384

ISBN 978 1 84844 047 0 (cased) Printed and bound by MPG Books Group, UK

Contents List of figures List of tables Contributors Abbreviations Foreword by Robert A. Pietrowsky Preface Acknowledgments 1. 2.

3. 4.

5. 6.

7.

vi vii viii x xiv xvii xx

Water resources planning: past, present and future John J. Boland and Duane Baumann A history of the United States water resources planning and development Warren Viessman, Jr Appendix 2.1 Evolution of public involvement in water planning Jerome Delli Priscoli Appendix 2.2 Nebraska Natural Resource Districts The theory and practice of benefit-cost analysis John J. Boland, Nicholas Flores and Charles W. Howe Environmental issues and options in water resources planning and decision making David H. Moreau and Daniel P. Loucks On the collaboration of ecologists and economists Clifford S. Russell and Mark Sagoff Political decision making: real decisions in real political contexts Peter Rogers, Lawrence MacDonnell and Peter Lydon Appendix 6.1 Overview of American law for allocation of water Making the transition: moving water resources planning and management into the twenty-first century Gerald E. Galloway

Index

1

14

62 80 82

136 188

220

253 259

285

v

Figures 2.1 A2.1 A2.2 A2.3 3.1 3.2 3.3 3.4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11

Trends in the evolution of the US Army Corps of Engineers responsibilities and approaches Matching level of influence expected and participation tools Continuum of dispute/conflict management tools Shared vision planning: integrating interactive modeling and participation Compensating variation estimate for a price increase Estimated demand curve for Idaho potatoes Recreation demand and travel cost (a) Recreation demand and travel cost (b) Number of urban places in the USA with population over 50 000 Urban population of the USA Urban population served by sewers and sewage treatment 1910 to 1938 Growth in membership of Sierra Club 1908 to 1980 Distribution of threatened and endangered species by states Progress toward secondary treatment Local government expenditures for sewage services Violations of maximum contaminant levels in national drinking water standards Outbreaks of waterborne disease in the USA Local government expenditures for water supply EPA’s AQUATOX model for freshwater ecosystems

vi

47 73 73 74 98 101 103 105 141 142 143 147 149 153 155 157 157 158 177

Tables 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3.1

1800 to 1900: emergence of water resources planning 1900 to 1933: multiple-purpose projects 1933 to 1943: economic efficiency 1943 to 1969: multiple-objective analysis 1969 to 1980: environmental era 1980 to present: devolution and environmental restoration Project cost-sharing for different purposes Historical contributions to the economic analysis of water resources 4.1 Number of endangered and threatened species in the USA listed pursuant to the Endangered Species Act as of February 2007 4.2 Classes of environmental effects in Principles and Standards (P&S) 6.1 Comparison of Rational Model with Polis Model 6.2 Major interest groups in Colorado River governance 6.3 Comparison of the Rational and Polis Models

vii

17 20 23 24 32 39 40 94

149 162 229 242 243

Contributors Baumann, Duane, Professor Emeritus in the Department of Geography, Southern Illinois University, Carbondale. Boland, John J., Professor Emeritus in the Department of Geography and Environmental Engineering, Johns Hopkins University, Baltimore, MD. Delli Priscoli, Jerome, Institute for Water Resources, US Army Corps of Engineers. Flores, Nicholas, Associate Professor of Economics and Research Associate in the Institute of Behavioral Science, University of Colorado, Boulder. Galloway, Gerald E., Glen L. Martin Institute Professor of Engineering, University of Maryland College Park, former Secretary of the US Section, International Joint Commission; Brigadier General, US Army, retired. Howe, Charles W., Professor of Economics Emeritus and Research Fellow in the Institute of Behavioral Science, University of Colorado, Boulder. Loucks, Daniel P., Professor in the School of Civil and Environmental Engineering, Cornell University, Ithaca, NY. Lydon, Peter, US State Department Officer, retired. MacDonnell, Lawrence, Counsel, Potzak, Browning and Bushong; former Director of Natural Resources Law Center, University of Colorado School of Law, Boulder. Moreau, David H., Professor in the Department of City and Regional Planning, University of North Carolina, Chapel Hill. Rogers, Peter, Professor of Environmental Engineering and City and Regional Planning, Harvard University, Cambridge, MA. Russell, Clifford S., Professor of Economics Emeritus, Vanderbilt University, Nashville, TN; Visiting Professor, Institute of Local Government, Copenhagen, Denmark; Research Associate, Bowdoin College, Brunswick, ME. viii

Contributors

ix

Sagoff, Mark, Senior Research Scholar at the Institute for Philosophy and Public Policy, School of Public Policy, University of Maryland, College Park. Viessman, Jr, Warren, Professor of Environmental Engineering Sciences Emeritus, College of Engineering, University of Florida, Gainesville.

Abbreviations ACF ACT ADR ASCE ASFPM ATLSS AWRA BCA BOB C&O Canal C&SF CAA CAP CEQ CERCLA

CERP COLA CPI CPI-U CPI-W CV CWA CWAP DENR DO DRBC DSS ECR EMAP ENPC EOP EPA EQ

Apalachicola, Chattahoochee and Flint Rivers Alabama, Coosa and Tallapoosa Rivers Alternative dispute resolution American Society of Civil Engineers Association of State Floodplain Managers Across Trophic Level System Simulation American Water Resources Association benefit-cost analysis US Bureau of the Budget Chesapeake and Ohio Canal Central and Southern Florida Clean Air Act Central Arizona Project Council on Environmental Quality Comprehensive Environmental Response, Compensation and Liability Act (also known as Superfund) Comprehensive Everglades Restoration Plan Cost of Living Adjustment Consumer Price Index CPI for all urban consumers CPI for urban wage earners and clerical workers Contingent valuation Clean Water Act Clean Water Action Plan Department of Environment and Natural Resources Dissolved oxygen Delaware River Basin Commission Decision support systems Environmental conflict resolution Environmental Monitoring and Assessment Program Ecole National de Ponts et Chaussees US Executive Office of the President US Environmental Protection Agency Environmental quality x

Abbreviations

ESA ETP FEMA FERC FIARBC FPC FWPCA FWPCA GAO GIS GPRA HEC HEES HEP HES HQW HSI HSPF HUD IBI ICCP IID IJC INGO IPCC IPET IUCN IWC IWR IWRM MCL MCLG MS4s MWD MWTP NAPA NAR NAST NCC NDWS NED

Endangered Species Act Economic theory of politics Federal Emergency Management Agency Federal Energy Regulatory Commission Federal Interagency River Basin Committee Federal Power Commission Federal Water Pollution Control Act Federal Water Pollution Control Administration US Government Accountability Office Geospatial Information Systems Government Performance and Results Act of 1993 Hydrologic Engineering Center Health and Ecological Effects Subcommittee Habitat evaluation procedure Habitat evaluation system High quality waters Habitat Suitability Index Hydrological Simulation Program FORTRAN Department of Housing and Urban Development Index of Biological Integrity Interagency Council on Public Participation Imperial Irrigation District International Joint Commission International non-governmental organization Intergovernmental Panel on Climate Change Interagency Performance Evaluation Task Force International Union for Conservation and Natural Resources Inland Waterways Commission Institute for Water Resources Integrated Water Resources Management Maximum Containment Level Maximum Containment Level Goals Municipal separate storm sewer systems Metropolitan Water District Marginal willingness-to-pay National Academy of Public Administration North Atlantic Regional Study National Assessment Synthesis Team National Conservation Commission National Drinking Water Standards National Economic Development

xi

xii

The evolution of water resource planning and decision making

NEPA NEWS NFIP NGO NOAA NPB NPDES NPL NPS NRB NRC NRCS NRD NRI NRPB NWC NWWC OMB ORSANCO OSE P&G

P&S PCSD PFI POTW PPI PVID QUAL2E RBC RCRA RED REE RFF ROGEM SAB SCS SDWA SFWMD SMS

National Environmental Policy Act Northeast Water Supply Study National Flood Insurance Program Non-governmental organization National Oceanic and Atmospheric Administration National Planning Board National Pollution Discharge Elimination System National Priorities List National Park Service National Resources Board National Research Council Natural Resources Conservation Service Natural Resource Districts Nationwide Rivers Inventory National Resources Planning Board National Water Commission National Waterways Commission Office of Management and Budget Ohio River Valley Water Sanitation Commission Other social effects Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies Principles and Standards for Planning Water and Related Land Resources President’s Council on Sustainable Development Per cent of family income Publicly owned treatment works Producer Price Index Palo Verde Irrigation District Enhanced Stream Water Quality Model River Basin Commission Resource Conservation and Recovery Act Regional Economic Development Regional economic effects Resources for the Future River of Grass Evaluation Methodology Science Advisory Board Soil Conservation Service Safe Drinking Water Act South Florida Water Management District Safe minimum standards

Abbreviations

SRBC SWAQ SWAT TMDL TVA UCOWR UNESCO USACE USBLM USBR USDA USDA-ARS USDOI USEOP USFS USFWS USGS USIACWR WCED WEAP WET WMD WMO WPCA WRAS WRC WRDA WRPA WSTB WTA WTP WWPRAC WWQMTSC

xiii

Susquehanna River Basin Commission Subcommittee on Water Availability and Quality Soil and Water Assessment Tool Total maximum daily load Tennessee Valley Authority Universities Council on Water Resources United Nations Educational, Scientific and Cultural Organization US Army Corps of Engineers US Bureau of Land Management US Bureau of Reclamation US Department of Agriculture US Department of Agriculture, Agricultural Research Service US Department of Interior US Office of President US Forest Service US Fish and Wildlife Service US Geological Survey US Interagency Committee on Water Resources World Commission on Environment and Development Water Evaluation and Planning System Wetlands Evaluation Techniques Water Management Districts World Meteorological Organization Water Pollution Control Act of 1948 Watershed Restoration Action Strategies Water Resources Council Water Resources Development Act Water Resources Planning Act Water Science and Technology Board Willingness-to-accept Willingness-to-pay Western Water Policy Review Advisory Commission Watershed/Water Quality Modeling Technical Support Center

Foreword The practice of water resources planning and management within the USA has adapted to keep pace with changes in societal values, advances in technology and scientific knowledge, and emerging water resource needs. Its early origins in nation building focused on the development of water supply, power and transport as the population expanded across the continent during the nineteenth century. It progressed through periods intensively focused on the mitigation of flood losses and later saw the emergence of multi-purpose development of the nation’s water resources during the first half of the twentieth century. The evolution of water resources planning from early single-purpose type projects to subsequent eras emphasizing economic efficiency, multipurpose planning, and then multi-objective planning and environmental protection continues today as the nation’s environmental awaking during the last half-century has advanced beyond environmental protection to embrace the goals of sustainable development, ecological integrity and integrated water resources management. This transformation has likewise been accompanied by equally significant changes to the nation’s water governance framework. The demise of the US Water Resources Council portended a federalism shift in decisionmaking leadership that continues into the twenty-first century. This paradigm change has been facilitated by reductions in real spending on water resources programs across federal agencies. The resulting devolution of the federal role places increased responsibilities on state and interstate organizations for the planning and financing of solutions which will address the water challenges of today and tomorrow. Against this dynamic backdrop, it is essential to dissect and understand the implications of the concurrent water resources management changes that have been taken place as a prerequisite for measuring the issues we must face in the future. This book, aptly titled ‘The Evolution of Water Resource Planning and Decision Making’, was commissioned by the Institute for Water Resources (IWR) to bring together a group of the nation’s foremost water experts and academicians to provide their unfettered views on what has brought the nation to this critical juncture. Their collective perspectives on the evolution of thinking on topics such as economic analysis, environmental valuation and the state of US water xiv

Foreword

xv

governance is aimed at informing students and practitioners alike on the nature of the issues looming ahead, while serving to underline the importance of an interdisciplinary approach to water resources planning and management. Indeed, the development of this book reflects an interdisciplinary approach which mirrors, by design, the breadth of expertise essential to addressing contemporary water resources problems. It is also consistent with the trend in advanced education for multidisciplinary curricula in water resources – such as the advanced degree program developed by several universities as part of a cooperative effort with the Universities Council on Water Resources (UCOWR) and IWR for an interdisciplinary Master’s Degree in Integrated Water Resources Planning and Management. As evidenced by recent events, the USA will continue to face a daunting array of future water resources challenges. Hurricanes Katrina and Rita exposed a surprisingly fragile New Orleans hurricane protection system, while the accompanying flood response and evacuation planning and execution proved unable to deter the tragedy and loss of life that unfolded. Such vulnerabilities are not limited to coastal storms, and while major initiatives across the nation at the federal and state levels are re-evaluating the threats from both coastal and riverine flooding, concerns are accelerating over the nation’s aging infrastructure, including dams and bridges and other water resources capital stock. As this book is being published, portions of the southeastern USA are gripped in a severe drought which has escalated a long simmering interstate dispute over water allocation. The US population continues to grow, with some of the greatest increases occurring in areas already facing increased competition for water, and despite an overall abundance of water in the USA, projections related to global warming and environmental change add to an uncertain future – with some regions facing prospects of more intensive drought while others consider possibilities for more severe inland flooding and/or coastal storms. As we begin a new century, with a new set of water resources challenges, both within the USA and around the world, this book serves as a reminder that the need for continued infusion of scholarship in water resources practice remains as compelling as ever. In fact, facilitating a continuing intersection of scholarship and practice remains the essence of the purpose of the IWR. Within this context, the Water Resources Development Act of 2007 (P.L.110–114) presents a unique opportunity to further advance the alignment of federal water resources principles with contemporary concepts for integrated water resources management, adaptive management, risk and reliability, system resiliency, improved

xvi

The evolution of water resource planning and decision making

communication of residual risk and collaborative, transparent decisionmaking processes. I am therefore delighted that the IWR had this opportunity to resource and serve as a nexus for supporting the publication of this important book. It will no doubt serve as a scholarly resource for a new generation of practitioners and academicians interested in both the historical context and the future of water resources planning and management. The IWR is indebted to the esteemed group of authors who poured their passion and knowledge into the various chapters. I wish to thank each of the contributing authors for their tenacity and dedication in seeing this book through to publication. I am certain that the knowledge documented herein will prove invaluable to future decision makers who will have their own distinct set of new water resources challenges to surmount. Robert A. Pietrowsky Director, Institute for Water Resources US Army Corps of Engineers

Preface Over a half-century ago, Gilbert F. White introduced the concept of flood plain management through his landmark 1942 PhD dissertation, ‘Human Adjustment to Floods’.1 Prior to that time, water resources management strategies were nearly all engineering-based, for example, design and construction of dams and levees. In spite of, or perhaps more accurately because of, our engineering marvels, the actual and potential damages associated with floods continued to rise in the USA, as industrial, commercial and residential development moved in behind the ‘safety’ of the flood control structures. Professor White argued that the federal government, particularly the US Army Corps of Engineers, needed to broaden its range of flood hazard management alternatives to include social and behavioral adjustments that would address the problem of increasing density and value of flood plain occupancy. This broader emphasis on the flood plain itself slowly began to capture the attention of planners, economists, political scientists, sociologists and eventually ecologists and biologists. The need for interdisciplinary collaboration came increasingly to be recognized, particularly during the period from the late 1950s through the 1960s. Nevertheless, it was and still is a daunting challenge for engineers, sociologists and biologists to agree on approaches to water resource planning, decision making and management. Through his continuing natural hazard work, and the work of his students, Professor White nurtured the process. His thoughts and actions have taken root in countless ways, perhaps most notably through the work of the University of Colorado’s Natural Hazards Center, which he established with support from the National Science Foundation in 1974. During this period, in response to many social, technical and political stimuli, federal and state water resources planning processes were modified and enhanced. Definitions of benefits were tightened, for example, to rule out counting local economic spillovers resulting from project construction and operation. At the same time, non-market benefits were recognized as legitimate, though reliable methods for their estimation did not yet exist. Tentative efforts to reflect the views of multiple ‘stakeholders’ outside the bureaucracy began. And more sophisticated ways of exploring the impact of hydrologic and economic uncertainty were developed. During this period Professor White continued to push for change by arguing for a xvii

xviii

The evolution of water resource planning and decision making

more formalized approach to monitoring the effects of these newly implemented methods in the context of actual projects, to see if the claimed benefits were produced under operating conditions. While there was and continues to be agency resistance to formally auditing programs, numerous studies have been performed along these lines, primarily within the academic field. If one were to try to sum up Gilbert White’s principles, the result might be: consider the full range of alternatives in planning; involve all relevant intellectual disciplines; and continually monitor the effects of all initiated projects and programs. Measuring actual progress in the water resources development and management field against the Whitean principles, it is striking how slowly change has been realized; how tenacious a grip tradition has had in spite of massive changes in knowledge, analytical techniques and computing power, to say nothing of the changes in incomes, tastes, leisure time and travel possibilities the USA has experienced during that period. The new water resource challenges the USA faces today and will face in the future require planners and related professionals to be better informed and more open to innovation than ever before. Informed decision making requires that they not only be skilled in their own specialty areas but also equipped with a broader understanding of related disciplines. As a case in point, one could argue that had the responsible decision makers embraced a more integrated approach in the wake of Hurricane Betsy, which devastated southern Louisiana in 1965, much of the recent damage associated with Hurricanes Katrina and Rita could have been avoided. In an attempt to address this need, in 2002 the Corps’ Chief of Planning, James Johnson, and Mark Dunning, research analyst at the Institute for Water Resources (IWR), proposed and launched a program to train existing and new employees in multi-objective planning and to encourage better collaboration among disciplines in dealing with new environmental problems and approaches. Cooperating with the Universities Council on Water Resources, IWR developed a multidisciplinary curriculum with a practical focus on integrated water resources planning and management. Universities participating in what evolved into the Corps’ Advanced Degree Program agreed to develop their own interdisciplinary curricula that balance coursework in economics, engineering, hydrology, ecology, political science, sociology and statistics. With the launch of the Advanced Degree Program the need was felt for a publication that would summarize and critically appraise the evolution of federal water resource planning over the last half-century. Such a book would, it was thought, benefit not only students enrolled in the program, but water professionals and practitioners more broadly. This volume is the product of that felt need. Great care was exercised in assembling a

Preface

xix

team of professionals willing to meet this objective. They include eminent scholars with decades of experience, representing the fields of economics, political science, engineering, law, biology/ecology, environmental philosophy and sociology. Their charge in the broadest terms was to describe changes over roughly the last 50 years and to suggest challenges for the future from their points of view. In the initial development of this publication, Professor White was asked for his input and in typical fashion his reaction was immediate and terse, stating: ‘I am elated that your efforts are going forward and am fully supportive of the entire program, it is 30 years overdue. Please keep me informed of your progress’. Professor White passed away in 2006 before the final manuscript for this book was completed. Based upon his lifetime achievements, steadfast persistence and clear guidance in water resources planning, we dedicate this book to the late Professor Gilbert F. White. Duane Baumann and Paul Bourget

NOTE 1. G.F. White (1945), ‘Human adjustment to floods’, University of Chicago Department of Geography, research paper no. 29, Chicago, IL, completed in 1942 and published in 1945.

Acknowledgments This book grew out of Dr Duane Baumann’s vision for an interdisciplinary graduate program in integrated water resources planning and management. He conceived the outline, negotiated with the authors, and organized support for the effort from the Institute for Water Resources of the US Army Corps of Engineers (IWR). Those authors, all notables in the field, put considerable effort into their respective contributions and were extraordinarily cooperative with the editor when he suggested changes to those contributions. The support from IWR included early face-to-face meetings, which were very helpful in drawing attention to areas that were potentially contentious and therefore worth extra thought. At the end of the writing and editing IWR went through the process of finding and negotiating with a publisher, not the easiest of tasks with a fairly specialized volume, and the authors and editors are grateful to Edward Elgar for persevering. Further, IWR arranged for technical support through CDM, and Ms Eva Opitz and Ms Paula Vukadinovich provided this. Ms Opitz was involved from the earliest stages of the manuscript’s development, coordinating with the authors, editors, staff and with IWR and conducting numerous reviews to ensure that the manuscript would meet the exacting standards of the publisher. Ms Vukadinovich demonstrated extreme patience and attention to detail in the development and processing of the several iterations of the manuscript. Those at IWR primarily responsible for the project were Dr Paul Bourget, Mr Robert Pietrowsky and Mr Darrell Nolton, and of these Dr Bourget can fairly lay claim to being the godfather of the final product. Formally, the book project has been completed under IWR contract with CDM (DACW72-00-D-0001, Task order 56; W912HQ-04-D-0007, Task order 58). However, the views, opinions and findings contained in this publication are those of the authors and should not be construed as an official Department of the Army position, policy or decision, unless so designated by other official documentation.

xx

1.

Water resources planning: past, present and future John J. Boland and Duane Baumann

INTRODUCTION The chapters that follow describe, from a number of perspectives, the current state of play in the field of water resources planning and management with a heavy emphasis on the United States’s experience. In reading this material, it will be helpful to recall that today’s planners and managers face very different problems from those of even a few decades ago. Before the middle of the twentieth century, water resources decisions were seen primarily as a matter of finding ways to use the resource to its utmost – to unlock its potential for providing marketable goods and services to human society, even if the results were not always marketed, as recreation typically was not. Water resources planning, in that period, was primarily the province of engineers, with occasional inputs from economists.1 As this book makes clear, water resources planning and management is a dramatically different enterprise today. Several of the chapters reflect on specific reasons for this difference, but it may be helpful to highlight here three distinct, but interrelated, areas of change that have affected water resources decision making during the past half-century. ●

●

Evolution of demands – Society has changed greatly in 50 years. One major change has been a rising affluence in almost all parts of the economy. Combined with a near doubling of the population since 1950, this has produced very large increases in the use of water resources for recreation, expanded human settlements near formerly pristine lakes and rivers and in flood plains, large municipal and industrial uses in arid and semi-arid regions and expansion of irrigated agriculture. At the same time, a better informed and more affluent society wants better water quality, a better standard of service and more attention to the needs of the future. Evolution of governance – As the demands and pressures on water resources development have grown and changed, government has 1

2

The evolution of water resource planning and decision making

●

responded by expanding and transforming water resources policies, regulations and institutions. These changes reflect the changing demands, values and preferences of society, but not perfectly and not quickly. For example, public concern about surface water quality ultimately led to the Clean Water Act (CWA), then to federal and state agencies with the mandate and competence to enforce it and finally to a continuing series of regulations and policies implementing the Act. Yet few would argue, even today, that the Act fully meets the expectations of those who supported it. Evolution of analysis – Governance structures (laws, policies, regulations and institutions) are the matrix within which planning and analysis must be done. Thus, the need for predictions of the water quality results from specific policy proposals has led to the development of more numerous, and more sophisticated, mathematical models capable of accepting broader arrays of pollutants as inputs and of predicting larger numbers of quality measures. But, as in the case of the evolution of governance, responses occur only after some lag and then only gradually.

It may be fair to say that today’s analytical methods are, in general, appropriate to yesterday’s laws and policies; and that those laws and policies reflect in turn the social values of the day before yesterday. Nonetheless, if one understands how water resources planning has developed and where it is today, it may be possible to say useful things about where it is and where it ought to be going. That is the modest goal of this book.

OVERVIEW OF THE BOOK Chapter 2 addresses the history of water resources planning and development in the United States, describing historical trends from 1800 to 2004. The latter part of this period includes the shift of focus from water resources development to water quality management and ecosystem restoration. It also traces the evolution of state and federal water laws. Contemporary water resources planning processes are described in Chapter 2, along with the planning and management functions of federal, state, regional and non-governmental agencies and organizations. Some observations from history capture the author’s views on events relevant to issues of concern in the present. The chapter concludes with a summary and related recommendation for the future. Historically, many government agencies, political commissions and technical panels have examined and made recommendations for improving

Water resources planning: past, present and future

3

water resources planning and decision making. In recent times the public – in general and in the form of a variety of stakeholders – has become much more influential in water resources planning and management processes through a variety of public involvement efforts designed to introduce a greater sense of democratic legitimacy to this process. (These efforts are described briefly in Appendix 2.1.) This evolution, along with the shift from development to environmental protection and restoration, has significantly affected the nature of planning processes and the valuation of proposals for water-related actions. For example, it is recognized that there is a need for broader stakeholder input, for recognition of the spatial and institutional dimensions of ‘problem-sheds’, for breaking away from the box mentality associated with governments, agencies and interest groups, and for seeking innovative and imaginative solutions to the water resources management issues being faced. History suggests, however, that what can be accomplished in the future will be influenced, even constrained, by agency biases and political boundaries as much as by physical, chemical and biological realities and by the estimated benefits and costs produced by economists. Nonetheless, economics continues to play a role in water resources planning and Chapter 3 discusses that role, focusing on the conceptual basis for and application of benefit-cost analysis. The logic has always been straightforward: identify and measure the aggregate beneficial and adverse effects of an action and compare them to see if the action is desirable. This has been the basic approach of water resources economic analysis for at least 200 years. During that time, of course, as water resources planning has evolved and changed in form, so has benefit-cost analysis. Benefit-cost analysis has changed to reflect the values and concerns of society and in response to expanded analytical capabilities. In particular, the kinds of effects considered and the sophistication of the methods used to measure them have changed dramatically, especially over the past 50 years. Among the beneficial effects of water resources development are market goods (electric energy, water supply) and non-market goods (recreation, visual amenity). Similarly, adverse effects include market goods (construction costs) and non-market goods (adverse environmental impacts). The valuation of market goods has long been understood; the ability to value non-market goods has improved greatly in recent decades. Still, benefitcost analysis cannot yet address all of the economic issues of concern to decision makers or the public. For example, despite much progress, the treatment of uncertainty still leaves much to be desired and the application of economic analysis to new activities, such as ecosystem restoration or dam removal, poses new challenges for analysis.

4

The evolution of water resource planning and decision making

The emergence of environmental values and enactment of policies to preserve or enhance the environment have affected water resources planning and management in a variety of ways, four of which are discussed in Chapter 4. First, following the massive disposition of federal lands in the nineteenth century, an influential minority began working to preserve some of the nation’s unique natural areas, many of which were closely related to water resources. Second, in the early twentieth century it was recognized that some species of flora and fauna were being substantially reduced in number, some even to the point of extinction, as a result of land and water resources development. Third, as growth in urban centers far outpaced development of public water supplies, fire protection, storm water facilities and disposal of sewage and garbage, the protection of public health became a larger issue for governments at all levels. In particular, without adequate treatment, discharged waste water was seriously degrading streams and interfering with a number of beneficial uses. Fourth, in the twentieth century, as the federal government became a dominant force in water resources development, concern arose about the effects of the projects themselves on water and related land resources. The period from 1965 to 1980 was one of especially rapid growth in public concern about the environment and saw the formulation of many of the protective policies which still exist today. While it is true that a number of initiatives to address pollution problems and preserve natural areas were taken prior to 1965, the flurry of activity in the years after 1965 was unprecedented and that year may be taken as a convenient historical divide. Programs were enacted to preserve wild and scenic rivers; to protect threatened and endangered species; to accelerate improvement in ambient water quality; to establish national drinking water quality standards; to attack contaminated sites, especially those threatening groundwater; to require that environmental values were given consideration in all federal and many state actions; and to put in place processes to ensure that environmental quality values would be reflected in the formulation and evaluation of water resources projects. Some adjustments to these policies have occurred over the intervening decades, but the basic structure remains largely intact. While many of these initiatives were long overdue, they created a highly fragmented system for managing water resources. Although comprehensive and multiple purpose planning had long been promoted, if never fully realized, the proliferation of programs and management agencies led us away from that ideal. Single purpose regulatory programs that tended to freeze existing uses supplanted planning for the multiplicity of future water-related needs and alternative uses of the resource.

Water resources planning: past, present and future

5

Increased attention to environmental values in water management has in turn led to an increased demand for analytical techniques to predict the beneficial or adverse environmental outcomes of large investments. The combination of increased demand for the outputs of predictive models, increased funding for research and phenomenal advances in computing capability has led to significant advances in methods for predicting spatial and temporal flow patterns and chemical and biological quality of surface and groundwater systems. In many cases, advances in predictive models have outpaced monitoring systems necessary to calibrate and evaluate them. One particular problem – predicting outcomes for complex waterdependent ecological systems – remains an elusive goal. That problem is well illustrated by the difficulty of determining instream flow requirements to sustain aquatic ecosystems. Recent research has shown how difficult that problem is and the extent to which the current generation of models fails to provide a solution. The concept of sustainability or sustainable development has attracted widespread attention over the past 15 to 20 years. Although the terms ‘sustainable development’, ‘sustainable use’ and ‘sustainability’ do not appear in any federal water resources regulations or statutes, many of the concepts of water quality and water resources management that emerged in the late nineteenth and twentieth centuries would fit comfortably under those broad concepts. Policies based on safe yield, wise use, maximum contaminant levels, maximum daily loads, protection of endangered species and preservation of wild and scenic rivers are clearly compatible with the principle of meeting the needs of the present without compromising the needs of future generations. Two questions that flow from this review are, first, whether a dramatically more comprehensive environmental planning structure is needed and, second, to what extent should management of water resources be subsumed within that structure? Is the goal of integrating all aspects of water management under a comprehensive program reachable? Should an effort be made to reach it? Or, given concerns that any reopening of environmental policies in the present political climate could lead to loss of much that has been gained, should we continue to seek only marginal changes to existing policies? Chapter 5 investigates the long problematic attempts to achieve collaboration between ecologists and economists. As noted at the beginning of this chapter, in 1962, when Maas et al. and the Harvard Water Program tried, with some considerable success, to report on and advance the stateof-the-art in water resources project analysis and planning, the game was largely the province of engineers and economists and the most important chips in play were water quantity and activities dependent on quantity.

6

The evolution of water resource planning and decision making

The growth of citizen demands for outdoor recreation and for the protection of the natural environment more broadly, as reflected in new laws and institutional arrangements, have brought water quality into the game in a central way. Indeed, it seems safe to say that there is no longer such an animal as the purely quantity-related water project or plan. One of the several implications of this change has been the discovery of the need for ecological expertise alongside the skills brought to the table by the traditional players. However, efforts to fit the ecologists around the same table have not often been successful. Frequently, collaboration has taken a back seat to bickering about the point of the collaboration, which sometimes leads on to bickering about the worth of what each discipline brings to the table. Why this should be so is not immediately obvious as commentators on and participants in these efforts have often observed, the very words ‘ecologist’ and ‘economist’ share the Greek root oikos, house. So why can they not share more and bicker less? Chapter 5 offers an explanation based on contrasting perceptions of the nature of the uncertainty we face in making policy or making plans and developing projects involving the natural world and the resulting positions on the appropriate definition and measurement of the ‘value’ of what is at stake. Put very briefly, ecologists tend to believe that our ignorance of the myriad processes and interconnections that characterize the natural world is so pervasive that even an apparently small intervention could lead to ecological disaster, with profound negative implications for human life. Thus, total values of systems are always relevant and should be sought. By contrast, economists may be said to have faith that the results of small interventions will be small changes in the state of the natural world, so that only the values of those small changes are relevant to policy discussions. Determining what to do about these mismatched perspectives is harder than noting the mismatch. But the chapter argues for starting with quite specific questions posed to multidisciplinary teams that can expect to stay and work together for years rather than weeks or months. It dismisses efforts at grand philosophical resolutions via blue-ribbon panels as unlikely to lead beyond platitudes. Chapter 6, returning to matters of analytical techniques, examines political decision making about water development and management in the USA, in particular, the federal role in achieving wise and sustainable uses of the resource for the public interest. In this connection, two hypotheses regarding the mode of governance are explored in a fairly general way: ●

That the process and outcomes of water decisions are controlled by considerations of rationality applied to the administration of the

Water resources planning: past, present and future

●

7

resource by the federal system paying attention to state’s and citizen’s rights and also to the needs and demands of stakeholders and interest groups. That the outcomes result from the contention and struggle among a wide variety of stakeholders and interest groups, only lightly controlled by the federal institutions except when egregious situations arise demanding federal intervention.

The chapter starts by examining the great misunderstandings of what is encompassed by the concept of governance. In the eyes of many technical persons (engineers, economists, development planners and so on) governance is just about laws, regulations and institutions that are typically exogenously given. The common belief is that there is an ‘ideal’ set of laws, regulations and institutions that will result in good governance of water resources regardless of what else is happening in the country. Practical experiences, however, are quite different. The role of the US federal government related to water derives indirectly from its authority to regulate interstate commerce and to manage federally-owned lands. Exercise of these constitutionally delegated powers may at times take precedence over inconsistent state actions. Individual and collective uses of water are determined initially as a matter of the property law of the one of the 50 states in which the water is found. In general, water is regarded as a common resource until it is applied to some legally protected use, after which a variety of federal, state and local rules come into play. Under the legal fiction that water belongs to everyone, states started developing more specific rules respecting uses of water. Today states are likely to directly supervise the process of establishing rights to use water, requiring a user to apply for permission. In sum, while the water resource itself is regarded as public property, individuals may establish legal rights to the use of some portion of water – subject to public regulation. The driving force in any area of governance is politics. The conventional view of the relationship of politics to governance portrays an orderly world where politicians act as rational legislators in formulating laws for the general welfare, which in turn are implemented by institutions, which carry out the legislated water policies through rules and regulations. Real politics, however, is not so neat. Governance is now not seen to be a simple linear process, but rather a discursive and a highly complex set of interactions between laws and institutions and personal and group interests as well as the general interest: ‘. . . policy is more like an endless game of monopoly than sewing machine repair’ (Stone, 1988, p.261). Water as a public resource is especially susceptible to political influences, substantial individual and public entity rights to sue over water acts as a brake on

8

The evolution of water resource planning and decision making

change, but this is opposed by the need for redefinition of rights to claim water. Such redefined rights must both reflect the core individual benefits which water rights carry and separate out and preserve their public good dimensions. The tension between these very divergent paths leads directly to political impasses. The literature on politics and political theory leads to at least three different pathways for explaining political decision making. First, and a priori the most attractive to professional planners, is in the direction of the Economic Theory of Politics (ETP). This theory, referred to here as the rational model, aims at a synthesis of the ethics of Rawls with the political theories of Lasswell (1936) and Dahl and Lindblom (1953) and the welfare economics of Pareto, Hicks and Bergson. The second approach assesses institutions and sees how well they are meeting their stated goals, as Arthur Maass did in his analysis of the relationships between Congress and the US Army Corps of Engineers (USACE) (Maass, 1951). Call this the institutional model. A third path derives from the Polis Model of Stone (1988, 2001), who argues that rational behavior models (usually the ETP) miss the point of politics. Stone outlines how a model of political reasoning should perform: . . . a model of political reasoning ought to account for the possibilities of changing one’s objectives, of pursuing contradictory objects simultaneously, of winning by appearing to lose and turning loss into victory, and most unusual, of attaining objectives by portraying oneself as having attained them. . . Political reasoning is reasoning by metaphor and analogy. (Stone, 2001, p. 9)

Two radically different perceptions of the nature of society emerge from this literature. The unit of analysis shifts from the individual to the community. Self-interest is extended also to include public interest. The conflicts now change from those between self-interests to those between self-interests and the public interest. The nature of collective activity moves from competition to a mixture of cooperation and competition. Most importantly, the criteria for decision making change from maximizing self-interest to the promotion of the public interest and loyalty to people and places. The nature of the information used tends to move from objective to ambiguous, interpretive, incomplete and strategically manipulated. Ultimately, what matters under the Polis Model are ideas, the pursuit of power and the maintenance of alliances. The chapter uses the case of the Colorado River and examines the outcomes through the lenses of these different political models. The evolution of the governance problems on the Colorado River has been well documented. The conflicts among water users in the Colorado Basin have arisen in part due to the de facto assignment by the US Constitution of control

Water resources planning: past, present and future

9

over allocation of water to the states. Other complicating factors are the international nature of the basin geography, the presence of an interstate compact that is effectively from another era, in addition to expectable water conflicts among users in arid country. All of these conflicts have become more intense in recent times as real increases in water demands are now being felt throughout the basin. Using Stone’s metaphor; it has been a 75-year monopoly game – and the game is not over yet! In the long and rich history of the Colorado Basin, there is arguably strong support for the rational model. But future political behaviors connected to implementation of the current agreements are likely to be better explained under the Polis Model. In going from the rational to the Polis Model, the Laws of Nature are replaced by Laws of Passion and the currency of exchange is seen to be ideas, persuasion and alliances rather than material exchanges (traditional ‘log rolling’ style trading of economic benefits). Using specifically ‘political’ models of water governance, as suggested in this chapter, rather than clinging only to ‘rational’ methods, could have major implications for how the federal government does business in the water arena. Since what emerges is that the control exercised and protection of the public interest achieved comes from actions taken at all levels down the chain from federal to state to river basin to county, to city and even neighborhood, what is the appropriate role for the federal water bureaucracy? Certainly there should at least be more explicit federal recognition of the role of politics in determining what is, or should be, good policy for water in the USA. Chapters 2 through 6 all have at least a trace of historical flavor, be it of policy evolution or analytical methods development. Observing this, the casual reader, if such a person actually exists, might conclude that the water resources management ‘system’ is through evolving and that analytical methods have been developed to the point that further progress is unlikely. But this would, indeed, be a casual reading, for there is no shortage of new ideas and further challenges cataloged in those chapters. Chapter 7 makes all this clear and explicit by bringing together past and future and putting both in the context of broader national and international events; concerns newly recognized as urgent, such as global climate change; and the shifting sands of governance. The chapter emphasizes how large are the tasks facing the next generation of policy makers, analysts and variously interested stakeholders, calling for increased research efforts in everything from benefit-cost analysis, through ecological modeling, to the philosophy and mechanics of public involvement. The next section anticipates some of this material and, it is hoped, primes the reader to see beyond the background provided to the nature of the existing challenges or, what amounts to the same thing, the nature of the opportunities available.

10

The evolution of water resource planning and decision making

A LOOK AT THE FUTURE Here are five challenges or opportunities depending on the reader’s taste in rhetoric that are likely to continue to be important for decades, if not generations. As society’s values and preferences continue to evolve, so will water resources policies, practices and management. The next two chapters document, for the past 50 or more years, major changes in law, regulation and policy (Chapter 2) as well as the mode of economic analysis (Chapter 3). These changes reflect trends in the ways in which water resources are used and the values that society places on those uses. These drivers are, in turn, affected by rising population and increasing affluence. The connections are not perfect: analytical capabilities tend to lag policies and regulations; policies and regulations tend to lag recognition of changed demands being placed on the resource. However, the evolution is continuous and will doubtless continue: first to catch up to demand, preferences and resource conflicts already apparent; and next to address the rising demand, altered preferences and increased conflicts expected for the future. There is a strong argument for the re-establishment of a single set of federal standards and practices for water resources project evaluation; it is not clear that this will happen in the near future. Improvements in analytical capabilities are of little avail unless they are consistently applied and actually result in better analysis. The last attempt by the federal government to set uniform practices for water project evaluation ended with the publication of the Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) in 1983. At that point, the P&G was voluntary guidance. Since then, individual agencies have drafted their own procedures (the USACE efforts have been based on the P&G); Office of Management and Budget (OMB) has another, though skeletal, set of standards and procedures. Among the numerous inconsistencies across the agencies is the existence of several different discount rates to be applied to federal projects (see Chapter 3). Many have called for the updating and repromulgation of the P&G. But there is no federal agency with authority or direction to do this. Some argue for an interagency body with the power to promulgate standards and procedures, to update them from time to time and to monitor their application by the various agencies. However it is done, improvement and rationalization of the methods for project evaluation would surely be helpful, but such a change depends on the will of Congress. Environmental quality, including water quality, will continue to suffer from fragmentation in laws, agencies and enforcement, but some

Water resources planning: past, present and future

11

improvement is likely. As noted in Chapter 4, a major deficiency is the lack of an accepted and operational overall concept of ecosystem health and services. Yet improvements in models and computational ability allow planners to take ‘problem-shed’ approaches, producing plans that are effectively integrated despite regulatory and operational fragmentation. As this approach becomes more widespread, it will inevitably be reflected in institutional arrangements and management policies. Eventually, laws and regulations may evolve to a more integrated state, with resulting improvements in the effectiveness and efficiency of environmental policy. Water resources conflicts will increasingly be resolved at the local and state level, with little or no role for the federal government. For much of the twentieth century, the federal government maintained a hierarchy of federal agencies and federally-sponsored river basin commissions (RBCs) which were expected to resolve most conflicts over access to or use of water resources. But when major conflicts arose, this system was unable to resolve them. This was true for the Colorado River Compact (see Chapter 6) and is currently the case for the Apalachicola-ChattahoocheeFlint (ACF) River Basin in the Southeast United States, to cite two very prominent multi-state disputes. When solutions, or partial solutions, or accommodations have been found, they have resulted from negotiations among local or state agencies, with substantial participation by stakeholder groups. Such negotiations may or may not yield efficient strategies, but the results are effective and sustainable. We can expect to see much less ‘top-down’ direction and much more ‘bottom-up’ planning and implementation – simply because it solves problems. Despite considerable ongoing debate in the water resources community, there is no general agreement on the best roles for federal government, versus state and local government, versus the private sector. As outlined in Chapters 2 and 3, the water resources sector has been marked by steady enlargement of the federal role, at least up until the latter half of the twentieth century. Since the 1980s, there has been a trend toward devolution of project planning and financing responsibilities to state and local government. More recently, there has been much talk about the presumed advantages of private sector participation. Advocates argue that the original rationale for government action (very large-scale projects which could not be financed by the private sector) is no longer valid and that for-profit firms can deliver projects that are both more effective and less costly. Opponents argue that given the many non-market benefits associated with water projects, for-profit firms will underproduce services that produce no cash flow, thus resulting in less beneficial projects. This volume does not tackle this issue directly, but it does fill in many details of the current situation. It is left to the reader to draw conclusions.

12

The evolution of water resource planning and decision making

CONCLUDING REMARKS From the above brief descriptions, it should be clear that this book attempts both to describe the changes that have occurred in the world – in preferences, politics, policies and analysis – and to provide frameworks for thinking about those changes, their interrelations and how those frameworks do, and to some extent how they should, affect the world. This is perhaps most obvious in the case of the discussion of benefit-cost analysis (Chapter 3), for this technique, in the eyes of many economists at least, is an explicitly normative tool that ought to be used for assessing the social desirability of alternative policies, plans and projects. But the point also applies to the discussions of the growing role of environmental understanding in water resources management (Chapter 4) and of water politics (Chapter 6). Particularly in the case of politics the search for models that aid our understanding takes center stage, for the reality of politics is even messier than familiar, traditional models have admitted. A new and still somewhat unfamiliar framework represents an attempt to deal with the messiness without throwing out the notion of an overarching framework within which predictions and prescriptions might become possible. Even Chapter 5, dealing with the difficulties of collaboration between ecologists and economists, represents a search for a framework to help us make sense of actual case histories. This book, then, does not aspire to make its readers experts in any of the subjects covered, to teach them how to do a benefit-cost analysis or run a water quality model, for example. Rather, it will have succeeded if its readers see concepts, connections and explanations for events that they had not seen before and, perhaps even more important, if they have their own ideas about where the gaps in our understanding lurk . . . where effort should be directed in the future.

NOTE 1. Introduction, in Maass et al. (1962), pp. 1–11.

REFERENCES Dahl, R.A. and C.E. Lindblom (1953), Politics, Economics and Welfare, Chicago, IL: University of Chicago Press. Lasswell, H.D. (1936), Politics: Who Gets What, When and How?, New York, NY: McGraw-Hill.

Water resources planning: past, present and future

13

Maass, A. (1951), Muddy Waters: The Army Engineers and the Nation’s Rivers, Cambridge, MA: Harvard University Press. Maass, A., M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr, S.A. Marglin and G.M. Fair (1962), The Design of Water-Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning, Cambridge, MA: Harvard University Press. Stone, D.A. (1988), Policy Paradox and Political Reason, Glenview, IL: Scott Foresman and Co. Stone, D.A. (2001), Policy Paradox: The Art of Political Decision Making, 3rd edn, New York, NY: Norton.

2.

A history of the United States water resources planning and development Warren Viessman, Jr

INTRODUCTION The objectives of this chapter are to acquaint the reader with historical trends in water resources planning and development from 1800 to the first decade of the twenty-first century, including: ● ● ● ● ●

The evolution of supporting legislation. The changes in analytical requirements for project analysis. The shift in focus from water resources development to water quality management and ecosystems restoration. Contemporary federal, state, regional and international water resources planning processes. Recommendations for future actions and policies.

Many agencies, organizations, commissions and panels have been active and influential in planning, designing, constructing and managing facilities for the development and use of water resources. An understanding of how the US water policy evolved over time will help us understand how what we do in the future will be influenced, and sometimes constrained, by historical events and current agency biases. Indeed, the future effectiveness of initiatives in water management will depend on the extent to which attention is paid to lessons learned from past successes and failures. This evolution is summarized in the following sections. A more complete accounting of the period 1800 to 1970 may be found in Holmes (1972, 1979).

14

History of US water resources planning and development

15

WATER RESOURCES PLANNING AND DEVELOPMENT FROM 1800 TO THE EARLY TWENTY-FIRST CENTURY 1800 to 1900: The Emergence of Water Resources Planning Much of the water resources development occurring in the earliest part of the nineteenth century resulted from private sector initiatives aimed at harnessing the water power of rivers in the Northeast of the new United States and improving the transport of people and materials both within this region and toward the western frontier. In Massachusetts (and its territories that were to become Maine), New Hampshire, Rhode Island, Connecticut and New York dams were built and large industrial enterprises were located along major streams and rivers to take advantage of the energy available from the falling water. Many of the dams constructed during this period still exist even if not still in use for power production and their futures are often the subject of lively, even bitter, debate. Another dimension of this era of largely privately financed developments was the construction of canals. Thus, digging of the Erie Canal began in Rome, NY, in 1817, with the objectives of opening the country west of the Appalachian Mountains to settlers and to providing inexpensive transportation of market products in both directions. It helped to establish New York City as a global trading center and Buffalo as a regional powerhouse and was considered to be the engineering marvel of the day. Construction on the Chesapeake (Bay) and Ohio (River) (or ‘C&O’) Canal began in 1828 and for nearly a century the C&O was the lifeline for towns and businesses along its 184-mile route between the nation’s capital and Cumberland, MD. During this era, the federal government’s concern with the nation’s waters focused on navigation. Thus, the Gallatin Report of 1808 proposed, in part, an extensive system of canal and river improvements (Holmes, 1972), justifying federal involvement on the basis of economic development of the west, encouragement of political unity and enhancement of the national defense. One outcome of the report was the creation of the US Army Corps of Engineers (USACE) in 1802, the first major water construction agency in the USA and the only organization in the USA at that time with the technical capabilities to engage in the water projects envisioned. Congress established the responsibilities of USACE for planning river and harbor improvements in 1824; in 1826 the Omnibus Rivers and Harbors Act was passed authorizing specific waterway improvements and surveys. For several years, authorizations (providing the authority to act) and appropriations (providing the funds for authorized actions) for river

16

The evolution of water resource planning and decision making

and harbor improvements were made in the same bill. Later, however, the Omnibus Rivers and Harbors Act, separately authorizing the planning stages of some projects and construction phases of others, became the standard form of legislation for ongoing USACE navigation and flood control programs. Originally flood control was a local responsibility. However, as the lower Mississippi River Basin was settled, interest in federal intervention intensified. In 1874 Congress appointed a commission to report on a permanent plan for reclaiming a portion of the Mississippi River subject to heavy flooding. This led to the establishment of the Mississippi River Commission, authorized to survey the river and prepare plans to improve navigation and prevent flooding in 1879. With flood control and navigation programs established, the federal government turned its attention to irrigation. The 1877 Desert Land Act authorized the sale of 640-acre tracts of land in four states and eight territories to persons who would agree to irrigate them within three years. Later, in 1890, the federal government received statutory authority to reserve a right-of-way for ditches and canals that it might later construct on public lands west of the 100th meridian (roughly the beginning of the High Plains, or in current terms, the middle of the Dakotas and Nebraska and the eastern edge of the Texas Panhandle). The reservation was valid as long as such ditches and canals were patented under any of the land laws of the USA. This action paved the way for the Reclamation Act of 1902, which supported most of the major irrigation developments that exist today. In the late nineteenth century the federal government also took an interest in water power. Beginning in 1879, Congress enacted numerous statutes that provided for the leasing of water power or surplus water to private companies and authorized the construction of private dams to generate power. An 1890 act prohibited building dams on navigable waters without permission from the Secretary of War. Table 2.1 summarizes the above-mentioned projects. 1900 to 1933: The Era of Multiple Purpose Projects During the first decades of the twentieth century, the functions of the USACE were expanded to include construction of flood control works and the development of water power, while the US Bureau of Reclamation (USBR) was established in 1902 and authorized to engage in irrigation works. At the same time that single-purpose project responsibilities were being parceled out, the concept of multi-purpose water resources planning emerged. The aim was to promote more efficient use of the resource by

History of US water resources planning and development

Table 2.1

17

1800 to 1900: emergence of water resources planning

Legislation 1826 Omnibus Rivers and Harbors Act 1877 Desert Land Act (set stage for 1902 Reclamation Act) Institutions 1802 US Army Corps of Engineers 1871 US Commission on Fish and Fisheries 1879 Mississippi River Commission Analysis 1808 Gallatin Report (economic development as justification for projects) Other events 1817 Erie Canal begun 1828 Chesapeake and Ohio Canal begun

recognizing the value of serving more than one purpose when planning new developments (Krutilla and Eckstein, 1958). Constituencies that would reap the benefits of proposed water projects generated the motivation for water resources planning. The views associated with Theodore Roosevelt, President from 1901 to 1909, are reflected in many features of this era. These included prominently: conservation of natural resources, especially those in the public domain; encouragement of small independent enterprises such as the family farm, and expansion of the federal government’s authority to affect the nation’s economic life. The National Board of Engineers for Rivers and Harbors was created in 1902 within USACE to review all reports on preliminary examinations, surveys, projects or changes in projects. The board was required to evaluate the commercial potential of proposed projects and compare them with construction and maintenance costs, with the goal of eliminating economically questionable projects and was empowered to make recommendations to the Chief of Engineers based on its findings. Also in that year, the Reclamation Act directed the Secretary of the Interior to make examinations and surveys and to locate and build works needed for irrigation. It also required that the Secretary estimate the costs of proposed works and determine the quantity and location of lands to be irrigated. All facts related to the practicability of each irrigation project were to be included in the examinations. As noted previously, this Act was a key piece of the federal policy of providing water for opening the West to settlement. Reports, such as those published by the National Conservation Commission (NCC, 1909) and the National Waterways Commission ‘NWWC’ (US Senate, 1912) provided the foundation for actions taken by the federal government during this era and later on. For example, the NWWC report

18

The evolution of water resource planning and decision making

urged specific navigation improvements, prevention of deforestation of land bordering mountain streams and promotion of water power development. It also advocated a federal reservoir system for flood control, noting that the costs could be justified by multiple-purpose benefits. During this same era, new water resources planning agencies were created, including the US Forest Service (USFS) and the Federal Power Commission (FPC, now the Federal Energy Regulatory Commission, FERC). Existing agencies, such as USACE, again had their authorities expanded. Thus, in 1912, Congress granted discretionary authority to the Secretary of War to include (in permanent facilities for navigation) civil works that might be desirable for the development of water power. Follow-up legislation in 1913 required that reports on examinations and surveys of waterways include information regarding the development and use of water power. In 1916, President Wilson signed an act creating the National Park Service (NPS) within the US Department of Interior (USDOI). It was given the primary mission of managing the then new national parks. However, since many of these parks contained potentially valuable water resources, NPS became a stakeholder in many water-related deliberations. In 1917 the first Flood Control Act was passed. It gave USACE responsibility for planning and building flood control works, such as levees, on the Mississippi and Sacramento Rivers, but not for the construction of reservoirs. This Act provided for watershed surveys when planning flood control projects and established the principle of cost sharing for flood control. It also provided for comprehensive studies of watersheds including consideration of the economical development of water power. Other legislation affecting USACE during this era showed considerable support for multi-purpose planning (Holmes, 1972). For example, legislation in 1910 provided that each survey of a navigable stream include measurements and investigations necessary for planning and proper consideration of all uses of a stream affecting navigation. The USBR also acquired regional multi-purpose planning functions during the 1920s when the 1920 Kincaid Act directed the Secretary of the Interior to investigate the Imperial Valley of California and consider the potential for irrigating it by diverting water from the lower Colorado River. The report, resulting from this investigation, recommended construction of several facilities and suggested that the federal government undertake all future developments along the Colorado River. In 1928 the Boulder Canyon Project Act provided authority to study the feasibility of multipurpose projects in six other Colorado River Basin states. The objective of these studies was to formulate a comprehensive plan for development and control of the Colorado River and its tributaries. And, as though to make

History of US water resources planning and development

19

sure that there would always be too many cooks in the kitchen, the Federal Water Power Act of 1920 gave the FPC authority to conduct continuing surveys of water power potential and development across the USA. The Act also required determination of whether power derived from federal dams could be used for public purposes. As if to emphasize the possibility for agency conflict, in 1925 Congress directed USACE and FPC to jointly prepare a list and estimate the cost of determining where power development might be practicable on navigable streams. The idea was to produce general plans for the improvement of those streams for navigation in combination with the development of power, flood control and irrigation. Potential surveys were listed in House Document 308 (US House of Representatives, 1926) and authorized in the 1927 Rivers and Harbors Act. A list of streams was submitted to Congress in 1927 and the resulting surveys became known as the 308 Reports. The general authority implied by the required 308 Reports permitted USACE to make general plans for all river basins in the USA except the Colorado, which was assigned to the jurisdiction of the USBR. These 308 Reports, which took over 20 years to complete, formed the basis for the water resources developments that took place from the early 1930s until the late 1960s. Following a series of major floods on the Mississippi River in 1928, Congress adopted a sweeping program for flood control on that river and directed that the federal government bear the entire cost of the program. Although the 1928 Act only provided for levees and diversion floodways, one section did call for studies of the impact of a reservoir system on the Mississippi River tributaries on lowering floods. Studies made pursuant to that section of the Act showed that USACE believed reservoirs would reduce flood heights and should be recommended. USACE also believed there should be local participation in the planning and financing of reservoir construction. Although the principle of multi-purpose planning received much rhetorical support during this period, it was not widely evident in practice (Holmes, 1972). Single-purpose developments focusing on irrigation, navigation, water power generation and flood control were still the norm. Most of the water project construction during the multi-purpose projects era occurred in the West, Midwest and South. The Reclamation Program focused on providing irrigation benefits to the 17 western states. Most waterway improvements were for the benefit of Midwestern farmers and businesses on the Ohio, Missouri and Mississippi Rivers. Flood control programs focused mainly on the Mississippi Valley and water power developments tended to support industries and the public in the West, Midwest and South. Table 2.2 summarizes the above-mentioned events.

20

Table 2.2

The evolution of water resource planning and decision making

1900 to 1933: multiple-purpose projects

Legislation 1902 Reclamation Act 1917 (first) Flood Control Act 1920 Federal Water Power Act 1927 Rivers and Harbors Act 1928 Boulder Canyon Project Act Institutions 1902 National Board of Engineers for Rivers and Harbors 1902 Reclamation Service (to become Bureau of Reclamation) 1905 US Forest Service 1909 National Conservation Commission 1912 National Waterways Commission 1916 National Park Service 1920 Federal Power Commission (to become Federal Energy Regulatory Commission) Other events 1927 308 Reports on navigation and power development

1933 to 1943: Economic Efficiency and Economic Stimulation The Flood Control Act of 1936 formalized economic evaluation of water projects. Since this was the middle of the Great Depression, water and other public works projects were viewed as a means of stimulating the nation’s economy by providing jobs. However, the Roosevelt administration feared that public works activities might be looked upon as pure pork barrel, so all water projects were to be related to and coordinated with plans for comprehensive river basin development. Furthermore, federalplanning agencies were to follow the principle that they should deal with all national resources, defined as including human resources and institutions as well as the traditional elements of land, water and minerals (ibid). Several significant institutions were launched during this period. Perhaps most dramatically, the Tennessee Valley Authority (TVA) was created in 1933. This organization, unique in the USA, is empowered to exercise all federal functions related to the development and management of land and water resources within the Tennessee River Basin, which includes parts of seven states. This includes authority to plan, construct and operate dam and reservoir projects for purposes of navigation, flood control and generation of hydroelectric power. Four national resource planning organizations and several emergency planning agencies also emerged and subsequently played roles in the

History of US water resources planning and development

21

development or management of the nation’s waters. Created in 1933, the National Planning Board’s (NPBs) most important accomplishment relative to water was coordinating the work of the President’s Committee on Water Flow (ibid.). That committee’s report included multi-purpose plans for ten river basins. Many of the projects suggested by the report were later authorized for development. In June 1934 the National Planning Board was reorganized as the National Resources Board (NRB) and under that name recommended that studies of water projects for consideration by Congress be based on drainage basins as comprehensive units and that a wide variety of water uses and controls be considered in the plans. The NRB, however, enjoyed only a brief life and was itself replaced by the National Resources Committee in 1935. The new committee’s most significant achievement was a nationwide study of drainage basin problems and programs. The study included recommendations for both federal and state actions and was undertaken in cooperation with newly formed state planning boards. In 1939, the US Executive Office of the President (EOP) was created and the National Resources Committee reconstituted as the National Resources Planning Board (NRPB), authorized to undertake research and analyse problems involving water and other resources and to report its plans and programs to the President and Congress. The NRPB was also assigned joint responsibility with the US Bureau of the Budget (BOB, now the Office of Management and Budget, OMB) for the review of studies and plans of the construction agencies and for all construction agency reports to Congress. This may be said to mark the beginning of formal economic analysis of water projects. Two emergency (in the economic sense relevant to the Depression concerns for employment and incomes) planning agencies with relevance to water resources were also established: the Public Works Administration and the Works Progress Administration. These agencies were responsible for the financial support of state and local planning and of public works projects constructed by state, local and federal agencies. During the 1930s, a number of new water-related agencies emerged and the functions of several existing agencies, principally the USACE and the US Department of Agriculture (USDA), expanded. In 1935 Congress authorized USACE to supplement its completed 308 Reports with additional studies as needed ‘to take into account important changes in economic factors as they occur and additional stream-flow records or other factual data’ (Section 6, 49 stat. 1028, 1048). This provided the foundation for a nationwide river basin planning program. The USDA was involved in coordinating water resources planning sponsored by the national resources planning organizations. In addition, the USDA became active in investigating certain agricultural aspects of the USBR projects.

22

The evolution of water resource planning and decision making

The Soil Conservation Service (SCS) within the USDA (now the Natural Resources Conservation Service, NRCS) was created in 1935. Its mission was to protect soil resources for agricultural purposes. Currently, the NRCS supports small watershed projects and on-farm improvements to protect soils and reduce water quality degradation. The 1930s brought a milestone in water resources planning and evaluation: the formalization of economic evaluation of water projects. The routine use of benefit-cost analysis to test a project’s worth is generally taken to have been foreshadowed by the language introduced by the Flood Control Act of 1936, which provided that ‘the Federal Government should improve or participate in the improvement of navigable waters or their tributaries, including watersheds thereof, for flood-control purposes if the benefits to whomsoever they may accrue are in excess of the estimated costs’ (49 stat. 1570, 33 U.S.C. 701a). Although this provision applied only to flood control works of the USACE and the USDA, other water planning agencies soon adopted it for all purposes (ibid.). Unfortunately, the agencies were not always consistent in the way they defined terms or went about their analyses, a fact that led to controversy over benefit-cost analysis over the years. Another issue of concern was who should pay the cost of water projects and the question of cost sharing is still a topic of debate in and between Congress and the Executive Branch. The question is one of subsidy: how much of the cost of a project function, such as flood control, should be borne by the federal government and how much by state and local beneficiaries? The earliest notions were that major works for purposes such as flood control were in the national interest and that therefore the federal government should assume the cost. As time passed, attitudes of citizens and members of Congress have shifted and today the general attitude is that the user (beneficiary) pays the costs. In 1940 the US Fish and Wildlife Service (USFWS) emerged within the USDOI, but it had originated as the US Commission on Fish and Fisheries in the Department of Commerce in 1871. The USFWS’s goal is to conserve, protect and enhance fish, wildlife and plants and their habitats. In carrying out its mission, the agency has often been in conflict with USACE and other construction agencies. Cooperation with local governments and encouragement of local participation in water programs were given lip service during this period. The policies espoused by the resources planning organizations usually centered on national concerns, including the provision of low-cost electricity and water for 160-acre western farms. Though the attempt was made to foster local cooperation, intense local opposition to water proposals sometimes arose. The broadening of focus away from single-purpose projects,

History of US water resources planning and development

Table 2.3

23

1933 to 1943: economic efficiency

Legislation 1936 Flood Control Act 1938 Flood Control Act Institutions 1933 Tennessee Valley Authority 1933 National Planning Board 1934 NPB becomes National Resources Board 1935 National Resources Committee 1939 Executive Office of the President (Bureau of the Budget) 1939 NRC becomes National Resources Planning Board 1939 Public Works Administration 1939 Works Progress Administration 1940 US Fish and Wildlife Service Analysis 1933 NPBs multi-purpose plans for ten rivers 1935 Authorization to supplement 308 Reports on economy 1936 Flood Control Act, benefit-cost language 1942 Human adjustment to floods, Gilbert White Other events 1939 World War II begins for Europe 1941 World War II begins for USA

attractive to local constituencies and toward multi-purpose projects with conflicting purposes became a contentious issue. Table 2.3 summarizes the above-mentioned events. 1943 to 1969: Emergence of Multiple-Objective Focus and Analyses After 1943, the focus in water resource planning and management began to shift from achieving multiple purposes, such as flood control and water supply, to achieving multiple objectives, such as economic development and environmental protection. Emphasis on economic evaluation of water projects increased (see Chapter 3). Numerous commissions, including the National Water Commission (NWC), were formed to assess water issues confronting the nation and to make recommendations regarding options for solving these problems. These bodies were consistent in their recommendations that river basin planning be carried out comprehensively as opposed to being oriented towards single purposes or projects. A book on water management strategies by the late Gilbert White is relevant to these developments (White, 1969). During the 1940s and 1950s, the construction agencies expanded their

24

Table 2.4

The evolution of water resource planning and decision making

1943 to 1969: multiple-objective analysis

Legislation 1944 Flood Control Act 1948 Water Pollution Control Act 1956 Water Pollution Control Act 1956 Flood Control Act 1955 Rivers and Harbors Act 1965 Water Resources Planning Act 1965 Rivers and Harbors Act 1965 Flood Control Act 1966 Clean Rivers Restoration Act 1968 Wild and Scenic Rivers Act 1968 Flood Insurance Act Institutions 1949 US Commission on Organization of the Executive Branch 1950 Presidential Water Resources Policy Commission 1952 House Subcommittee to Study Civil Works 1955 Presidential Advisory Commission on Water Resources Policy 1959 Senate Select Committee Water Resources 1965 Water Resources Council 1967 North East Water Supply Study Analysis 1950 Green Book (revised 1958) 1952 Circular A-47 1958 Multiple-Purpose River Development (Krutilla and Eckstein, 1958) 1962 Senate Document 97 1962 Design of Water Resource Systems (Maass et al., 1962) Other events 1945 World War II ends 1950 Korean War begins 1953 Korean War ends

programs significantly, even with little national interest in water programs other than the continuing concern for improving flood protection. But, by the end of the 1950s, some water resources issues, especially protection and improvement of environmental quality began to capture wide national interest (Table 2.4). At the same time, after abolition of the NRPB in 1943, federal water resources planning became fragmented and of narrower scope. The Executive Branch of the government lost the capability to develop comprehensive water resources plans or to evaluate the plans prepared by the construction agencies. New water resources programs were mostly the work of the congressional committees responsible

History of US water resources planning and development

25

for individual agency programs. Not surprisingly, each of the construction agencies developed close ties with their congressional supporters and the subsequent programs were heavily oriented to agency missions and geographical areas of responsibility. Thus, the USACE focused on the desires of local communities seeking flood protection, the USBR on stimulating economic development in the west through irrigation development and the SCS on protecting the nation’s soil and water through watershed conservation programs. Congressional sponsorship was based more on serving local constituencies than on furthering national objectives. After World War II, USACE continued as the principal water resources construction agency, with more than 50 per cent of federal water resourcerelated authorizations and appropriations going to its programs. Flood control issues dominated, but navigation ran a close second. The Flood Control Act of 1944 was USACE’s main governing policy during this period. It authorized the introduction of recreation facilities at USACE sites, but not, until 1965, the inclusion of recreation benefits in benefit-cost ratios. The 1944 Act also authorized the USBR to participate in the PickSloan plan (Missouri River Basin development plan), the largest project of its type in which the USBR had participated up to that time. With this law, Congress took responsibility for coordinating efforts between the USACE and the USBR. As already noted, the use of benefit-cost analysis in the evaluation of alternative public projects had its roots in the Flood Control Act of 1936. The great challenge for application lies in estimating the benefits and costs and in establishing a conceptually defensible discount rate to allow transforming long future time streams of both benefits and costs into comparable single numbers (generally ‘present values’, that is, values as of the time of analysis before the project is actually built). To provide guidance, a series of increasingly sophisticated documents were published. The first of these was a report by the Subcommittee on Benefits and Costs of the US Interagency Committee on Water Resources (USIACWR) entitled Proposed Practices for Economic Analysis of River Basin Projects, commonly known as ‘The Green Book’ (USIACWR, 1950). First published in 1950, then revised in 1958, it was widely used through the early 1960s. In 1952 the BOB issued Circular A-47 (US Bureau of the Budget, 1952), which set out standards for evaluating water resources projects and contained the provision that total project benefits must exceed the costs, as well as the proviso that the benefit of each individual purpose within multi-purpose projects must exceed its portion of costs. It also included several cost-sharing provisions and set a maximum period of 50 years for repayment of federal investments in water resources projects. These guidelines were adopted by the Eisenhower Administration. In 1962 a new

26

The evolution of water resource planning and decision making

set of guidelines was issued entitled Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources, known as Senate Document 97 (US Senate, 1962). In 1964 President Kennedy rescinded Circular A-47, giving preference to Senate Document 97 (Rogers, 1993). Two classic Harvard University studies published during this period also addressed issues related to economic analysis of water resources projects and suggested analytical approaches (Krutilla and Eckstein, 1958; Maass et al., 1962). The latter, titled Design of Water Resource Systems, encouraged development and application of mathematical models to support planning and decision-making processes. The advent of high-speed digital computers facilitated implementation of the techniques contained in the publication and thus supported formal, numerical analysis of large-scale water resources systems over long periods of time (see also Chapters 3 and 4). During the same years that analytical guidelines were being sharpened, efforts were underway to increase coordination of planning efforts across federal agencies and to broaden the viewpoints of the planners themselves, especially where it came to matters of environmental quality. Thus, beginning in the late 1940s a series of commissions and committees was created focused on coordination within the Executive Branch broadly and on water resource coordination more narrowly. The most prominent of these efforts were: the US Commission on the Organization of the Executive Branch of the Government, 1949; the President’s Water Resources Policy Commission, 1950; the Subcommittee to Study Civil Works of the House Committee on Public Works, 82nd Congress, 2nd Session, 1952; and the Presidential Advisory Committee on Water Resources Policy, 1955 (Holmes, 1972). All four produced work carefully considered by the legislative and executive branches, and although the details of the recommendations varied, the studies were in agreement with a general approach to water resources planning. All of the bodies favored comprehensive planning for river basins rather than an individual purpose or project basis. They also favored integration of planning by federal, state and local participants and the establishment of uniform policies for economic evaluation of projects and repayment of costs. These recommendations drove many of the reforms in water resources organizational structure and management that eventually emerged in the late 1960s. On 20 April 1959 the Senate Select Committee on Water Resources had been established. A decade later, it made five broad recommendations (US Congress, 1969). First, it called for the federal government, in cooperation with the states, to prepare comprehensive water development and management plans for all major river basins in the USA. Second, it recommended

History of US water resources planning and development

27

that the federal government encourage the states to more actively participate in planning and implementing water resources development and management activities. Third, it called for a periodic assessment of water-supply and demand relations to be made for each water resource region of the nation. Fourth, the committee proposed a federal program of coordinated scientific research on water. Fifth, it recommended a specific program to encourage efficiency in water development and use. The recommendations of the Select Committee are often considered the starting point of a new era in water resources planning and development in the USA. The report gave the Executive Branch approval to initiate radically new policy directions (Holmes, 1979; US Congress, 1969). The role of existing construction agencies expanded to include emphasis on objectives such as storage for in-stream quality, municipal and industrial water supply, recreation, fish and wildlife protection and the regulation of floods. It was also recognized by Congress that the traditional focus of water programs was in need of revision to ensure proper handling of the most urgent water problems identified in the 1960s. Although the committee made no legislative proposals, the Water Resources Planning Act (WRPA) of 1965 was an outgrowth of its work. The Act was designed to encourage conservation, development and use of the nation’s water and related land resources on a comprehensive and coordinated basis and it established the Water Resources Council (WRC), provided for River Basin Commissions (RBCs) and authorized financial assistance to the states for comprehensive water resources planning. Where the environment was concerned, the following actions were taken: ●

●

The 1946 Fish and Wildlife Coordination Act initiated cooperative efforts among water agencies to prevent harm to or loss of wildlife as a result of federal actions to impound, divert or control water. The Act also mandated that the cost of planning, construction and maintenance of facilities for protection of wildlife should be part of the total cost of the water resource project. In 1958 Congress amended the Act to add wildlife enhancement to the planning purposes. This forced federal agencies to consult with the USFWS on water resource construction projects. The 1948 Water Pollution Control Act authorized the US Surgeon General of the Public Health Service to work with federal, state, interstate and local government agencies to prepare comprehensive pollution control plans for interstate rivers. The legislation included a pollution abatement procedure, but did not provide for enforcement action without approval of the state involved. The 1948 Act

28

The evolution of water resource planning and decision making

●

also provided grants and loans to local governments for construction of sewage treatment works, yet no funds were appropriated for this purpose. In 1956 a much stronger pollution control bill passed. This Act authorized a program of 30 per cent incentive grants to subsidize municipal wastewater treatment plant construction. The federal abatement procedure was also strengthened. After two years of debate over federal water quality standards by Congress, the Water Quality Act of 1965 was passed. It provided a timetable for the states to create water quality standards for their interstate receiving waters. The standards were then enforceable by the federal government. The 1965 Act was a turning point in the federal government’s enforcement role because the Act gave the government authority to make basic water quality policy and permitted it to take direct action against water polluters.

Related developments included the strengthening of the role of the SCS in 1953, when it was given full administrative responsibility for watershed programs. In 1954 Public Law 566 authorized the USDA to help local organizations conduct improvement works for flood prevention and agricultural aspects of water use and conservation for watersheds not exceeding 250 000 acres. The help authorized included studies, plans and financial assistance for appropriate programs. Under the SCS’s small watershed program, the construction of large dams, such as those permitted under the authority of USACE, USBR and TVA, was not allowed. However, SCS engaged in many projects nationwide related to the needs of rural areas. In addition, in the 1940s, the National Park Service (NPS) had begun reporting to USBR on the recreational potential of reservoir sites and river basins and in 1945 it began recreation planning for USACE projects, but only when requested to do so. While NPS did not always share the views of the USACE or the USBR relative to water development projects, indeed it often opposed them, in 1947 it became responsible for recreation planning at USBR projects. This was probably not the best idea for promoting interagency coordination. Another significant development was the growing respectability of non-structural alternatives in the control of flood damages. The first movement away from a structural-only approach began in the 1950s and gained momentum with circulation of work by Gilbert F. White and his colleagues at the University of Chicago detailing changes in urban occupancy of flood plains and advocating land use control and zoning as an alternative to levees and floodwalls for reducing the damages from floods (White, 1945; Kates, 1962; White, 1964). As a result of mounting flood losses nationally, even construction agency attention in the 1960s began to

History of US water resources planning and development

29

shift from structural to non-structural approaches. Consideration began to be given to measures such as zoning, flood insurance, relocation, flood forecasting and alternative types of storage, despite the bias inherent in the guidelines for Benefit-cost analysis (BCA) toward structural alternatives, for which both costs incurred and damages avoided are likely to be more easily estimated. The 1960 Flood Control Act officially launched this effort and authorized USACE to provide flood plain information. In 1966 the Johnson Administration submitted ‘A unified national program for managing flood losses’, House Document 465, (US House of Representatives, 1966) to Congress including recommendations for federal agencies, including research and administration (Grigg, 1996). A consequence of House Document 465 was the Flood Insurance Act of 1968. Even TVA felt the pressure, for after a spate of dam building, many communities in the TVA region were still subject to damaging floods and structural solutions seemed likely to be economically unjustifiable. As a result, the TVA began a cooperative program with state and local governments that involved land use planning to help communities avoid or minimize flood damage where floods could not be prevented. This was one of the earliest on-theground efforts at non-structural flood control. At least in part because Senate Document 97 had amended the benefit-cost analysis standards, allowing more projects to meet the test of economic efficiency and thus be eligible for authorization, many new projects were authorized and initiated during the brief Kennedy years. These included a wide array of projects that would substantially affect the environment, such as the USBR’s Fryingpan-Arkansas trans-mountain diversion and new canals that greatly increased the length of the nation’s inland waterways system (Holmes, 1979). However, the 1960s were not just about building. During the later years of the decade, several significant regional and basin-wide, water-related studies were implemented. For example, Title I of the Rivers and Harbors Act and Flood Control Act of 1965 authorized USACE to undertake the Northeast Water Supply Study (NEWS) in cooperation with other federal, state and local government agencies and to develop plans to meet the long-range water supply needs of the northeast megalopolis. It was further authorized to construct, operate and maintain relevant water supply works, including reservoirs and inter-basin transfer facilities. The study was funded in 1967 and completed in the 1970s. The USACE also participated in several Type I regional framework studies provided for by the WRPA of 1965. These studies were to incorporate the most recent developments in planning theory and methods. One such effort was the North Atlantic Regional Study (NAR) in which needs for water and related land resources were projected to the year 2020, considering

30

The evolution of water resource planning and decision making

the following three objectives: regional development, national income and the environmental quality. A major finding was that water quality maintenance was the highest priority need throughout the region (ibid.). While President Johnson continued most of Kennedy’s initiatives for water resources planning, research and development, when elected president in 1964, he made the preservation of nature a keystone of his domestic policy. In 1966 Johnson began to focus his attention on water quality, and it was his position that the entire river basin, rather than a locality, should be the focus of pollution control efforts. He proposed a clean rivers demonstration program in which the federal government provided funds to interstate and/or regional water pollution control authorities on a firstready, first-served basis. Those participating in the program would be required to have permanent water quality planning organizations, water quality standards and implementation plans in effect for all waters of the basin designated. When the Clean Rivers Restoration Act passed in 1966, it contained no provision for Johnson’s demonstration program, though it did acknowledge his river basin planning concept. But the greatest effect of the 1966 Act was its substantial increase in the level of funding that could be appropriated to subsidize the construction of wastewater treatment facilities. Unfortunately, because of the increasing costs of the Vietnam War, the construction grant program was not funded at the levels authorized in the 1966 Act. But the Wild and Scenic Rivers Act, passed in 1968, did provide for a national system of rivers to be protected from federal water development, symbolizing the interest of Congress in protecting the environmental attributes of special water bodies. An excellent example that brought together the themes of sophisticated planning methods, the use of non-structural approaches and the consideration of multiple objectives is the study of Washington, DC’s metropolitan area water supply problems, reported in Palmer et al. (1979). A unique amalgam of institutional cooperation and analytical expertise involving simulation and optimization models, the Potomac River Basin study produced a system management rather than structural solution to the problem. The principal features of the approach included: ● ●

●

Combination of simulation and optimization techniques to provide practical rules for operation of the water supply system. Use of the National Weather Service River Forecast System based on a soil moisture accounting model and its direct integration with reservoir operation. Development of a technique to predict water demand and application of it to water resources system design and operation.

History of US water resources planning and development ● ● ●

31

Combination of distribution analysis and hydrologic modeling to develop operating procedures for a complex water supply system. Use of risk analysis to identify the start of potential droughts and to quantify the risks of continued drought. Use of drought games to test and improve water supply operating procedures and to illustrate the use of those procedures to decision makers.

The benefits of coordinated water management were substantial (estimated in excess of one quarter billion dollars based on costs of implementing proposed reservoir development alternatives at that time) (Sheer, 1981). The environmental impact was minimal since major reservoir construction was not involved. Despite such advances in technique, shifts toward more subtle views of available policy tools, such as multi-objective decision-making aids and non-structural flood damage mitigation approaches, and heightened interest in environmental, especially water, quality, the focus of water resources programs during the 1960s remained one of rather traditional development via new construction projects. 1969 to 1980: The Environmental Era During this period, emphasis shifted from water resources development to water quality protection and management, with the passage of the National Environmental Policy Act (NEPA) of 1969, the Water Pollution Control Act Amendments of 1972, the Safe Drinking Water Act (SDWA) of 1974, the Resource Conservation and Recovery Act (RCRA) of 1976 and Amendments in 1977 to what had come to be known as the Clean Water Act (CWA) (Table 2.5). Reflecting this same shift in emphasis, new guidelines explicitly required the consideration of an ‘Environmental Quality Account’ in the analysis of proposed projects. In 1969 the Nixon Administration took office with good conservation intentions. And while Congress prodded his administration to take action in the areas of water pollution control and environmental policy more broadly, budgetary restraints imposed by the Vietnam War (Holmes, 1979) limited his efforts. Nevertheless, the environmental movement, which had been strengthening during the last part of the 1960s, supported this prodding. By 1970 the Nixon Administration became convinced of a need for massive federal investment in the wastewater treatment plant construction program and in his February 1970 Message on environmental quality, President Nixon proposed a four-year, $10 billion program of state, federal and local investment in wastewater treatment facilities.

32

Table 2.5

The evolution of water resource planning and decision making

1969 to 1980: environmental era

Legislation 1969 National Environmental Policy Act 1972 Federal Water Pollution Control Act (Amendments) (Clean Water Act) 1973 Endangered Species Act 1974 Safe Drinking Water Act 1976 Resource Conservation and Recovery Act 1977 Clean Water Act (amended) 1980 Comprehensive Environmental Response, Compensation and Liability Act Institutions 1970 Council on Environmental Quality 1972 National Commission on Water Quality 1973 Principles and Standards 1973 National Water Commission Report 1978 Water Policy Initiatives (President Carter) Other events 1964 USA becomes seriously involved in the Vietnam War 1975 USA withdraws from Vietnam

The federal share of this proposed authorization was $1 billion per year. Although the actual authorized funding level was less than many environmental advocates desired, it was much more than any previous presidential request (ibid.). In 1970 NEPA became law, with the President praising the Act and proclaiming the three-member Council on Environmental Quality (CEQ) a great asset in informing him on important environmental issues. The Administration promptly put the provisions of NEPA into effect and in March 1970 the President issued an Executive Order instructing all federal agencies to report on possible inconsistencies between their authorities and policies and those codified in NEPA. Then, in April 1970 the CEQ issued interim guidelines for the preparation of environmental impact statements. In December of 1970 President Nixon’s environmental interests led to the creation of a new independent regulatory agency, the US Environmental Protection Agency (EPA). He based his action on the recommendations of his Advisory Council on Executive Organization (the Ash Council). The EPA assumed the environmental management functions of several existing agencies and brought together all of the federal pollution control programs related to water, air, solid wastes, pesticides and radiation. The Administration viewed the EPA as the most effective way of reorganizing multiple agencies into a single, interrelated system. However, creation

History of US water resources planning and development

33

of the EPA made even more pronounced the separation of water quality from other water programs. It appears sentiment at the time was that water resources development and water pollution control were at best unrelated and at worst antagonistic concerns (ibid.). Even with the enactment of the NEPA and the creation of the EPA, comprehensive response to water pollution issues was still lacking. During congressional hearings in 1971, it became evident the existing program was underfunded and lacked the ability to create enforceable restrictions on pollution discharges from either public or private sources. In an ambitious effort to fix things, including the unenforceability of the water quality standards provisions of earlier legislation, Congress passed the Water Pollution Control Act Amendments of 1972 (Public Law 92-500), which became the CWA. The law ended two years of intense debate, negotiation and compromise and resulted in the most assertive step yet taken in the history of national water pollution control activities. The Act departed in several ways from previous water pollution control legislation, expanding the federal role, increasing the level of funding for subsidizing construction of publicly owned waste treatment works, elevating planning to a higher level of significance, opening new avenues for public participation and creating a regulatory mechanism with technology-based effluent standards and a national permit system for all point-source dischargers as the basis for enforcement. Two goals and eight policies were articulated and, as part of the strategy for their implementation, Congress set deadlines for achievement of specific goals and objectives. The grand objective of the Act was to restore and maintain the chemical, physical and biological integrity of the nation’s waters. Beneath this overarching target, the more specific goals were: first, to reach, wherever attainable, a level of water quality that would provide for the protection and propagation of fish, shellfish and wildlife and for recreation in and on the water; and, second, to eliminate the discharge of pollutants to the navigable waters of the USA. The policies aimed at achieving the objective and goals were: ● ●

● ●

To prohibit the discharge of toxic pollutants in toxic amounts. To provide federal financial assistance for construction of publicly owned treatment works. In particular, the law committed the federal government to provide subsidies amounting to up to 75 per cent of the capital costs of new public treatment works and authorized $18 billion of funding for this purpose. To develop and implement area-wide waste treatment management planning. To mount a major research and demonstration effort in wastewater treatment technology.

34

The evolution of water resource planning and decision making ● ● ● ●

To recognize, preserve and protect the primary responsibilities and roles of the states to prevent, reduce and eliminate pollution. To ensure, where possible, that foreign nations act to prevent, reduce and eliminate pollution in international waters. To provide for, encourage and assist public participation in executing the Act. To pursue procedures that reduce paperwork and interagency decisions on procedures and prevent needless duplication and unnecessary delays at all levels of government.

Congress intended the Act be more than a general mandate for pointsource discharge control. It embodied a new approach to dealing with water resources. For example, the construction grants for publicly owned treatment works (POTW) made available to encourage meeting of permit terms, provided not just for standard treatment processes, but also for: ●

● ● ●

The recycling of potential sewage pollutants through the production of agriculture, silviculture and aquaculture products or any combination thereof. The confined and contained disposal of pollutants not recycled. The reclamation of wastewater. The ultimate disposal of sludge in a manner that would not result in environmental hazards.

The statute also outlined a long-term program to reduce water use, reduce the generation of wastes and establish financially self-sustaining, public-owned pollution control facilities. Reinforcing this movement toward a serious federal role in environmental quality protection and restoration, in September 1973 the WRC published Principles and Standards for Planning Water and Related Land Resources (P&S) (WRC, 1973). This document and its revisions recognized and required the use in planning and evaluation of four major accounting stances: National Economic Development (NED, the ‘efficiency’ stance), Environmental Quality (EQ), Regional Economic Development (RED) and Other Social Effects (OSE). Although the EPA was included in the Federal Register for review of the P&S, the agency was excluded from their provisions when evaluating its own proposed rules and standards. Also in 1973 the NWC released its landmark report New Directions in U.S. Water Policy (NWC, 1973). The report’s recommendations still may be seen as a model statement of goals for water policy refinement in the long run. The report’s seven recurring themes were:

History of US water resources planning and development ●

● ● ● ●

● ●

35

Future water demands are not inevitable but are in large part the result of policy decisions within the control of society. Good planning should be based on a range of plausible alternative futures. National priorities are shifting from water resources development to restoring and enhancing water quality. Water resources planning must be tied more closely to land use planning. Water use efficiency should be emphasized and policies to encourage wise water use and conservation practices should be promoted. Sound economic principles should be incorporated in decisions about whether or not to build water projects. Beneficiaries should pay for the costs of the services they receive and unjustified subsidies that distort allocation of scarce resources should be eliminated. Laws and legal institutions should be re-examined in the light of contemporary water problems. Development, management and protection of water resources should be controlled at that level of government nearest the problem and most capable of effectively representing the vital interests involved.

Extending the march of environmental legislative victories, in 1973 Congress passed the Endangered Species Act (ESA), recognizing the human impact on extinction of plants and animals (Public Law 90-542). The initial focus of the Act was on protecting habitats for terrestrial species, but water-related conflicts began to emerge almost immediately. And in the same year the National Commission on Water Quality (mandated by the 1972 Act) began considering mid-course corrections because the mandates for fishable-swimmable waters by 1977 and for zero discharge of pollutants by 1985 were clearly not going to be met. The Commission generally recommended deadline extensions on a case-bycase basis, but for the 1985 deadline, it recommended a five- to ten-year blanket extension. It also requested appointment of a new commission to oversee progress. Recommendations were also made regarding nonpoint pollution, shortfalls in funding and assigning states regulatory authority. In December 1974 the SDWA became law, with the purpose of ensuring that water supply systems serving the public met minimum standards for the protection of public health by identifying contaminants and establishing maximum acceptable levels for them. Prior to the SDWA, only water supplies used by interstate carriers were governed by federal drinking water standards. After the Act passed, EPA established federal standards to control the levels of contaminants in drinking water supplied by all public water systems. It also established a federal–state system for

36

The evolution of water resource planning and decision making

ensuring compliance with these standards. The major provisions of the SDWA were: ● ● ● ● ● ●

Establishment of primary regulations for the protection of the public health. Establishment of secondary regulations related to taste, odor and appearance of drinking water. Establishment of regulations to protect underground drinking water sources by the control of surface injection. Initiation of research on health, economic and technological problems related to drinking water supplies. Initiation of a survey of rural water supplies. Allocation of funds to states for improving their drinking water programs through technical assistance, training of personnel and grant support.

Two further laws relevant to the protection of water quality came into force before the end of the decade: the RCRA in 1976 and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as the Superfund Act, in 1980. Their connections to water quality were potentially dramatic if physically somewhat indirect, involving protection, especially of groundwater, from the leaching of toxic and other pollutants from operating and defunct landfills and other on-land disposal sites. In 1977 the CWA was revised in an attempt to correct identified shortcomings. The salient points of the revision were: ● ● ●

●

●

States were specifically mandated primacy over water quality and water use issues. Municipalities were given evidence of an increased federal commitment in the form of construction grants and training assistance. The public received assurances of the priority of water quality in the form of effective enforcement and incentive provisions for governments and industries to achieve the goal of fishable and swimmable waters. Industry received the necessary extensions of compliance deadlines under the National Pollution Discharge Elimination System (NPDES). Environmental groups witnessed the incorporation of a Natural Resources Defense Council/EPA consent decree into the law that established the principle of toxic effluent standards and set forth a process to implement effluent limitations.

History of US water resources planning and development

37

In 1978 President Carter developed his Federal Water Policy Initiatives (President Jimmy Carter, 1978). They were designed to improve water resources planning and management, to permit construction of sound water projects, to emphasize water conservation, to enhance federal-state cooperation and to increase the focus on environmental quality. On 5 June 1979 he signed Executive Order 12141 authorizing development of an Independent Water Project review process. Under the proposed rules, it was generally believed many western water projects would no longer meet the test of authorization. This did not sit well with Congress and appears to be one of the reasons the WRC was eliminated in 1982 by being given a zero budget. The tide of pollution turned in many localities during the environmental era. Aside from water quality improvement and protection, most other water resources initiatives (particularly development-oriented ones) slowed considerably after about 1970. During the Carter years, the executive and legislative branches of the government debated many issues, but the outcomes were generally stalemates. Every energy and water appropriations bill before Congress after 1976 was a major source of conflict. President Carter’s 1977 hit list of what his administration felt to be unsound water projects was a major symbol of the antagonism between the President and many pro-water development members of Congress. 1980 to Present: Devolution and Environmental Restoration During this period, one of the most dramatic changes in water policy was the introduction of project cost-sharing rules that gave state and local sponsors clear incentives to be careful what they wished (or asked) for and gave the federal construction agencies matching incentives to pay more attention to those wishes and requests. Water quality, both in the ambient setting and when captured as drinking water, continued to be a major concern, but new on the policy horizon was the protection and especially the restoration of natural systems such as the Florida Everglades. Projects aimed at restoration were seen by some as the modern substitutes for dams and canals in the budgets of the construction agencies. From its first days in early 1981, the Reagan Administration’s approach to water project planning and implementation reflected a philosophy of transferring responsibility for some water programs to the states, increasing the level of non-federal cost sharing for water projects and programs and encouraging full recovery of project costs. This was accompanied by an intention to decrease the relevant federal regulatory burden and eliminate the backlog of project authorizations. As another facet of this campaign, in 1981 the Administration encouraged passage

38

The evolution of water resource planning and decision making

of the 1981 Municipal Wastewater Treatment Construction Grant Amendments with key provisions that included reducing grant-funding levels, shifting construction costs to municipalities and limiting eligible categories for funding. This reduced funding commitment at the federal level reflected both a desire to reduce federal spending levels generally and a decision that the environment was an area in which this could be done with little pain. The second part of this decision was perhaps not the wisest one the Administration made, for during the eight years of Reagan stewardship public support for environmental programs increased markedly. In 1982 the Reagan Administration eliminated the budget for WRC, leaving it still authorized but no longer funded. The Administration’s view was that the Cabinet Council on Natural Resources and the Environment and the Office of Water Policy in the USDOI, both created in 1981, early in the term, would fill the void created by the demise of WRC. This action has left the federal government without any national-level mechanism for coordinating state, federal and regional water resources planning processes, with no broad water resources assessment process and without any protocol for dialogue with the states on national water resources management issues. Then in 1983, as part of its more general attack on environmental regulations, the Administration replaced the P&S with Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) (WRC, 1983) based on a single NED objective rather than the four accounting ‘stances’ of the earlier document (for more detail, see Chapter 3). The year 1986 was a very busy one on the water resources front (Table 2.6): ●

●

Congress amended the SDWA, providing federal grants to states for establishing wellhead protection programs. The EPA guidelines for the programs were somewhat unusual in that they allowed regional flexibility, rather than prescribing uniform national standards. The Act also provided for protection of aquifer recharge areas that were primary sources of drinking water. Drinking water standards would apply to these areas and underground injection of effluent was regulated. Enforcement provisions of the Act were strong and in 1987 the first criminal conviction under the Act was obtained (United States vs Jay Woods 1987). Congress also amended the Federal Power Act to require that issuance (or renewal) of licenses for hydroelectric power facilities give equal consideration to energy conservation; to protection of, mitigation of damage to and enhancement of, fish and wildlife; and to

History of US water resources planning and development

Table 2.6

39

1980 to present: devolution and environmental restoration

Legislation 1986 Safe Drinking Water Act (amended) 1986 Federal Power Act (amended) 1986 Water Resources Development Act (WRDA) 1990 WRDA (reauthorized) 1992 Western Water Policy Review Act 1996 Safe Drinking Water Act (reauthorized) Institutions 1981 Cabinet Council on Natural Resources and the Environment 1981 Office of Water Policy (in USDOI) 1982 WRC budget zeroed out Other events 1983 WRC publishes Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) 1986 FEMA takes over Interagency Flood Management Task Force 1989 Beginning of heavy federal involvement in Everglades restoration

●

●

protection of recreational opportunities and preservation of other attributes of environmental quality when considering licensing of power generating facilities. The passage of WRDA 1986 came after years of effort by both the Carter and Reagan Administrations to require greater levels of nonfederal cost sharing for water projects and programs. Prior to this fairly dramatic shift, the federal government had borne most of the construction costs of water projects, although, since 1936 project sponsors had been required to provide lands, easements and rights-ofway needed for the projects and to commit, in some cases, to operate and maintain the projects after completion. (Table 2.7 shows different cost-sharing levels for different project purposes.) That change significantly affected federal and state roles in water management. It increased the likelihood that states would be more discriminating in their pursuit of water projects and suggested that they play a more significant role in identifying alternative strategies for meeting their longterm water supply, flood control and water quality control desires. The Act authorized over 270 water projects and many studies. Finally, in the same year, the Federal Emergency Management Agency (FEMA) assumed responsibility for the Federal Interagency Flood Management Task Force and submitted a revision to the Unified National Program for Managing Flood Losses. The revisions included a federal disaster mitigation strategy, increased

40

The evolution of water resource planning and decision making

Table 2.7

Project cost-sharing for different purposes

Purpose

Non-federal share (%)

Reconnaissance Study Feasibility Study

0 50 20: depth < 20 ft 35: depth 21–45 ft 60: depth > 45 ft 50 from fuel tax

Navigation – Harbors Navigation – Inland Flood Control Structural Non-structural Hydroelectric Power M&I Water Supply Agricultural Water Supply Recreation Navigation Other Hurricane and Storm Damage Aquatic Plant Control Source:

Min. 35 to max. 50 25 100 100 35 50 50 50 of separable cost 35 50

USACE (2002).

research and a focus on coastal zone flooding (Grigg, 1996). The non-structural thrust of flood management has remained the standard for the remainder of this era. Congress reauthorized the CWA in 1987 as the Water Quality Act of 1987 (Public Law 100-4). One focus of the 1987 Act was the beginning of an effort to control non-point sources of pollution, an effort that could be traced back to Section 202 of the 1972 CWA, but the 1987 Act (Section 319) required the states to prepare non-point source management plans. Agricultural fields, animal feedlots and urban areas, including streets, were to be targeted. Significantly, however, the new law did not authorize mandatory controls. A total of $400 million in federal funds was authorized for use by the states to implement cleanup programs and there was provision for state creation of revolving funds to facilitate low-interest loans to local governments for sewage treatment improvements. It also provided more options for state and federal sharing of programs under the NPDES. The EPA and the states now divide the categories of discharges regulated within each state. During his first two years as President, the first George Bush adopted

History of US water resources planning and development

41

a more positive environmental agenda than had Reagan, but the White House was itself divided on environmental issues for economic and ideological reasons. Nonetheless an important piece of water resources legislation was passed in 1990, a new version of the WRDA, which provided USACE with a specific environmental protection mission and represented a significant expansion in the breadth of USACE activities. Thus, Public Law 101-540, Section 306 of the Act states: ‘The Secretary [of the Army] shall include environmental protection as one of the primary missions of USACE in planning, designing, constructing, operating and maintaining water resources projects.’ Although the environmental movement to protect the Florida Everglades, the largest single marsh system in the nation and the habitat for numerous species of birds, mammals, amphibians and reptiles, some of which are endangered or threatened, had begun in the 1960s, it was the early 1980s before the state of Florida initiated the ‘Save Our Everglades’ program to address the widespread concern of its citizens for the protection of this unique ecosystem. This program aimed to restore the Everglades to a state more closely resembling that existing at the turn of the twentieth century, before South Florida development significantly altered the water flow patterns and amounts by creating an elaborate system of drainage canals and flow control structures aimed at draining land for agriculture and urban development and protecting those lands from subsequent flooding. In 1989 the federal government became heavily involved in Everglades restoration when the Everglades National Park Protection and Expansion Act passed in Congress. (Only about 15 to 20 per cent of the original Everglades lands were contained in the Everglades National Park; see Dzurik, 2002.) The Act authorized the purchase of over 107 000 acres east of the existing park. In 1992 Congress authorized the Central and Southern Florida (C&SF) Project Comprehensive Review Study. The study included representatives from the South Florida Water Management District (SFWMD), the USACE, the Everglades National Park and other state and local government agencies and not surprisingly, adopted a multiagency cooperative approach to planning the restoration effort. A major focus was on restoration of flows of fresh water from Lake Okeechobee through the Everglades to Florida Bay. The Reconnaissance Report was completed in 1994. In 1996 the WRDA, in Section 528, entitled Everglades and South Florida Ecosystem Restoration, directed the restudy to propose a comprehensive plan for the purpose of restoring, preserving and protecting the South Florida ecosystem and in 1998 USACE released a draft of its Comprehensive Everglades Restoration Plan (CERP). The estimated price tag was $7.8 billion, half to be provided by the State of Florida. The WRDA of 2000, signed by President Clinton, approved the CERP and

42

The evolution of water resource planning and decision making

authorized $1.4 billion for ten restoration projects that were to serve as the foundation for future actions. In 1996 the SDWA was again reauthorized. This was the first major revision to the Act in ten years and the amendments focused on funding related to contaminants that were thought to pose the greatest risk to human health and those most likely to occur in a given water system. Rather than prescribe those contaminants, EPA was given latitude to select which contaminants to regulate, but required to use the best available scientific information and objective practices when proposing drinking water standards. The Act established Maximum Contaminant Level Goals (MCLG) and Maximum Contaminant Level (MCL) standards. The MCLGs are desirable minimums (often zero), while the MCLs are practicable standards based on costs, laboratory capabilities and physical/ chemical feasibility. The Act also established a revolving trust fund for drinking water system upgrade loans, required that water system operators be certified, maintained requirements for setting both a MCL and a MCLG for regulated contaminants based on health risk reduction and benefit-cost analyses and required EPA to establish a database reflecting the presence of unregulated contaminants in water. The Western Water Policy Review Act of 1992 had directed the President to undertake a comprehensive review of federal activities in the 19 western states that directly or indirectly affected the allocation and use of water resources and to submit a report of findings and recommendations to the Congressional committees having jurisdiction over federal water programs. A Western Water Policy Review Advisory Commission (WWPRAC) was appointed to carry out the charge and the Commission’s report, Water in the West: Challenge for the Next Century, was published in 1998 (Western Water Policy Review Advisory Commission, 1998). The major topics addressed were: ● ● ● ● ● ● ● ● ●

Principles of water management for the twenty-first century New governance of watersheds and river basins Tribal water rights Water quality Management of water and water facilities Flood plain management Maintaining the water infrastructure Protecting productive agricultural communities Improving decision making, reducing conflict.

The Commissioners hoped that the many diverse recommendations they made would help guide Congressional actions in the coming years.

History of US water resources planning and development

43

It should be noted, however, that funding problems and a change in the control of Congress constrained the Commission’s achievements from the start. While the Clinton Administration supported a broad agenda of environmental policy reform, its sporadic political leadership in that field disappointed environmentalists. There is scant record on water related actions by the second Bush Administration, but it appears that the economic impact of environmental policy has once again become important and that the President has leaned toward development. The terrorist attacks of September 11, 2001 generated concern about the security of the nation’s water sources and water supply infrastructure. In response, public and private organizations have formed partnerships to determine effective preventive measures and counter-measures to improve water supply security. EPA is working with water utilities, water associations, state and federal agencies to develop strategies to strengthen their security capabilities. The Public Health Prevention and Bioterrorism Preparedness Act of 2002 includes provisions for funding security initiatives. Since September 11, water utilities have made considerable expenditures on security measures and they have improved their emergency response capabilities. It is expected that these efforts will continue to expand. In 2002 the Aspen Institute raised the question: ‘Should removing a dam be an option in managing river systems in the United States?’ (Aspen Institute, 2002). This reflected the decay of the condition of many dams, the obsolescence of others, the environmental impacts of these structures and the tension between such positive possibilities as water power generation and negative effects such as the interference of dams with anadromous fish runs. The Aspen Institute study team noted that dam removal had usually not been adequately considered as an option in decision-making processes and their recommendations focused on this deficiency. As a follow-up to the Aspen report, the Environmental and Water Resources Institute of the American Society of Civil Engineers (ASCE) has conducted a number of nationwide dam removal workshops and a Dam Removal Clearinghouse has been established at the University of California, Berkeley (www.lib.berkeley.edu/WRCA/damremoval/). It appears that water resources development and management in the twenty-first century will continue to depart from the historic structural orientation and focus more on high priority outputs, such as ecosystem protection and restoration, flood damage reduction and navigation. It is also expected that water resources planning will take on a more integrated approach, capturing the true spatial and temporal dimensions of water problems and recognizing the interactions of components of natural systems (air, water, land, plants and animals) with the relevant,

44

The evolution of water resource planning and decision making

social, political, legal and economic attributes of the problem-shed. The Water Resources Development Act of 2000, for example, authorized ten regional/watershed restoration programs, the most notable is Florida’s Everglades ($7.8 billion). That Act also authorized the use of adaptive management techniques in the planning process. A survey of State Water Planning in 2005 by the ASCE (Viessman and Feather, 2006) disclosed several major occurrences since Earth Day, 1970 which affected the focus of water resources development and management: (1) devolution of federal water resources obligations to the states; (2) emergence of sustained public support for environmental protection and restoration; (3) elimination of funding for the Water Resources Planning Act of 1965 which had supported comprehensive state and river basin water plans; and (4) the emergence of direct and widespread stakeholder involvement in water resources planning as a result of social dynamics and changes in federal cost sharing policy resulting from the Water Resources Development Act of 1986. These events fostered the development of plans that embodied concepts of sustainability, integration and climate change. The notion of ‘watershed focus’ was rekindled and there was an adoption of new techniques, such as adaptive management, outcomes assessment and shared vision planning.

EVOLUTION AND ELEMENTS OF PLANNING PROCESSES, FOCUSING ON THE US ARMY CORPS OF ENGINEERS Over the last half of the twentieth century, planning processes within federal agencies changed in response to changes in national values, adjustments in the guidance issued to agencies by Congress and the administration and shifting attention within the agencies to the facets of planning itself. Figure 2.1 schematically illustrates trends in the evolution of USACE responsibilities and their degree of complexity and the variety of influences on those responsibilities. These same influences were mirrored in other agencies. Prior to the 1950s, internal regulations developed over time primarily guided the development of agencies’ reports. The issuance of OMB Circular A-47 in 1952, the circulation of the ‘Green Book’ and the influence of the early publications of the Harvard Water Program brought water resources planning into a new era. Several later documents increased the professionalization of planning activities within the agencies and broadened the disciplines represented in the process: (1) Senate Document 97 of 1962, endorsing water resources development as a means of increasing economic growth; (2) the 1965 WRDA that required

History of US water resources planning and development

45

the establishment of broad-based principles for the evaluation of proposed projects; (3) the 1973 P&S published by the then new WRC; (4) NEPA and related environmental legislation of the early 1970s; and (5) the P&G of 1983. The USACE Institute for Water Resources (IWR) was established in 1969 to guide that agency’s efforts to keep up with changing requirements. Increased attention was focused on education and training of USACE planners in new techniques for economic analysis, public participation and planning in general. The focus shifted from planning for specific projects to planning that took the broader view required by today’s society. Passage of the WRDA of 1986 established serious cost sharing as part of USACE project planning. Especially important for planning was the requirement for project sponsors to cost-share feasibility studies. Planning efforts of the sort previously led by USACE became joint efforts with local sponsors. At a minimum, the views of local sponsors regarding the need for environmental aspects of projects had to be taken more seriously and sometimes resulted in the blending of primary project purposes (flood control, navigation and so on) with environmental enhancements. Legislation in the early 1990s gave USACE new authorities for taking a broad-based planning approach, but failure of administrations to push for funding of such programs left this something of a dead letter. Further, efforts to improve the business management of USACE shifted focus away from innovative planning and the development of planners so that by the turn of the new century, it was apparent major steps would be needed to restore the strength of the planning program.

ELEMENTS OF THE PLANNING PROCESS At a very general level, water resources planning involves processes and goals. Processes are the methodologies and goals define the purpose of the plan. Water resources plans address water availability (all sources); water uses (purpose, amount and timing); impacts of water development and use on water quality and the environment; deficits and surpluses in water supply; population trends; constraints on water development and use; relevant laws and regulations; economic conditions; and the political climate of the planning region. The trends discussed previously and the preferences of society have influenced the evolution and attributes of water resources planning protocols (Dzurik, 2002; Grigg, 1996; Rogers, 1993). Planning processes generally include the following elements: identifying problems, defining goals and objectives, establishing a database, obtaining stakeholder input, managing conflicts, coordinating planning

46

The evolution of water resource planning and decision making

efforts, identifying and evaluating alternatives, making recommendations, developing implementation plans and establishing monitoring programs (Dzurik, 2002; USACE, 1997). Planning frameworks have evolved from single-purpose, to multi-objective, to integrated. This transition reflects: (1) increased awareness and understanding of water-environment interactions; (2) increasing stakeholder involvement; (3) improvements in analytical capability; and (4) the globalization of water-related issues (Elgin et al., 1975; US Government Accountability Office (GAO), 1978; Hanke, 1981; James and Lee, 1971; US Congress, 1975; USACE, 1997). Figure 2.1 depicts an expansion over time of the scope of water resources planning. (The vertical axis simply represents changes in relative responsibilities, it is not quantitative.) It should be noted that the breadth of focus of water resources planning discussed here is not the same as that conducted by the EPA (Schad, 1998). For the most part, EPA’s water quality plans focus on compliance with EPA regulations and solving water quality problems, whereas water resources planning practices of the construction agencies embrace a broader spectrum of issues, such as allocation of water resources, flood damage reduction, navigation, hydroelectric power generation and environmental protection and restoration. Dealing with this dichotomy is a continuing challenge for water resources planners and managers. Identifying Issues and Problems Planning is the framework for dealing with water management problems. Contemporary water management issues are the foundation for establishing planning objectives. As new issues emerge, adjustments in planning strategies must be made to keep them current. Issue identification deals with the broad conceptual picture, while problem identification translates issues into specifics for watershed or other water management plans. Defining Goals and Objectives Water resources plans must address the goals and preferences of society. The goals are broad generalizations such as restoration of environmental attributes. Society’s preferences are illustrated by contemporary views of the public such as opposition to structural measures for water management. Objectives are achievable targets that address the prevailing goals. In the USA the principal water resources planning objectives have been to maximize the NED and maintain the integrity of the environment. Once goals are established, a plan is developed to achieve them.

History of US water resources planning and development

47

WATER RESOURCES Build

Control

Allocate

Protect

Restrain

Restore

EPA established

WRDA 90

NEPA

Locks and dams Irrigation

Senate Document 97 Flood Control Act

Channels and harbors 1928

Multi-purpose comprehensive single objective 1950

User fees and higher Clean Water cost sharing sought to Act Amendment reduce federal of 1977 deficit

1969

1981

1990

1998

Source: National Research Council (1999). Reprinted with permission from the National Academies Press, Washington, DC.

Figure 2.1

Trends in the evolution of the US Army Corps of Engineers responsibilities and approaches

Social and environmental goals and objectives may be used to shape contemporary water resources plans via several possible routes: they may be considered explicitly if not mathematically from the beginning in framing the setting; or they may be introduced as constraints on actions; or a multi-objective approach may incorporate these goals in the objective function so that outcomes of evaluations of alternatives may be compared in terms of the implied costs of pursuing each such objective in terms of economic efficiency and other objectives. Establishing a Database There is a need for a continuing assessment of the quantity, quality and uses of water. Such assessments should be considered an integral part of the planning process for they provide the database for identification of emerging issues and information on the ability of existing institutions to deal with identified problems. Data collection and analysis can be expensive, however, and it is important that care be taken to acquire the right data and to use the data in the most productive manner. Prerequisites include determining the type and format of data needed and the types of anticipated analyses. Assessment processes should be designed to fit

48

The evolution of water resource planning and decision making

the level of planning envisioned. Statewide assessments, for example, are likely to be oriented toward issue identification and review of relevant policies and programs; while regional and local level assessments would more likely focus on operational and management needs. Obtaining Stakeholder Input Stakeholder interest in water resources management has increased significantly in the last three decades. Individuals and interest groups have become active in bringing their views to the attention of decision makers by way of attempting to influence the outcomes of proposals for the expenditure of public funds. Without stakeholder acceptance, plan acceptance is unlikely, so planners have developed various approaches for bringing stakeholders to the table. The effectiveness of these efforts has varied from success to failure depending largely on the stage at which involvement occurs, the willingness of stakeholders to negotiate and the skill of the planning agency and even of the individuals most directly involved. There does not appear to be a general formula for getting stakeholders to the table and keeping them there or of assuring positive results, but in Appendix 2.1 the history of efforts is briefly reviewed and some lessons drawn. Managing Conflicts Stakeholder input will often reveal conflicts, at which point negotiation, rather than confrontation, is the most productive path to follow. The alternative is litigation and this is costly and time-consuming. Conflict resolution strategies employed by planners include: informal gatherings to air views and discuss differences; introduction of third-party facilitators, mediators or arbitrators; and public education, sometimes in the form of cooperative (shared vision) model building. Which approach is the right one depends on the circumstances and the prevailing political climate. Efforts to manage conflict should, in any case, begin when the conflict is discovered. Coordinating Planning Efforts Effective coordination of the agencies involved in water resources planning has long been a goal at all levels of government. It has never been easy because of differing agency missions, traditions and authorities; and the turf-protection attitude that usually accompanies these. Dealing with such problems requires a willingness on the part of agency heads to reach a negotiated solution to their common problems. Short of legislative action to consolidate agencies and their missions, the next best approach is to

History of US water resources planning and development

49

develop effective linkages among the agencies that reduce, if they do not eliminate, the barriers to cooperative efforts. Coordinating mechanisms include interagency agreements and mandates by Congress, the latter often being the most effective arrangement. Identifying and Evaluating Alternatives Because of uncertainties surrounding forecasts and disagreements about particular choices independent of forecast results, planners commonly explore several plausible, but different alternatives for consideration by decision makers. This permits considering and comparing plans for a breadth of future conditions and gives decision makers a better basis for deciding on a plan to support. Although an infinite number of futures might be envisioned, the human mind can deal effectively with only a few of them. Thus, it is common for planners to consider futures reflecting predicted high, low and median conditions. It is also good practice to formulate one or more strategies for meeting the objectives of a plan in the context of each projected future (Elgin et al., 1975). Once formulated, plans must be evaluated according to measures of worth. Such measures are usually economic, environmental and social in character. The evaluations determine: whether a proposed plan will have a positive or negative effect on the national economy, usually based on Benefit-cost analysis; what the environmental impacts will be; whether the social costs are reasonable; what the specifically regional costs and benefits will be; whether the stakeholders likely will accept the plan; and whether funding will be available to ensure implementation. At the federal level, there are well-established criteria for evaluating water resources plans. For actions proposed by state and local governments or by the private sector, the criteria may deviate from those of the federal government, but generally there will be some prescribed standards of judgment. The current USACE evaluation process, similar to the NEPA process, is guided by the P&G of 1983 (WRC, 1983) which are intended to ensure conceptually consistent evaluation of planning proposals involving water and related land resources. (For further detail see Chapter 3; Caulfield, 2000; WRC, 1973; Gardner, 2000; Hufschmidt, 2000; Loucks, 1998; Schilling, 1998; WRC, 1983; Viessman, 2000; Young, 2000.) Making Recommendations While planners should not make the ultimate decision regarding choice among the plans they develop, they should be expected to draw attention

50

The evolution of water resource planning and decision making

to the important differences among the options they consider and to make their own recommendations, based on their analyses, regarding the choice among the alternative plans. Options considered to be less favorable, but feasible, should be explained in the context of the planning objectives. The planners’ recommendations should be designed to aid decision makers in understanding the merits of the choices available, thus enabling them to reach better-informed decisions. Developing Implementation Plans The sine qua non for plan implementation is the authorization and appropriation of funds. But continued stakeholder support is also vital to success. Good information, presented in understandable terms, can go a long way toward convincing both stakeholders and those making decisions that the proposed plans are in their best interests. When plans are not successfully implemented the reasons may include: failure of planners to develop economically, politically or socially acceptable alternatives, leading to lack of public support; failure of coordination among planning and development agencies; or ineffective linkages between planning and implementing agencies. Establishing Monitoring Programs The ultimate test of the effectiveness of planning is found in plan implementation and the achievement of planning objectives, but the outcomes of plan implementation can only be determined by monitoring project or program performance over time. Programs required for this assessment purpose may also serve as a source of information for making adjustments to operating policies or construction schedules when deficiencies are found. Unfortunately, this important element is all too often overlooked or poorly funded.

OTHER AGENCIES AND ORGANIZATIONS RELEVANT TO WATER RESOURCES PLANNING Many agencies, levels of government and non-governmental organizations (NGOs) are either directly involved in water resources planning or at least capable of influencing plans or planning processes. At a minimum, therefore, the planning roles these institutions play should be understood. But the NWC, in its 1973 report, New Directions in U.S. Water Policy, set out a broader normative view of institutional responsibility, stating

History of US water resources planning and development

51

‘. . . development, management and protection of water resources should be controlled by that level of government nearest the problem and most capable of effectively representing the vital interest involved’ (NWC, 1973 p. 10). The commission envisioned a continuing federal role in planning and financing, but believed it should gradually diminish, proposing that, ‘Regional and State entities, as well as local units of government, should assume increasing roles in the control of water resources use and preservation’ (ibid.). President Carter’s water policy reforms of 1978 included emphasis on an increasing role for the states and the administrations that have followed Carter’s have continued to move in that direction. Federal Agencies Many federal agencies play significant roles in planning for the development and management of water resources in the USA. The principal construction agencies, USACE, USBR and NRCS, are very influential, but their roles have changed with the shifting of concern from water quantity to water quality and environmental protection. The principal regulatory agency, EPA, became an important player in the early 1970s, in terms of its budget share and regulatory programs. While the federal role in water resources planning and management in the USA is broad, it is not dominant in many areas. For example, major expenditures for public water supply development, treatment and distribution and for sewers and wastewater treatment are largely borne by local governments. State Agencies Most states have water resources agencies that are counterparts of federal ones. Some of these are quite venerable but others have resulted from requirements for states to manage or participate in federal water-related programs. All states have agencies with responsibility for one or more aspects of water resources planning and management. There is usually a Department of Natural Resources (or something similar) responsible for water resources planning and development and a Department of Environmental Protection (or something similar) responsible for water quality planning and protection. Few states combine the two dimensions in a single agency, though Virginia has a water supply and water quality planning program designed to look ahead to the year 2030. Most states have an explicit goal related to water resources development and management, and water resources planning processes are often project- or purpose-oriented and tend to be organized around surface water, groundwater, water quality or water quantity issues, but may also be comprehensive. State

52

The evolution of water resource planning and decision making

water planning may or may not include regional plans, but consideration of sub-basins or regions is becoming more prevalent (as in California, Florida, Nebraska, Ohio, Pennsylvania, Texas, Virginia and Wisconsin, for example). There has not been widespread concern with addressing consistency of water-related plans at local, regional and state levels. The water management agencies of some states (Texas and California, for example) have large expert staffs, but others depend on federal agencies for assistance on technical matters. States with water right or water permit systems commonly have agencies charged with administering these. While state, federal and local government agencies and organizations may have broad authority including functions such as planning, constructing, regulating and managing, they also have narrow functions such as issuing permits. Agencies with wide-ranging powers offer the attraction for those concerned of minimizing the number of entities that must be dealt with, but the very comprehensiveness of their powers can be an invitation to abuse. Local Governments Local governments are involved in water resources planning, usually focused on local water issues such as drinking water supply and wastewater treatment. Sometimes special districts, covering more than one political jurisdiction have been established to deal with a particular issue such as storm water. Public and private water and wastewater utilities are actors in this arena. Plans are often project- or purpose-oriented rather than comprehensive, but they do incorporate many of the planning components referred to earlier in this chapter. For major metropolitan areas, the planning staffs may be sizable and highly qualified. Partnerships with local and regional water and wastewater utilities are common and stakeholder input is sought. Local governments may also be players in regional or state water resources planning processes. In Florida, for example, a state statute requires that local government comprehensive plans be consistent with the state’s regional versions and with the state’s comprehensive plan. And in California cities must prepare water plans that coordinate growth with water supply. Regional Institutions Regional institutions involved in water management have been established in the USA over the years as outlined in the historical section above. Their functions have varied from forums aimed at facilitating discussion and modest coordination to institutions with broad authorities to plan, construct and operate water management systems. They have been defined on

History of US water resources planning and development

53

a variety of bases and on varying scales. Thus, some have involved entire large, multi-state river basins, while others have been focused on small watersheds or groups of local political jurisdictions such as counties with only an imperfect match to hydrologic boundaries. Since the early 1900s, many councils and commissions have considered the merits of regional or river basin organizations, recognizing that regional, in addition to state and local, perspectives are often useful in coordinating with federal water resource investment planning. Large regional institutions such as those dealing with major river basins generally follow planning protocols similar to those of federal agencies and they tend to be comprehensive in their goals. Institutions focused on small watersheds tend to have fewer objectives and often focus heavily on water quality problems. As discussed above, the first, and probably best known, water-oriented regional organization is the TVA. The TVA is unique and has had a long, generally successful, though occasionally contentious history (Hargrove, 1994). It is not likely to be duplicated, being to some large extent a child of the special circumstances of the Great Depression. In 1943 a Federal Interagency River Basin Committee (FIARBC) program was established to encourage the creation of informal, voluntary interagency committees organized around basins or groups of basins. The Arkansas-White-Red, the Southeast Basins and the Pacific Southwest committees were among those formed. The interagency committees have little power and their principal achievement has been the provision of forums for communication among state and federal agencies and the other units of government involved. In 1948 the Ohio River Valley Water Sanitation Commission (ORSANCO) was established. This interstate commission, representing eight states and the federal government, develops programs to improve water quality in the Ohio River and its tributaries. Activities include setting wastewater discharge standards, conducting biological assessments, monitoring the chemical and physical properties of the waterways and conducting special surveys and studies. In 1961 the states of New York, New Jersey, Pennsylvania and Delaware joined the federal government in creating the Delaware River Basin Commission (DRBC). Like the TVA, the DRBC has broad powers, including project planning, implementation and operation and has settled disputes over water allocation among the participating states. It is perhaps best known in the field of water resources for its pioneering study of the cost-effectiveness of various alternatives for improving water quality in the Delaware Estuary and Bay, where effectiveness was defined in terms of dissolved oxygen (DO) levels at critical times for shad migration (DRBC, 1970).

54

The evolution of water resource planning and decision making

Another RBC, the Susquehanna River Basin Commission (SRBC), designed along the lines of the DRBC, was established in 1973. The DRBC and SRBC are state-federal compact commissions and their creation required a consensus of the states participating. Other compact commissions have been proposed, but a lack of consensus stifled all efforts other than those for the Delaware and Susquehanna. The WRPA of 1965 developed the Pacific Northwest, Missouri River, Upper Mississippi River, Great Lakes Basin, Ohio River and New England River Basin Commissions designed as planning and coordinating entities and forums, where representatives of states and federal agencies could coordinate activities and jointly develop river basin or regional plans for water and related land resources. Since they had no management or operating authority they did not replace the functions of the federal agencies. An independent chairperson, appointed by the President, coordinated the activities of the RBCs. Each federal agency with an interest in the river basin was entitled to membership, as was each state lying totally or partially within the basin or basins where more than one was involved. The act provided that every reasonable effort be made to arrive at a consensus on all issues. Creation of an independent chairperson and staff, divorced from federal and state agencies, was an important departure from the rotating chairmanships of predecessor interagency committees and encouraged loyalty to the institution and an opportunity for focusing on regional goals rather than on the narrower objectives of the member states and federal agencies. However, the performance of the RBCs was hampered by budgetary constraints, problems of coordination, lack of authority to enforce decisions and the necessity to act by consensus. Obligations of members to their parent organizations, the voluntary nature of the coordination process and the limited capacity of members to speak for their organizations added to the difficulties. The result was that the RBCs fell short of expectations and, in 1981, were abolished. The former RBCs were later reshaped into various forms of interstate institutions charged with coordination of interstate water resources planning, but they were generally not successful. After the demise of the RBCs, interest in such organizations declined. An anomaly was the formation of new interstate compacts for the Apalachicola, Chattahoochee and Flint (ACF) Rivers and for the Alabama, Coosa and Tallapoosa (ACT) Rivers by the states of Georgia, Alabama and Florida. The driver for this action was a decade-long dispute over the allocation of water in the ACF River Basin, which continues to be a contentious issue. Indeed, failure to resolve differences among the states resulted in litigation yet to reach conclusion. The problems of fragmented interests in water problems within states and the extension of problems beyond the jurisdictions of governmental

History of US water resources planning and development

55

units led to the consolidation of some organizations and the emergence of new authorities with the ability to manage water resources in a multijurisdictional region. Two such organizations are the consolidated Natural Resource Districts (NRD) in Nebraska and the Water Management Districts (WMD) in Florida. These regional models merit a more detailed description and one is provided for the NRDs in Appendix 2.2. Non-Governmental Organizations NGOs are private organizations that may be involved in advocacy, litigation, lobbying, research, public education or some combination of these activities, relative to public issues of concern to them. They may be supported by individual contributions, by foundations, by corporate gifts and even by grants from governmental units at federal, state or local levels. International non-governmental organizations (INGOs) have the same general functions, but their focus is on international problems. NGOs are almost always designed to influence public opinion and governmental action and those interested in water resource issues can have significant effects on the formulation of water management policies, plans and projects. Many of the national versions, such as the Natural Resources Defense Council, Environmental Defense, the Sierra Club and the Wilderness Society, have the expertise and political influence to get official consideration, if not always endorsement, of their views. The likelihood of success in a planning effort may well depend upon bringing these stakeholders to the table as partners in plan development rather than as opponents.

SOME OBSERVATIONS SUGGESTED BY THE HISTORY OF POLICY AND PLANNING Since the turn of the twentieth century, interest in water resources has shifted from development for traditional purposes to more efficient management and the protection and restoration of water quality and water environment systems. The history of water resources planning and development summarized previously reveals some important continuing themes and issues warranting consideration in establishing future plans and policies: ●

Local political pressures, along with broad national interests and crises have heavily influenced US water resources development, being the drivers for legislative action.

56

The evolution of water resource planning and decision making ●

●

●

●

●

●

●

●

The need to address regional interests has been recognized for years, but regional or river basin planning efforts fit awkwardly within the federal system and have often been of limited scope or ineffectual. Although not written explicitly, a national water policy exists in the form of a dense network of statutes, rules and traditions that has evolved over time. Occasionally efforts are made to provide a sharper focus, but this always proves difficult, in large part because of the vast differences in regional interests where water is concerned. The WRPA of 1965 was a milestone in water management. It established the WRC and RBCs; recognized the several levels of planning; fostered coordination and collaboration; involved the states; and provided a much-needed assessment process. The demise of the WRC in 1982 left a void. The NEPA of 1969 signaled a substantial increase in federal support for environmental protection. This had significant implications for water policy because the requirement for environmental impact statements indirectly initiated a movement toward more holistic water planning and management. The 1973 report New Directions in U.S. Water Policy by the NWC explored the status of the nation’s waters and recommended new directions for water policy. Although more than 30 years old, the report’s seven recurring themes still stand as useful guidelines for the future. The WRC’s 1975 assessment included an attempt to identify and quantify water needs for environmental protection. It also projected a future water use trend that indicated water use could be decreased in the future even though the population and economic activity levels were increasing. The WRC’s projections have been borne out by the US Geological Survey (USGS) water use statistics through the year 2000. The solution to water supply problems in the Washington, DC metropolitan area suggested by research demonstrated that creative, holistic approaches to water management have much to recommend them and that they can be implemented without the need for massive institutional reforms. Effective forums in which to seek solutions to problems that transcend normal political or agency boundaries are, however, needed. Contemporary trends in water management include: ● making more conservative use of water ● aiming at low impact development ● embracing environmental protection and restoration as equal partners in water-allocation decision making

History of US water resources planning and development ● ● ● ● ● ● ●

57

taking stakeholder involvement seriously educating the public for a broader understanding of water and environment issues recognizing that water management is best practiced within the problem-shed of concern embracing integrated water resources planning and management utilizing consensus-based decision making recognizing the importance of risk management and risk communication expanding research in areas such as ecosystem needs for water and the valuation of water dedicated to environmental purposes

RECOMMENDATIONS FOR THE FUTURE Water policy development for the new century must embrace both resource-related and institutional issues. The physical properties and distribution of water are keystones, but legal, political, social, economic and environmental building blocks must be crafted into these policies as well. Dimensions of uncertainty, public perception and political sensitivity must be addressed. Hard-line technical approaches may be, and often are, socially unacceptable and compromise is usually required; but, even so, settlements should be based on the best information available. Unfortunately, institutional and social configurations and attitudes often impede objective analyses and encourage narrowly focused or inefficient policy designs. Generally, integrated water management should be the goal at all levels of government for the twenty-first century. This means that the full spatial, environmental and institutional dimensions of problems must be recognized and the component interactions addressed. Complete integration is probably an impossible dream, but it is practical to move incrementally towards it. This implies the desirability of: ●

Establishing a new federal water policy coordinating institution (Viessman, 2000). A format with some of the attributes of the former WRC would: (1) provide guidance in designing federal water policy, (2) coordinate federal water programs and agencies, (3) assess the status of the nation’s and the world’s water environment, (4) provide foresight capability, (5) facilitate research and (6) coordinate and support state water resources planning and management programs. The new institution should also have the authority to

58

The evolution of water resource planning and decision making

●

●

●

●

●

stimulate and facilitate, but not to direct, regional water resources initiatives for appropriate problem-sheds. It should have representation from state and NGOs, as well as federal agencies. There is a sound rationale for having this council attached to the White House, thereby setting it somewhat apart from interagency politics. Restoring the focus on regions or problem-sheds as platforms for water resources planning and management. Planning and management institutions should be designed bottom-up to reflect the needs and character of the area to be served. Participants would include concerned citizens, local governments, appropriate representatives of federal and state agencies and NGOs. These regional institutions would be charged with making assessments, suggesting regional policies and identifying paths that should be taken to deal with plausible future scenarios. Bringing the single-objective regulatory approach used by the EPA into conformance with the multi-purpose, multi-objective planning system that for many years has provided guidance for federal planning. Requiring that all federal water-related programs be subject to the P&G could facilitate reconciliation of the two approaches (Schad, 1998). Providing the resources needed to plan for meeting potential global climate change and related challenges. It is likely that many of the most vexing water management problems to be faced in the future will be global in nature. Dealing with major water issues in a single nation is difficult, but when the problem transcends national boundaries, necessary institutional arrangements are generally nonexistent or not backed up by sufficient authority to be effective. The time for developing plausible climate change scenarios and exploring alternatives for dealing with them is now. Supporting analytical and database initiatives. Good decision making is heavily dependent upon the quality of available data and the ability to analyse this data so that information can be presented regarding the outcomes to be expected from exercising the options proposed. The value of interactive simulation models in aiding decision makers is well documented. Resources are needed to further develop and promulgate these decision-support tools and to develop and maintain the databases needed to assure that they can be used effectively. Incorporating environmental values into the economics of water allocation. Protocols for making trade-offs and establishing relative values for making water-allocation decisions for environmental purposes are needed. Casting the value of a constructed waterway in

History of US water resources planning and development

59

monetary terms is relatively easy to do, but problems abound when it comes to establishing a value for wetlands, a natural habitat or an in-stream flow to support fish and wildlife. This is a challenge in need of additional research.

ACKNOWLEDGMENTS Many sources have been drawn upon in preparing this chapter. The author hopes that suitable acknowledgment has been given to them. In particular, the outstanding historical works of Beatrice H. Holmes provided a wealth of information. The author also wishes to acknowledge the contributions made by the following reviewers: Kyle E. Schilling, Mark Dunning, Larry MacDonnell, David H. Moreau, Mark Sagoff, Paul Bourget, Daniel P. Loucks and Duane Baumann.

REFERENCES Aspen Institute (2002), Dam Removal: A New Option for a New Century, Washington, DC: The Aspen Institute. Caulfield, Jr., H.P. (2000), ‘Early federal guidelines for water resource evaluation’, Water Resources Update, 116, 14–17. Delaware River Basin Commission (DRBC) (1970), Final Progress Report on Delaware Estuary and Bay Water Quality Sampling and Mathematical Modeling Project, report to the Federal Water Pollution Control Administration, US Department of Interior, Trenton, NJ: DRBC. Dzurik, A.A. (2002), Water Resources Planning, 3rd edn, Savage, MD: Rowman and Littlefield. Elgin, D.S., D.C. MacMichael and P. Schwartz (1975) Alternative Futures for Environmental Policy Planning: 1975–2000, Washington, DC: Center for Study of Social Policy, Stanford Research Institute. Gardner, B.D. (March 2000), ‘The importance of property rights in water’, Water Resources Update, 116, 31–5. Grigg, N.S. (1996), Water Resources Management, New York, NY: McGrawHill. Hanke, S.H. (1981), ‘On the feasibility of benefit/cost analysis’, Public Policy, 29 (2), 147–57. Hargrove, E.C. (1994), Prisoner of Myth: The Leadership of the TVA, 1993–1990, Princeton, NJ: Princeton University Press. Holmes, B.H. (June 1972), ‘A history of federal water resources programs 1800– 1960’, miscellaneous publication no. 1233, Washington, DC: US Department of Agriculture. Holmes, B.H. (September 1979), ‘History of federal water resources programs and policies 1961–1970’, miscellaneous publication no. 1379, Washington, DC: US Department of Agriculture.

60

The evolution of water resource planning and decision making

Hufschmidt, M.M. (2000), ‘Benefit/cost analysis: 1933–1985’, Water Resources Update, 116, 42–9. James, L.D. and R.R. Lee (1971), Economics of Water Resources Planning, New York, NY: McGraw-Hill. Kates, R.W. (1962), ‘Hazard and choice perception in flood plain management’, University of Chicago Department of Geography research paper 78, Chicago, IL. Krutilla, J.V. and O. Eckstein (1958), Multiple Purpose River Development: The Economics of Project Evaluation, Baltimore, MD: The Johns Hopkins Press. Loucks, D.P. (1998), ‘Watershed planning: changing issues, processes and expectations’, Water Resources Update, 111, 38–46. Maass, A., M.M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr., S.A. Marglin and G.M. Fair (1962), Design of Water Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning, Cambridge, MA: Harvard University Press. National Conservation Commission (1909), Senate Document 676, 60th Congress, 2nd Session, 1, 24–7. National Research Council (1999), New Directions in Water Resources Planning for the US Army Corps of Engineers, Washington, DC: National Academies Press. National Water Commission (NWC) (1973), New Directions in U.S. Water Policy – Summary, Conclusions and Recommendations, Washington, DC: US Government Printing Office. Palmer, R.N., J.R. Wright, J.A. Smith, J.L. Cohon and C.S. ReVelle (1979), Policy Analysis of Reservoir Operation in the Potomac River Basin, vols I–III, College Park, MD: Water Resources Research Center. President Jimmy Carter (1978), Federal Water Policy Initiatives, House Document 95-347, Washington, DC: US Government Printing Office. Rogers, P. (1993), America’s Water: Federal Roles and Responsibilities, Cambridge, MA: MIT Press. Schad, T.D. (1998), ‘Water policy: who should do what?’, Water Resources Update, 111, 51–61. Schilling, K.E. (1998), ‘The future for water resources planning and decisionmaking models’, Water Resources Update, 111, 62–8. Sheer, D.P. (12 November 1981), Assuring Water Supply for the Washington Metropolitan Area – Twenty-Five Years of Progress, in a 1980s View of Water Management in the Potomac River Basin, report of the Committee on Government Affairs, US Senate, 97th Congress, 2nd Session, Washington, DC: US Government Printing Office. United States vs Jay Woods Oil Co., Inc. (5 June 1987), ‘ED Mich. Number 87 CR20012 BC’, unreported opinion, cited in Environmental Reporter, 18 (6), 502. US Army Corps of Engineers (USACE) (2002), Summary of Water Resources Project Cost Sharing: Non-Federal Representatives, Washington, DC: Civil Works Program Development and Executive Course. US Army Corps of Engineers (USACE), Institute for Water Resources (November 1997), Planning Primer, Institute for Water Resources report 97-R-15, Fort Belvoir, VA: US Army Corps of Engineers. US Bureau of the Budget (1952), Budget Circular A-47, Washington, DC: US Government Printing Office.

History of US water resources planning and development

61

US Congress (1969), History of the Implementation of the Recommendations of the Senate Select Committee on National Water Resources, Senate Committee on Interior and Insular Affairs, 90th Congress, 2nd Session, Washington, DC: US Government Printing Office. US Congress (1975), Alternative Futures for US Agriculture, Part L, Senate Committee on Agriculture and Forestry, 94th Congress, 1st Session, Washington, DC: US Government Printing Office. US Government Accountability Office (1978), An Overview of Benefit/Cost Analysis for Water Resources Projects: Improvements Still Needed, CED-78-127, Washington, DC: US Government Accountability Office. US House of Representatives (1926), USA Grand Coullee Study – Scoping Report, House Document 308, 69th Congress, 1st Session, Washington, DC: US Government Printing Office. US House of Representatives (1966), A Unified National Program for Managing Flood Losses, communication from the President of the United States, transmitting a report by the Task Force on Federal Flood Control Policy, House Document 465, 89th Congress, 2nd Session, Washington, DC: US Government Printing Office. US Interagency Committee on Water Resources (USIACWR) (1950), Proposed Practices for Economic Analysis of River Basin Projects, The Green Book (revised 1958), Washington, DC: US Government Printing Office. US Senate (1912), Final Report of the National Waterways Commission, Senate Document 440, Washington, DC: US Government Printing Office. US Senate (1962), Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources, Senate Document 97, 87th Congress, 2nd Session, Washington, DC: US Government Printing Office. Viessman, Jr, W. (2000), ‘Are we still on the wrong road?’, Water Resources Update, 116, 74–9. Viessman, Jr, W. and Timothy D. Feather (eds) (2006), State Water Resources Planning in the United States, Reston, VA: American Society of Civil Engineers. Water Resources Council (WRC) (1973), Establishment of Principles and Standards for Planning Water and Related Land Resources, Federal Register, Part III, 38 (174), Washington, DC: US Government Printing Office. Water Resources Council (WRC) (1983), Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, Washington, DC: US Government Printing Office. Western Water Policy Review Advisory Commission (1998), Water in the West: Challenge for the Next Century, Washington, DC: Western Water Policy Review Advisory Commission. White, G.F. (1945), ‘Human adjustment to floods: a geographic approach to the flood problem in the United States’, University of Chicago Department of Geography research paper no. 29, 225, Chicago, IL. White, G.F. (1964), ‘Choice of adjustment to floods’, University of Chicago Department of Geography research paper 93, Chicago, IL. White, G.F. (1969), Strategies of American Water Management, Ann Arbor, MI: University of Michigan Press. Young, R.A. (2000), ‘Thoughts on economic evaluation and western water policy’, Water Resources Update, 116, 85–90.

62

The evolution of water resource planning and decision making

APPENDIX 2.1

EVOLUTION OF PUBLIC INVOLVEMENT IN WATER PLANNING Jerome Delli Priscoli

Introduction: What is Public Participation in Water Resources Management and Why Should Decision Makers be Interested in It? As we know, the control of water is the control of life and livelihood. Thus, how we exercise this control reveals what we value, who we are and what type of society we seek to become. Not surprisingly, water resources planning has evolved along with our evolving understanding of how we control and manage water. The past decades have brought fundamental changes in key dimensions of water management including the objectives sought, evaluation criteria and procedures employed. Perhaps the greatest change has been in the role of the public in the planning process. Public participation (or involvement) in water resources management can mean many things to many people. The approaches used in the US Army Corps of Engineers (USACE) to help water resources have been pragmatic and have not dogmatically advocated a definitive definition of participation. However, USACE experiences do reveal areas of growing concern to the water field within which to discuss what participation is and why it is important. These are: 1. 2. 3. 4. 5.

Ethical dimensions of water management. Water management and civic culture. Tension between the technical and political. Reconciling the discontinuities between geographic and jurisdictional boundaries. Need for better and more conflict management.

Ethical dimensions of water management We can see profound ethical implications in all aspects of the traditional water uses such as: flood control and management; drought contingency planning and management; irrigation, hydroelectric power and agriculture; water supply and sanitation; navigation; ecological maintenance and health; and public health and disease control. Ethical considerations around these uses concern the distribution of benefits and costs of the services; who gets how much of the water and who pays; the distribution of risks, who is vulnerable and to what degree. Today, this includes service for the nature and ecology as well as people.

History of US water resources planning and development

63

Ethical implications are also clear in all aspects of water management decision making such as: planning, regulating, operating, financing and investing, designing and implementing and others. They concern who participates and what are their sources of legitimacy; what are the decisions they participate in; do they have access to formulating options or only to reacting to options already formulated; how and what type of opportunity costs are considered; the valuing, implicit or explicit, in tradeoff decisions; level and type of information open to the public; disclosure and characterization of impacts; the way professionals interact with nonprofessionals and the use, as well as misuse, of technical and professional information. The public engineers must move beyond just standards to guidelines to principles. In philosophical terms, this means moving more to utilitarianism perspectives as the basis of policy making. We should be moving to blending water management’s public health, preservationist and our conservative utilitarian traditions. Accountability, performance and power sharing will become part of the public ethic we must foster. As engineers, we must move even further to blending and mixing quality and quantification in our approaches. It is not that engineers, scientists and technical professionals have become irrelevant. The public need them more than ever. However, for their expertise to be put in service, a new model of relationships must be built with those whom they would serve. This new model, often called ‘informed consent’, demands broader understanding, by all stakeholders, of the special ethical demands faced by decision makers. For example, when is the decision not to decide a greater evil than to decide and to possibly incur unexpected negative effects? Meaningful participation often brings both decision makers and participants into a new awareness of this ethical reality. Lack of participation or non-meaningful participation allows stakeholders the luxury of negative ‘nay-saying’ without confronting the reality of decision-making pressures; and that is dangerous. Admittedly, getting the public in touch with such realities, which are often described in obscure and esoteric language, is difficult. But we must. And participation is one of our main tools to do so. Today’s ecology and water disputes must overcome the syndrome of advocacy science if we are to preserve the legitimacy of the scientific enterprise, which is so necessary for water management. We must ask what are the ethics of using science to persuade publics, especially under conditions where there is fundamental disagreement among scientists and where even the models and data themselves are weak. Participatory processes force all of us to confront these questions.

64

The evolution of water resource planning and decision making

Water management and civic culture Building the physical water infrastructure in a collaborative and participatory way is now an important means for building the civic infrastructure and the civil society or what many call the governance environment. However, this is not new. Water, governance and civic culture have always been connected (Delli Priscoli and Hassan, 1998). Fountains of ancient Rome, like standpipes in small villages today or in medieval cities of Europe, have played roles in building civic culture as well as quenching thirst. They were occasions for civic dialogue and meeting places central to creating a sense of civic belonging and responsibility. We should not forget that civil society, civic culture and civil engineering share common roots. Whether it is irrigation associations, community water and sewage and even large-scale multi-purpose river operations, water management forces us to connect and to balance rights to water with responsibilities for managing water. Most democratic theorists see the experience of such balancing as central to development of civic society (Kettering Foundation, 1991). Such balancing moves publics away from passive acceptance to active choice of decisions that directly affect our lives. It is the heart of democratic civic culture. There is little place here for the old paternalism of engineering design that says, ‘I will take care of everything for you.’ So too there is little place for the new regulatory paternalism that says the state will protect you based on some obscure and nonexistent holistic wisdom; a wisdom, like engineering of the past, which is often achieved among experts usually bound together in joint missionary zeal by unwritten ideological consensus. The movement is exercising freedom to choose activities and responsibilities – no matter how frightening or overwhelming. It is not a freedom from interference, inconvenience or action. It means taking responsibility for choosing a design (destiny) and actively pursuing it. Participation, especially in the civic works of water, is central to this process. Tensions between the political and technical Traditionally we have come to view the separation between the political, usually seen as legislative voting, and the technical, usually seen as implementing the executive agencies. When confronted with complex water management decisions, this distinction breaks down (Delli Priscoli, 1974). Often it is with the implementation or administration of general laws that the distribution of impacts becomes clear. Politics is ‘Who gets What, When and How’ (Lasswell, 1958). Often the what, when and how become apparent only during implementation. Thus, administrators of technical agencies begin to appear as the bestowers or deniers of political benefits. And this is becoming truer and truer as we become more complex.

History of US water resources planning and development

65

To manage this gray area, scholars and commentators, from Habermas to Robert Reich, have been calling for a new paradigm of public dialogue, which leads to civic discovery (Reich, 1996). This call reflects the chief goals of participatory processes: to foster deliberation, to encourage social learning, to create new alternatives and to build or enhance through empowering experiences the civic infrastructure. In his book Degrees of Belief: Subjective Probability and Engineering Judgment, Vick notes the essential features of informed consent. It is interesting to look how closely these professional ethics from hard engineering parallel those that would be espoused by participation and collaboration advocates and how they strongly suggest a democratic civic culture as we confront the dilemma of technical versus political (Vick, 2002). The elements are: 1. 2. 3. 4. 5. 6. 7.

The decision rests with the decision maker. Probabilities communicate information to inform the decision. Judgment is expected to be incorporated in probability estimates. Probability estimates incorporate ranges where appropriate. Probabilities for adverse consequences are accompanied by means to reduce either or both. The decision maker is encouraged to seek other opinions. Motivational bias in probability estimates is not tolerated.

Participation means much to both water management and to our civic cultures. Discontinuities between geography and jurisdictions Our water problems are integrated around watersheds and river basins. However, our administrative units to deal with them are fragmented. Participatory processes are essentially tools to help us bridge the discontinuity between geographical and jurisdictional boundaries found in water resources management. Ultimately, participation is a bottom-up phenomena. Participation becomes a driving force for the vertical (state, local and regional) as well as the horizontal (across agency) negotiations vital to decisions, which rarely fit traditional jurisdictional boundaries. And both are central pieces of the current advocacy for integrated water resources management (IWRM) found throughout the world water community (GWP, 2000). Participation and conflict management Our modern participation experience was born of multi-party, multiissue disputes usually precipitated by new ecological value challenges. By

66

The evolution of water resource planning and decision making

contrast, participation’s associated movement, conflict management or alternative dispute resolution (ADR), began by focusing on mediation and various forms of non-binding arbitration. This movement was born of the more traditional model of labor-management disputes, which involved limited numbers of parties and more discernable interests. Practitioners in both of these traditions have come together in a variety of professional forums and societies. The growth of environmental mediation in the USA during the 1990s is one major example. Many of the same ‘process’ tools and techniques are used in each field. But beyond these convergences, important differences between participation and ADR exist. Participation has been driven primarily by values of empowerment, creativity and open access to government. ADR, while not ignoring such values, has been sold more on the values of efficiency, timeliness and cost effectiveness of decision-making processes. These values of empowerment, open system access, efficiency and timeliness can and do often conflict. In the end, some people may just not agree among themselves nor with water managers or other decisions but we will all have to learn to live together while we disagree. In this sense, participation is far more then conflict resolution. Participation seeks to help us discern public interest, community will and to articulate preferred futures. Political philosopher Ben Barber puts it best when he says, ‘participation teaches us the arts of Democracy’ (Barber, 1997). Both are critical to water resources managers but should not be confused. Brief Chronology of Changes in Public Involvement in Water Resources Planning Public participation (or involvement) in water resources management has moved from a focus on legalistic and formal public hearings in the pre-1960s to US government leadership in alternative process tools in the 1970s, to de-emphasis on participation and more focus on selected costsharing partners in the 1980s and to negotiations and dispute resolution in the 1980s, and currently to renewed concerns with both dispute resolution and participation in the late 1990s and early 2000s. Today USACE is in a period of merging lessons learned from the fields of dispute resolution and participation along with new tools for interactive modeling among stakeholders. Changing values toward our ecology are calling for new consensus tools to reach agreements among non-commensurate values. Rapidly moving technology has produced inexpensive new means for stakeholders to actually jointly model and jointly create technical visions of water resources to provide the basis for trade-off and negotiations.

History of US water resources planning and development

67

Pre-1960s In this time period, planning was an activity reserved for experts. The public was seen as lacking technical understanding and, therefore, as having little to offer the planning process. Interaction with the public was confined to public hearings to present already-created plans. The public had little influence on the planning process and that only if able to mobilize political support sufficient to impress elected representatives. 1960s The public consciousness-raising that lay behind the civil rights and the anti-war movements resulted in a general growth of activism and protest in support of social goals. When organized opposition to water resources projects, often based on environmental concerns, emerged at roughly the same time, water resources planners began to adopt open planning models such as that of the Susquehanna River and the Northwest Fishbowl Planning approach (Borton et al., 1970; Widditsch, 1972) that emphasized a two-way flow of communication with the public. The National Environmental Policy Act (NEPA) legislation in 1969 provided a statutory basis for a more in-depth and proactive involvement of the public, especially in the project scoping process. 1970s and early 1980s Additional legislation and executive orders mandated public involvement. The concept of public involvement as a planned effort to involve citizens in decision making through mutual two-way communication became a specific part of the planning process. The USACE contracted with Synergy training services for a landmark training program introducing the importance of consulting with the public during the planning process and focusing on the use of interactive workshops as an alternative to formal public hearings. Hanchey’s publication, Public Involvement in the Corps of Engineers Planning Process (Hanchey, 1975), laid out a systematic approach using interactive workshops. One of the first applications occurred in the St Louis District in 1975 and employed interactive workshops using the Nominal Group Technique to elicit public expressions of water resources ‘needs’ and potential preferred solutions to flooding problems in the community. Throughout the 1970s and early 1980s, water resources agencies experimented with innovative public involvement methods and broadened their use to encompass all aspects of water resources planning and management, including regulatory decision making (Creighton et al., 1982). In the 1970s USACE Public Participation (involvement) led by the Corps’ Institute for Water Resources (IWR) focused primarily on civil

68

The evolution of water resource planning and decision making

works water resources planning. It is fair to say that USACE became a US government leader in the field culminating in collaboration with the White House to create the Interagency Council on Public Participation (ICCP). The centerpiece of the USACE strategy was to build capacity of its professional mangers to assure participatory processes were used in water resources management. It did this through training programs in public participation and involvement. Some of these set standards for training throughout the US government. 1980s During the late 1980s, after passage of the Water Resources Development Act (WRDA) of 1986 and the introduction of substantial cost sharing by project beneficiaries, a fundamental change in the motivation for public involvement occurred. The role of the cost-share partner – the local sponsor – became critical and planning and public involvement became considerably more streamlined to focus primarily on meeting local sponsor needs. The use of structured public involvement programs to interact with diverse publics was significantly reduced, except for larger, more complex studies. The focus on cost sharing and reduced emphasis on planning meant reduced interest and use of public involvement processes. The USACE field focused more and more on the cost-shared partner as the important public and negotiations with them as the key to projects. As USACE interests in water resources planning and in public participation waned, interest in alternative dispute resolution and conflict management grew rapidly in areas of civil works operations, engineering and construction, clean up of hazardous sights and even within areas of the USACE bureaucracy such as personnel. This interest was spawned in great part by the support for these new process programs by USACE legal council. The greatest interest was shown in contract management. Many of the process tools from public involvement were then applied to these growing areas of interest in USACE with considerable success. For example, through the new ADR program USACE achieved a 50 per cent per year reduction in claims or about $500 million per year. New USACE training, which built on older public involvement training programs, once again set some standards in the field for all of the US government, and the programs won the Hammer Award presented by Vice President Al Gore. The greatest successes were registered in contract management and what has come to be called partnering; which really seemed a variant of collaborative problems solving found in public involvement. With a general decline in water resources investments for new, large projects, planning attention broadened to include issues of managing projects already constructed and addressing conflicts about the operation or modification

History of US water resources planning and development

69

of existing projects. Alternative dispute resolution processes, borrowing heavily from the general concepts of interactive public involvement, introduced new process tools into USACE; mini-trials, mediation, conciliation and fact finding were examples of processes that adopted the same consultative and facilitative approach to interacting with the public that earlier public involvement processes emphasized (Creighton et al., 1998). 1990s In the late 1990s, concern grew in many areas of water management, from regulatory functions to planning and to operations. The fields began to converge as the US government, through the Office of Management and Budget (OMB) and the Council on Environmental Quality (CEQ) initiated new programs called environmental conflict resolution (ECR), and directed agencies to report on how ECR techniques were being used. Essentially ECR combined the tools found in both the dispute resolution field and the public involvement field and focused them on all aspects of environmental conflict. Today: Early 2000s and the Future Since the middle of the twentieth century, water resources planning has shifted its focus from multiple-purpose projects to IWRM systems that emphasize a more holistic consideration of water resources issues and collaborative partnerships among stakeholders, often at a watershed or problemshed scale. In this emerging framework, agency roles move from top-down planner to convener/facilitator of a joint sponsor/agency/stakeholder forum, which is designed to seek balanced, sustainable and implementable solutions. Planning in such a framework has become more a process of encouraging learning among stakeholders than directing a series of steps in which others have an ability to influence and interact at specific intervals. Today ECR is a centerpiece to achieving promised goals of the USACE – Civil Works Program: ‘We will broaden our collaboration with others to enhance the chances of balancing water uses and making wise investments and trade-offs decisions’ (JP Woodley and Chief USACE, March 2004, Civil Works Strategic Plan). Two of the five identified national water challenges used as baseline in the USACE Civil Works Strategic Plan are based on ECR, to: ● ●

Achieve greater balance between traditional water resources demands and environmental/ecosystem objectives. Minimize institutional barriers to efficient and effective water resources planning, decision making and management.

70

The evolution of water resource planning and decision making

Two of the four key Corps principles of IWRM which the Corps seeks to adopt are ECR: ●

●

Balance across multiple uses or functions. The objective is to seek greater balance across objectives. Interdisciplinary views and collaboration become germane to identifying how best to achieve multiple objectives. Collaborative approach. Collaboration can involve several federal agencies (for example, Environmental Protection Agency, US Fish and Wildlife Service, Natural Resources Conservation Service, Bureau of Reclamation, US Geological Survey and land management agencies), state and local agencies, the private sector and interest groups, and can take many forms.

The Corps watershed approach contains nine methods of which at least four are directly ECR: ● ● ● ●

coordinating planning and management promoting cooperation among government agencies at all levels encouraging public participation establishing interdisciplinary teams.

Consequently, the USACE capacity to integrate the water uses among its business programs systematically in river basins and watersheds now depends on ECR or public involvement and conflict resolution tools. While the salience of these process tools has grown and while USACE had maintained considerable leadership and investment in them, current surveys show that the capacity to use process tools within USACE had become weak. For example, USACE field surveys showed: ● ● ●

An uneven use of ECR and process tools. Little systematic knowledge of what USACE is actually doing in the area. Only anecdotal evidence of their use but limited understanding of ECR and process approaches, especially as applied to civil works.

In fact, with the atrophying of public involvement interest, there seemed to be a digression in public image to pre-1970s level of competence in interactive processes. Few process training programs still exist and none of the current District Engineers and few Senior Leaders have training in the process areas, despite their grown salience to USACE missions.

History of US water resources planning and development

71

With this in mind and with uneven knowledge, USACE has begun new ECR programs, once again using training as a centerpiece for rapidly building capacity with the field. The USACE Civil Works Regulatory program seemed to be mentioned most frequently as needing more process tools. In addition, a number of suggestions have been emerging: ● ● ● ● ●

improve training setting up one-stop help centers disseminating more cases studies from the Corps as examples updating regulations providing guidelines on how to fund the process.

Lessons Learned Over Four Decades Public involvement tools are necessary to water resources managers as they must manage multiple demands by multiple stakeholders, some of which conflict. USACE must manage watershed stakeholders so they can jointly define problems and generate solution alternatives. Indeed USACE seems to be moving in these directions when one looks at programs such as: ● ● ●

● ● ●

coastal America regional sediment management Section 729 of the Water Resources Development Act of 1986; Congress authorized the Corps to study water resources needs of river basins and regions in coordination with stakeholders increased use of general and area-wide permitting need for negotiated operating plans new models that have emerged in the Everglades, CalFed and coastal Louisiana.

Dealing with and trading off among the benefits accruing from different, and often conflicting, values is the key for water resources managers. Over the years USACE has found that: ●

● ● ●

When agencies are confused about the difference between technical and values choices, stakeholders often begin to second-guess the agency technically. Most significant decisions made by agencies are not really technical decisions, but values choices, informed by technical information. Agencies still have to make decisions that involve values choices; but values choices are prime candidates for ECR and participation. Stakeholders view decisions about values as ‘political’.

72

The evolution of water resource planning and decision making ● ● ●

Technical training does not make us more qualified than others to decide what is good for society. When there are big values differences, the other side will always appear ‘over-emotional’ and ‘irrational’. People of a similar point of view will cluster together.

The driving philosophy behind public involvement and process approaches is that they are a means to: improving the way water resources managers makes decisions; helping USACE to deal with a changing mission (which means dealing with changing or new values); building capacity of the Corps in key areas of collaboration skills; and to externally help USACE deal with changed public images. Key Competencies, Tools and Processes Over time USACE has come to see that water resources managers need to understand and have competence to work with the following challenges: ● ● ● ● ● ● ● ● ● ● ● ●

why conduct participation? who is the public? what is involvement? designing programs techniques and applications communication – facilitation designing workshops – meetings teaming language of consensus and negotiations identifying and breaking conflict escalation patterns beyond extremes getting to middle ground principles of consensus building.

The primary public involvement tools to help them do so can be seen in Figure A2.1. Likewise the conflict resolution tools to help them do so can be seen in Figure A2.2. Figure A2.3 shows the link to tools describing how to integrate the process tools with analytical tools into one jointly owned shared vision. Conclusions and Issues for the Future Early efforts at involving the public in agency-led water resources planning were criticized for being little more than sales pitches – attempts to build support for predetermined decisions. Public involvement often took

History of US water resources planning and development

73

Match Techniques to Intended Level of Involvement LEVEL OF INFLUENCE Agreeing to the decision

HIGH

PARTICIPATORY TECHNIQUE Joint decision making Assisted negotiations Collaboration/mediation

Having an influence upon the decision

Facilitation/interactive workshops Task forces/advisory groups

Being heard before the final decision is made

Public hearings

Being informed about the decision being made

Figure A2.1

Conferences, symposia Public information LOW

Matching level of influence expected and participation tools A Continuum of Alternative Dispute Resolution Techniques

HOT TUB

Unassisted

Assisted

C

Third party decision making

WAR

A

B

• Conciliation • Information exchange meetings • Cooperative collaborative problem solving • Negotiations

Source:

Relationship building assistance

Procedural assistance

• Counseling/therapy • Conciliation • Team building • Informal social activities

• Coachingconsultation • Training • Facilitation • Mediation

Substantive assistance • Mini-trial • Technical advisory boards • Dispute panels • Advisory mediation • Fact finding • Settlement conference

Advisory non-binding assistance • Non-binding arbitration • Summary jury trial

Binding assistance • Binding arbitration • Med-arb • Dispute panels (binding) • Private courts • Judging

From Delli Priscoli and Moore (1985).

Figure A2.2 Continuum of dispute/conflict management tools

74

Note:

The evolution of water resource planning and decision making

Printed with permission.

Figure A2.3

Shared vision planning: integrating interactive modeling and participation

place too late in the planning process to influence decisions; much of the ostensible two-way communication was really one-way agency education to convince the public of the rightness and desirability of agency positions. Public interaction was often conducted using formal public hearings and meetings with formats that did little to encourage give and take interchange. Even as public involvement became more sophisticated and better aligned with decision-making steps, the public involvement process continued to be agency-led and constructed as an instrumental input. Broader perspectives or ways of thinking about water resources problems, issues and options beyond agency mandates, rules and even accepted ways of thinking were not likely to be taken seriously by the agency. The current movement toward the IWRM has resifted emphasis to: how can we solve this problem together? From: how do we follow our rules and procedures? It is likely that the past critiques of public involvement will become less and less relevant. However, in building coalitions among stakeholders, the planning process may become too focused on particular stakeholders and lose touch with the interests of the broader but unrepresented public. Solutions developed in such circumstances may be more costly than necessary and at variance with broader points of view.

History of US water resources planning and development

75

The foundational skills of public involvement are growing in salience. These include the abilities to design interactive workshops, conduct small group facilitation and to utilize a thought process to map out design objectives and the flow of information among stakeholders during the planning process. Similarly, skills in interest-based negotiation will remain central for helping diverse groups of stakeholders to work productively toward balanced solutions to water resources problems. Low-tech procedures employing flip charts, markers and dots remain the standard tools for those practicing public involvement. Beyond foundational skills, new techniques and technology hold great promise for advancing public involvement. Simulation models, some stakeholder built (with expert assistance), allow stakeholders to learn about the sensitivity of outcomes to assumptions about the future and about preferences. These shared vision models can be quite useful in helping to keep the focus on assumptions with big effects. Similarly, computer-assisted voting enables groups to rapidly show preferences and where key disagreements exist. The demands for participation in water management and ecological decision making are both indicators and symptoms of problems in water management and democratic institutions. The values held by those whom administrators and executives serve are changing. Older administrative organizations and institutions, which themselves are the embodiment of values from previous times, have often lagged behind their publics. New publics bring new demands. At the same time, the complexity of decisions increasingly raises the question of how to achieve democratic accountability. Our water resources demands do not conform to traditional jurisdictional boundaries. The ethical basis of professionalism is now moving from paternalistic to informed consent. Participation is a means to adapt and to make our democratic institutions work better in this context. But participation is also helping to reinvent our civic cultures. Participation is a means to achieve important psychological transference within our publics: that is, from passive victims of, or reactors to, risk toward active choosers of levels of risk (Delli Priscoli, 1989). In this way, water management reform becomes a major tool for providing experiences for building democratic civic cultures on which democratic systems depend. In classical political theory, democracy is defended because citizens participate in decisions that affect their lives and this experience will educate and build responsibility among citizens – and better citizens (Thucydides, Peloponnesian Wars). What issues could be more important and affect us more than the purposeful designing of our ecological future? And our water resources life support system? Our technology and experts tell us that we have enough water – if we cooperate!

76

The evolution of water resource planning and decision making

Two hundred years ago, Thomas Jefferson, himself steeped deeply in both the technical and political worlds, once said about making the technical/administrative accountable (Peden, 1954): I know of no safe depository of the ultimate powers of the society but the people themselves and if we think them not enlightened to exercise their control with wholesome discretion, the remedy is not to take it from them, but to inform their discretion.

Two hundred years later, reflecting on the same problem, one of America’s leading theorists, Robert Dahl, said (Reich, 1996): Complexity threatens to cut the policy elites loose from effective control by the demos. The result could be . . . a kind of quasi-guardianship of the policy elites . . . indeed specialization, which is the grounds for the influence of policy elites, may itself impair their capacity for moral judgment . . . If democratic process is not firmly anchored to the judgments of the demos, then the system will continue to drift over to quasi-guardianship.

BIBLIOGRAPHY Barber, Benjamin (1997), keynote speech to the International Association of Public Participation Practice (IAP2) Conference. Borton, T.E., K. Warner and J.W. Wenrich (1970), The Susquehanna Communication – Participation Study, report 70-6, Fort Belvoir, VA: US Army Corps of Engineers, Institute for Water Resources. Broome, Taft (1986), ‘The slippery ethics of engineering’, Washington Post, December, Section D3. Carpenter, Susan (1995), ‘The blurring of roles between public participation and conflict resolution practitioners’, Interact, 1 (1) (Fall), 37–53. Creighton, J., J. Delli Priscoli and C.M. Dunning (eds) (1982), Public Involvement Techniques: A Reader of Ten Years Experience at the Institute for Water Resources, report 82-R1, Fort Belvoir, VA: US Army Corps of Engineers, Institute for Water Resources. Creighton, J., J. Delli Priscoli and C.M. Dunning (eds) (1998), Public Involvement and Dispute Resolution: A Reader of the Second Decade of Experience at the Institute for Water Resources, report 98-R-5, Fort Belvoir, VA: US Army Corps of Engineers, Institute for Water Resources. Dahl, Robert A. (1989), Democracy and Its Critics, New Haven, NJ: Yale University Press, p. 340. Delli Priscoli, Jerome (1975), ‘Public participation in regional-intergovernmental water resources planning: conceptual frameworks and comparative case studies’, PhD dissertation, Georgetown University, p. 549. For a review of the debate over representativeness of administration, see also: Carl J. Friedrich (1966), ‘Public policy and the nature of administration responsibility’, in Peter Wol (ed.), Public Administration and Policy, New York, NY: Harper, pp. 236–9;

History of US water resources planning and development

77

and Herman Finer, ‘Administrative responsibility in democratic government’, in Peter Wol (ed.), Public Administration and Policy, New York, NY: Harper, pp. 257–9. Delli Priscoli, Jerome (1984), ‘Public involvement in risk assessment’, keynote speech at workshop, University of Southern California, Los Angeles, 10 December. Delli Priscoli, Jerome (1989), ‘Public involvement, conflict management: means to EQ, and social objectives’, Journal of Water Resources Planning and Management, 113 (1), 31–42. Delli Priscoli, Jerome (1998), ‘Water and civilization: using history to reframe water policy debates and to build a new ecological realism’, Water Policy, 1, 623–36. Delli Priscoli, Jerome and M.R. Lamas (2001), ‘International perspective on ethical dilemmas in the water industry’, in Cheryl K. Davis and Robert E. McGinn (eds), Navigating Rough Waters: Ethical Issues in the Water Industry, Denver, CO: American Water Works Association, pp. 58–9. Delli Priscoli, Jerome and C. Moore (1985), Executive Training Course in Conflict Resolution, Alexandria, VA: Institute for Water Resources. Fisher, D. and C. Davis (1992), ‘Civil society and the environment in Central and Eastern Europe’, Ecological Studies Institute, London, May. Global Water Partnership (GWP) (2000), ‘Integrated water resources management (IWRM)’, Technical Advisory Committee (TAC), background paper no. 4, Stockholm. Habermas, Jurgen (1984), The Theory of Communicative Action 1: Reason and Rationalization of Society, Boston, MA: Beacon Press. Hanchey, J.R. (1975), Public Involvement in the Corps of Engineers Planning Process, report 75-R-4, Fort Belvoir, VA: US Army Corps of Engineers, Institute for Water Resources. Kenworthy, T. (1996), The Washington Post, 27 March, A17. Kettering Foundation (1991), ‘Citizens and politics: a view from main street’, a report by the Harwood Groups, June. Lasswell, Harold (1958), Politics: Who Gets What, When and How, Cleveland, OH: Meridian. Lewis, Martin W. (1994), ‘Introduction’, Green Delusions: An Environmentalist Critique of Radical Environmentalism, Durham, NC: Duke University Press. Masters, Roger D. (1998), Fortune is a River, New York, NY: The Free Press. Montville, J. and Jerome Delli Priscoli (1998), Conflict Prevention in Central Europe, PEW. Peden, William (ed.) (1954), Thomas Jefferson, Notes on the State of Virginia, New York, NY: Norton Library, W.W. Norton & Co., Inc.. Pericles, ‘Funeral oration’ in Thucydides, The Peloponnesian War. Reich, Robert (1996), ‘Policy making in a democracy’, in Robert Reich (ed.), The Power of Public Ideas, Cambridge, MA: Harvard University Press, p. 125. Teclaff, Ludwig A. (1967), The River Basin in History and Law, The Hague: Martinus Nijhoff. Vick, Stephen G. (2002), Degrees of Belief: Subjective Probability and Engineering Judgment, Reston, VA: ASCE Press. Widditsch, A. (1972), Public Involvement Workshops on the Puget Sound and Adjacent Waters Study: An Evaluation, report 72-2, Fort Belvoir, VA: US Army Corps of Engineers, Institute for Water Resources.

78

The evolution of water resource planning and decision making

Select USACE IWR Bibliography Articles Alternative Dispute Resolution (ADR) Procedures (1989). Conflict Resolution in Water Resources: Two 404 General Permits (1987). Citizen Participation: The Enduring Myths of Public Involvement (1982). DOD Partnering – Quick Start Guide (1996). Journal of Water Resources Planning and Management (1987), 114 (1). Partnering Guide for Environmental Missions (1996). Public Involvement and Teaming in Planning-Participants Workbook (1978). ‘Public involvement and social impact analysis: union looking for marriage’, (January 1978), IWR Working Paper 78-WP-2. Public Involvement Techniques: A Reader of Ten Years Experience (September 1998), IWR Report 82-R-1. ‘Public involvement, conflict management: means to EQ and social objectives’, Journal of Water Resources Planning and Management (1989), 115 (1). Public Involvement and Dispute Resolution (1998), IWR Report 98-R-5. ‘Retraining the modern civil engineer’, The Environmentalist (1983). Social Assessment and Resources Policy: Lessons from Water Planning (1995). ‘Twelve challenges for public participation practice’, Interact (1995), 1 (1). ‘What is public participation in water resources management and why is it important?’, IWRA Water International (June 2004), 29 (2). When Partnering Doesn’t Work (Well): An Analysis of Less Successful Partnering Cases (1998). ‘Why the federal and regional interest in public involvement in water resources development’, (January 1978), IWR Working Paper 78-WP-1.

Case studies 89-ADR-CS-1 – Tenn Tom Constructors, Inc. 89-ADR-CS-2 – Granite Construction Company. 89-ADR-CS-3 – Olson Mechanical and Heavy Rigging, Inc. 89-ADR-CS-4 – Bechtel National, Inc. 89-ADR-CS-5 – Goodyear Tire and Rubber Company. 91-ADR-CS-6 – Corps of Engineers Uses Mediation to Settle Hydropower Dispute. 92-ADR-CS-7 – Brutoco Engineering and Construction, Inc. 92-ADR-CS-8 – Bassett Creek Water Management Commission. 92-ADR-CS-9 – General Roofing Company. 94-ADR-CS-10 – Small Projects Partnering: The Drayton Hall Stream-Bank Protection Project Charleston County, South Carolina. 94-ADR-CS-11 – The J6 Partnering Case Study – (J6 Large Rocket Test Facility). 94-ADR-CS-12 – Fort Drum Disputers Review Panel – A Case Study in the Alternative Dispute Resolution Series. 95-ADR-CS-13 – Use of Facilitated Task Force to Develop a General Permit in Colorado. 97-ADR-CS-14 – A Case Study in Dispute Resolution System Design: The Corps of Engineers Early Resolution Program (CEERP) for Allegations of Discrimination.

History of US water resources planning and development

79

Pamphlets 89-ADR-P-1 – The Mini-Trial. 90-ADR-P-2 – Non-Binding Arbitration. 91-ADR-P-3 – Mediation. 91-ADR-P-4 – Partnering. 96-ADR-P-5 – Overview of Alternative Dispute Resolution (ADR): A Handbook for Corps Managers. 95-ADR-P-6 – Deciding Whether or Not to Partner on Small Projects: A Guide for US Army Corps Engineers Managers. 98-ADR-P-7 – Partnering Guide for Civil Missions.

Research reports 89-ADR-R-1 – Using ASDR in the US Army Corps of Engineers: A Framework for Decision-Making.

Working papers 90-ADR-WP-1 – ‘ADR round table: US Army Corps of Engineers (South Atlantic Division)’. 90-ADR-WP-2 – ‘Public involvement; conflict management, and dispute resolution in water resources and environmental decision making’. 90-ADR-WP-3 – ‘Getting to the table’. 90-ADR-WP-4 – ‘Environmental ends and engineering means: becoming environmental engineers for the nation and the world’. 94-ADR-WP-5 – ‘Partnership councils: building successful labor management relationships’. 96-ADR-WP-6 – ‘Conflict resolution, collaboration and management in international water resource issues’. 96-ADR-WP-7 – ‘Public participation in designing our environmental future’. 96-ADR-WP-8 – ‘Partnering, consensus building, and alternative dispute resolution: current uses and opportunities in the US Army Corps of Engineers’. 96-ADR-WP-9 – ‘An organizational assessment of the US Army Corps of Engineers in regard to public involvement practices and challenges’.

80

The evolution of water resource planning and decision making

APPENDIX 2.2

NEBRASKA NATURAL RESOURCE DISTRICTS

In 1939 there were 172 special-purpose organizations designed to deal with some aspect of Nebraska’s waters (Fischer, 1981). As greater demands were placed on this resource, additional governmental units emerged to address special needs. By 1969 the population of such organizations had grown to about 500 narrowly focused organizations, with overlapping responsibilities, duplication of services and taxation and limited ability to cope with problems encompassing more than one jurisdiction. They included soil and water conservation districts, watershed conservancy districts, watershed districts, watershed planning boards, irrigation districts, reclamation districts, sanitary drainage districts, drainage districts and groundwater conservation districts. To provide a better basis for solving the state’s water problems, the legislature determined that a consolidation of districts would be appropriate and that a new set of regional water management districts should be devised to blanket the state. Thus, in 1969 the legislature established 24 Natural Resource Districts (NRDs). The legislature’s intent was to create governmental units with sufficient powers to address a broad range of natural resources issues and to implement programs or projects to resolve them. Although only about 300 of the previous districts were merged or abolished in the process of setting up the NRDs, the new organizations had much greater capacity for managing water and other natural resources than their predecessors (ibid.). The original intent of the NRD movement was to bring about a total consolidation of existing entities. This was not politically feasible at the time and so a compromise was struck, with the remaining special-purpose districts encouraged to cooperate and if possible to merge with the NRDs. In addition, the legislature specified that no new districts of previous form could be established after the passage of the legislation. Supervisory control of the NRDs is vested in the state’s Natural Resources Commission. This semi-autonomous agency has broad powers and is charged with the task of coordinating the activities of the NRDs, other state agencies responsible for natural resources and other substate entities including counties, municipalities and those special-purpose districts not abolished or merged into the NRDs. The principal state agencies involved are the Department of Water Resources (responsible for administering the water rights of the state), the USDA and the Department of Environmental Control (the state’s counterpart to the EPA). Nebraska’s Natural Resources Commission also interfaces with federal agencies whose programs affect development and management of the state’s waters.

History of US water resources planning and development

81

The legislation gave the NRDs broad responsibilities. These included soil conservation and erosion control; flood and sedimentation control; water supply; development and management of ground and surface waters; solid waste disposal, sanitary drainage and pollution control; drainage and channel improvements; and responsibilities relative to fish and wildlife habitats, recreation, forestry and range management. The legislature also provided the NRDs with the authority needed to get their jobs done, including taxation; eminent domain; construction and maintenance of facilities; acquisition and disposal of water rights; financial assistance for projects; regulation of groundwater use; development, storage and distribution of water; regulation of land use in certain cases; rate setting for water furnished; development of facilities for solid waste disposal; provision of technical assistance; assignment of charges to beneficiaries for services; and initiation and conduct of studies. While the NRDs may obtain water rights, they have little control over water allocations, which are administered by the Department of Water Resources. An advantage the NRDs hold over their predecessors is that of spatial dimension. On average, the NRDs cover areas about four times larger than the average Nebraska county. This scale gives them the financial capability to obtain qualified technical staffs and suggests that many localized problems can be resolved within the bounds of a single NRD (ibid.). The NRDs also have access to a state resource development fund that may be used to fund or partially fund meritorious state projects. Reference Fischer, L.K. (1981), ‘A critique of Nebraska natural resource districts’, Unpublished manuscript, University of Nebraska, Lincoln.

3.

The theory and practice of benefit-cost analysis John J. Boland, Nicholas Flores and Charles W. Howe

INTRODUCTION Economic reasoning began to influence decisions about water resources development and management even before a recognized discipline of economics existed (eighteenth century) but since World War II economics has received increasing weight in the planning for and management of water resources. This has been stimulated by the increasing scarcity of water relative to the multiple demands imposed on it. Economic analysis can inform water resources planning at several levels. Benefit-cost analysis discussed in this chapter is intended to promote the efficient use of resources at the project level by guiding the design of individual projects and their operating rules, by measuring the economic gains generated by alternative projects and then by allowing the comparison of competing projects in terms of their benefits to society. Economic analysis at a more macro or regional level can assess the broader impacts of changes in water availability on parties other than the direct water user, for example, on activities that service irrigated agriculture or the effects of water supply availability on regional economic growth. These higher levels of economic analysis use different tools or models than those used in benefit-cost analysis of individual projects and are not discussed in this volume. To assist in the design and evaluation of water projects and related policies, it is necessary to identify all project effects, beneficial and adverse (benefits and costs), then to quantify those effects in physical terms and, wherever possible, to place monetary values on the physical measures. Examples would be changes in agricultural outputs resulting from increased or more reliable irrigation supplies or changes in urban supplies. Market prices usually exist for agricultural products, while urban rate structures allow us to place values on levels of urban water use. Cost savings from improved navigation can be calculated. More difficult to 82

Theory and practice of benefit-cost analysis

83

deal with would be the impacts of increased flood control, improved recreational opportunities or the long-term health effects of improved water quality, for which no obvious market prices exist. Some impacts such as endangered species preservation may elude credible monetization entirely (but should not be ignored). Then measured benefits and costs of individual projects can be compared to see if, giving consideration to non-monetized impacts, each project alternative’s benefits justify its costs and which, among competing projects, delivers the greatest benefits net of costs. While the logic of economic analysis is straightforward, this simplicity is easily lost in the many details of actual application. This chapter provides the reader with sufficient background to understand and begin to apply benefit-cost analysis. What follows is a brief overview of the economic logic of benefit-cost analysis, which is referred to in economic jargon as ‘welfare economics’. An understanding of this basic logic should be helpful in following later discussions of specific techniques. Following the overview, a section provides a historical perspective on the evolution of the current ‘tool box’ in response to changing social values and institutions. There it will be seen, for example, that, with the rise of environmental concerns, economists developed techniques to measure non-market environmental benefits and damages to ecosystems. This evolution of benefit-cost analysis was accompanied (sometimes with considerable time lags) by federal legislation directing federal agency programs and practices as described in Chapter 2. Next, we explain how benefits and costs can be measured directly through markets, indirectly through markets or by techniques that can substitute for market prices. That section provides the reader with the basic techniques and an appreciation of their broad applicability, but also of their limitations. Another section integrates the concepts and measurement techniques into a comprehensive framework for application. Finally, an overview and assessment of the state of benefit-cost analysis is presented, with suggested directions for future development.

THE LOGIC OF ECONOMIC ANALYSIS The appropriate framework for the analysis of most water projects is the river basin since the effects can often be felt throughout the basin, both upstream and downstream of the project. For example, a dam to produce power and facilitate navigation will alter the hydrology of the basin. These changes will impact the flood plains along the river and the ability of users to divert water from the stream. New electric power supplies may change power prices. Changes in land use are likely, affecting land values and tax

84

The evolution of water resource planning and decision making

bases. Some recreational opportunities will be created (for example, reservoir boating) while others will be eliminated (for example, white water canoeing). Bird, fish and plant populations of riparian ecosystems will change. Taken together, these changes will make some people better off (winners) while making others worse off (losers). Welfare economics in the form of benefit-cost analysis attempts to assess the impacts on the winners and the losers and to judge the net impact on society.1 But how can the gains to winners be compared with the losses to losers? Even if all impacts can be monetized, a monetary value of $1000 may be insignificant to some parties and crucial to others. Thus in evaluating projects that involve interpersonal comparisons of values, the only way to conclude that a project is unambiguously desirable from society’s point of view is if some people gain from the project while no one loses. Such an outcome is called a ‘Pareto improvement’.2 Unfortunately, Pareto improvements are rare in the real world: gains to some are almost always associated with losses to others. This creates the need for a more practical test. A weaker criterion is to determine whether the winners have gained enough that they could monetarily compensate the losers – rendering them no worse off – while retaining sufficient gains to remain winners. This criterion is called the ‘compensation principle’ and a project meeting this criterion is said to pass the ‘compensation test’. The adoption of this criterion does not, however, solve the problem of having a foolproof criterion since the monetary compensation required to make the losers as well off as they were before must be determined and this is not an easy task, especially if many parties are involved. For each winner and loser we can, in principle, determine the amount of money subtracted from their income (for the winners) or added to it (for the losers) that would make that person just indifferent between having the project relative to not having the project. The technical term for this measure is ‘compensating variation’.3 For winners, we would need to take away money so the compensating variation is positive. For losers, we would need to give money so the compensating variation is negative. If we could sum up individual compensating variations for all people, we could determine whether the compensation test was satisfied, whether or not the compensation is actually paid. A positive sum would indicate that the compensation test was passed while a negative sum would indicate that the project failed the compensation test. An alternative way of saying this is that the sum of project benefits outweighs the total costs, where both costs and benefits are measured in ways consistent with the notion of the relevant compensating variations. The ability to measure compensating variation for the many changes occasioned by water projects has grown over the past 50 years by

Theory and practice of benefit-cost analysis

85

extending the range of impacts that can be assessed in monetary terms.4 Initially benefit-cost analysis took account of only those project impacts for which benefits and costs could be measured directly from markets, for example, changes in profits for producers and commodity prices for consumers. Service flows not traded directly in markets, such as public recreation and ecological preservation, were relegated to the category of intangibles.5 The mid 1960s saw a burst of research activity aimed at incorporating monetary benefits and costs for non-marketed service flows into project analysis. As Russell and Sagoff note in Chapter 5 of this book, Krutilla’s work (1967) marked a paradigm shift in the way economists view environmental/ecological services in project analysis. He argued (1) that benefits and costs related to the environment are naturally and logically part of neoclassical economics and (2) that adequately gauging the economic efficiency of large-scale water projects will increasingly depend on the ability of analysts to measure environmental benefits and costs.6 The changing needs and concerns of society pose continuing challenges to benefit-cost analysis. Eckstein (1958) and Krutilla (1967) represent successive generations of benefit-cost analysis as an evolutionary process of response to changing social values. Economic analysis has lagged behind new social concerns as economists attempt to develop new tools to address these new concerns. However, the increasing scarcity of water has made the case for an increasingly important role for economic analysis in project and policy assessments. In order to understand economic analysis of water projects as it is carried out today, it is useful to understand the evolutionary interaction of societal concerns and economic techniques of analysis since this same evolutionary process is active today and will almost certainly continue.7 To this end, we now turn to a historical overview of the evolution of economic analysis including that of water policy legislation.

EVOLUTION OF ECONOMIC ANALYSIS THROUGH A HISTORICAL LENS Early Foundations It is commonly thought that the application of economic analysis to the design and evaluation of water policies and projects was initiated by the US Flood Control Act of 1936. However, the use of basic economic concepts in the selection and evaluation of publicly funded water projects began early in US history.

86

The evolution of water resource planning and decision making

In 1807 the US Senate directed Albert Gallatin, Secretary of the Treasury, to undertake a survey and analysis of the system of roads and canals in what was then the USA and to make recommendations for the expansion of that system. In his report Gallatin (1807) set forth economic guidelines that would still be considered appropriate in the light of contemporary welfare economics: It is sufficiently evident that whenever the annual expense of transportation on a certain route in its natural state exceeds the interest on the capital employed in improving the communication and the annual expense of transportation by the improved route (exclusive of the tolls), the difference is an annual additional income to the nation. . . . it also happens that (when construction proceeds slowly), the capital applied remains unproductive for a longer time . . . and the interest accruing during this period becomes, in fact, an injurious addition to the real expense of the undertaking. The general gain is not confined to the difference in expense of those articles which had formerly been conveyed by that route, but many which were brought to market by other channels will then find a new and more advantageous direction and those which, on account of their distance or weight could not be transported in any manner whatever will acquire a value and become a clear addition to the national wealth. . . . In countries possessed of a large capital, where property is sufficiently secure to induce individuals to lay out that capital on permanent undertakings and where a compact population creates an extensive commercial intercourse . . . those improvements may often . . . be left to individual exertion without a direct aid from Government. There are, however, some circumstances that check the application of private capital and enterprise to improvements on a large scale. . . . The great demand for capital in the U.S. and the extent of territory compared with the population are, it is believed, the true causes that prevent new undertakings. . . . The general government can alone remove these obstacles. . . . Good roads and canals will shorten distances, facilitate commercial and personal intercourse and unite . . . the most remote quarters of the U.S. (Gallatin, 1807, p. 724)

Current economics texts could hardly state these principles of project evaluation and economic development more clearly. Gallatin sets forth the annualized comparison of benefits and costs including interest during construction and interest return on the total investment. He calls for a systems analysis of the diversion and creation of traffic. He clearly states the issue of capital scarcity and the property right conditions needed to call forth private undertakings and adds that, when national interests require infrastructure investments not privately attractive due to dispersed populations and security problems, government should take on the tasks. Outside the USA, engineers at the French Ecole National de Ponts et Chaussees (ENPC) in the eighteenth and first half of the nineteenth centuries addressed the problem of evaluating the benefits and costs of public services like bridges and roadways (Ekelund and Herbert, 1973).

Theory and practice of benefit-cost analysis

87

The major early contributors were Henri Navier, Joseph Minard and Jules Dupuis. Navier published an article in the Annales des Ponts et Chaussees in 1832 that presented a systematic discussion of extending a market spatially by reducing costs to the shipper. Joseph Minard established a course in public economics at ENPC in 1831, which emphasized factors influencing demand for transport services and demand-supply interaction to determine prices. His benefit measure was cost of the best alternative (still used today as a shortcut). He presented an explicit consideration of time in the benefit-cost assessments: the production period, the durability of capital goods and the use of compound interest. Jules Dupuit (1844) formalized the concept of diminishing marginal utility and its relationship to the demand curve. He recognized the appropriate area under a demand curve as a measure of benefit. He argued the advantages of competitive equilibrium in markets and the removal of barriers to free trade. Thus, it is clear that sophisticated economic concepts had been formulated and applied to roads and canals during the first half of the nineteenth century. By the early twentieth century, the English economist, A.C. Pigou, in the various editions of his famous The Economics of Welfare (first published in 1920), while not dealing explicitly with water, was extending economic analysis by identifying the problems of (negative and positive) externalities and the use of taxes and subsidies to correct market allocations of goods and services. He also recognized that objectives other than economic efficiency will be important in some situations and was concerned with the distribution of economic welfare and possible conflicts between economic efficiency and equity: The misery and squalor that surround us, the injurious luxury of some wealthy families, the terrible uncertainty overshadowing many families of the poor – these are evils too plain to be ignored . . . the question is raised in what circumstances it is possible for the absolute share of the dividend accruing to the poor to be increased without, at the same time, diminishing the volume of the dividend as a whole. . . (Pigou, 1932, p. vii)

United States Guidelines for Water Resources Evaluation8 Though the ideas antedated the law, federal guidelines for water resources project evaluation did spring from the Flood Control Act of 1936, wherein Congress directed that federal flood control projects be undertaken ‘if the benefits to whomsoever they may accrue are in excess of the estimated costs and if the lives and social security of people are not otherwise adversely affected’ (33 USC 701a). The application of this legislative provision has

88

The evolution of water resource planning and decision making

been far wider than just to flood control projects. Either by statute or by administrative order, this provision has been made broadly applicable to all water resources projects of US Army Corps of Engineers (USACE), US Bureau of Reclamation (USBR) and National Resource Conservation Service (NRCS). The importance of this provision was to inject economic analysis into water planning. The opportunity afforded by Congress to apply this normative theory to the field of water and related land resource use and development was welcomed by economists and reflected in the work of those within the federal government, with outside support from academics. These efforts were interrupted by exigencies of World War II, but after 1945, the elaboration of benefit-cost analysis began in earnest. The first product of this activity was popularly known as the ‘Green Book’ (it had a green cover), a report of the Subcommittee on Benefits and Costs of the Federal Interagency River Basin Committee, published in 1950 and bearing the title, Proposed Practices for Economic Analysis of River Basin Projects (USIACWR, 1950). This report embodied Pigouvian theory of public finance and an analysis of externalities and market failure. With minor additions and changes, a revised edition was published in 1958. The Proposed Practices set forth ‘criteria and principles’ of ‘general economic welfare’ for ‘application by agencies within the framework of their particular programs and responsibilities’. Goals or objectives other than economic efficiency from a ‘comprehensive public viewpoint’ were recognized as relevant (paraphrased from Caulfield, 2000, p. 14). The ‘Green Book’, moreover, called for identification of all beneficial or adverse effects of a project in both tangible (that is, monetary) and intangible terms. An intangible beneficial effect of a flood control project would be risk reduction and the saving of human life, effects Congress clearly had in mind when establishing flood control as a national, largely non-reimbursable, project purpose. However, because of the weight given by the US Bureau of the Budget (BOB, now the Office of Management and Budget (OMB)) and Congress to achieving a 1.0 or greater ratio of tangible benefits to tangible costs as the basic criterion for authorization and funding of water development projects, all other goals were (implicitly) secondary. For example, regional development was secondary to the goal of national economic efficiency. The ‘Green Book’ was never adopted by the Federal Interagency River Basin Committee (FIARBC) or its successor committees, largely due to continuing interagency disagreements over inclusion of secondary benefits in project reports. The secondary benefits issue refers to the appropriateness of including the additional incomes generated in activities linked to the project as providers of inputs or users of project outputs. The

Theory and practice of benefit-cost analysis

89

controversy continues today. Budget Circular A-47, (BOB, 1952), embodied the basic philosophy and criteria and principles of the ‘Green Book’. Its most fundamental standards and procedures were these: ● ●

●

The relative economy of alternative means available for meeting national needs was to be set forth for consideration. Benefits and costs, in total and separately for each project purpose, were to be set forth. Where benefits and costs could not be estimated in monetary terms, their relative significance was to be stated in as precise and quantitative terms as possible. ‘While it is recognized that a comparison of estimated benefits with estimated costs does not provide a precise measure of the absolute merits of any particular program or project, one essential criterion in justifying any program or projects will, except in unusual cases where adequate justification is presented, be that its estimated benefits to whomsoever they may accrue exceed its estimated costs’ (Caulfield, 2000, p. 15).

The BOB attempted to apply A-47 to all projects presented to it for review in the 1950s. This effort led to great dissatisfaction with A-47 within Congress, beginning about 1956. Few, if any, in Congress called for abandonment of the benefit-cost analysis per se, but there was a widespread call for its liberalization. Democrats in Congress declared the Eisenhower Administration had a no new starts policy. A panel of consultants to the BOB (M.M. Hufschmidt, J. Krutilla, J. Margolis and S.A. Marglin) produced an innovative report, titled Standards and Criteria for Formulating and Evaluating Federal Water Resources Developments (Hufschmidt et al., 1961). David Bell, Director of the BOB, commended the report for consideration by all agencies involved in water management and it exerted a strong influence on subsequent policies and standards. The report first addressed the objectives of water development and management: the efficiency objective, distributional objectives, preservation of aesthetic and cultural values and merit wants in general. Thus, as with the earlier reports, the need to recognize multiple objectives was emphasized. The report also discussed discount rates extensively, emphasizing the existence of different private and social rates, as well as the appropriate discount rate in the light of national stabilization policy and budget constraints. A stable social discount rate for purposes of project design was recommended, along with a contemporary opportunity cost rate to assess the desirability of proceeding with the project. The secondary benefits issue, which had led to controversy over the

90

The evolution of water resource planning and decision making

‘Green Book’ and A-47, was covered as well. It was pointed out that federal agencies were wont to include so-called ‘secondaries’ to enhance the desirability of the project. The economics profession, then and now, has followed the full employment-competitive market model to conclude that secondary impacts should be ignored on the grounds that the resources used in a project would be drawn from equally productive activities elsewhere or that alternative projects precluded by the one under consideration would have equivalent secondary impacts. However, according to the report, secondary benefits could, under circumstances deviating from the full employment-competitive condition, constitute legitimate national benefits not captured in the willingness-to-pay (WTP) of direct beneficiaries. The report suggested situations in which secondary benefits would legitimately be included from an economic efficiency point of view. Other topics covered in innovative ways included risk and uncertainty, the use of alternative cost, recreational values, the importance of repayment policy in motivating responsible project assessment and the need for integrated river basin planning. Senate Document 97, Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources (US Senate, 1962) replaced the BOB Circular A-47 on 15 May 1962. Consideration was to be given to three objectives with ‘reasoned choices made between them when they conflict’: ●

●

●

Economic development (a new label for economic efficiency) – Water and related land resource development and management were taken to be essential to economic development and growth, including outdoor recreation, fish and wildlife enhancement. Preservation – Proper stewardship of the nation’s natural bounty was taken to require preservation in particular instances of open space, green space, wild areas of rivers, lakes, beaches and mountains and areas of unique natural beauty, historical and scientific interest. Such preservation was required to support outdoor recreation and fish and wildlife enhancement.9 Well-being of people – Hardship and basic needs of particular groups were to be of concern, as was the saving of human life.

In Senate Document 97 an initial economic efficiency baseline river basin plan was to be identified having the following characteristics: (a) tangible benefits must exceed project economic costs; (b) each separable unit or purpose must provide benefits at least equal to its costs; (c) the scope of the development must be such as to provide the maximum net benefits; (d) there must be no more economical means, evaluated on a comparable

Theory and practice of benefit-cost analysis

91

basis, of accomplishing the same purpose. Such optimum plans were to provide baselines from which alternative plans reflecting different objectives could be judged (for example, by determining the efficiency benefits forgone if preservation of a reach of a scenic river was considered important). Regional, state and local points of view or objectives were to be considered as well as national points of view. In contrast to A-47, there was no requirement that projects must exhibit a benefit-cost ratio greater than 1.0 but the BOB was not to be barred from adopting such a requirement. Before President Kennedy approved Senate Document 97, the Council of Economic Advisors established a group of distinguished academic economists led by Kenneth Arrow to review the agreement. Approval was given, subject to a committee to further study the discount rate. The Water Resources Planning Act (WRPA) of 1965 created an active, well-staffed Water Resources Council (WRC).10 Under Section 103 of the Act, the Council was required to promulgate its own principles, standards and procedures for application by all federal water and related land resource projects. The multi-objective approach was retained, represented by the two primary objectives of national economic development (NED) (economic efficiency) and environmental quality (EQ). In addition, the effects on regional development and social well-being were to be displayed. The discount rate formula was changed to reflect contemporary federal borrowing rates, calculated as the average nominal rate on Treasury bonds outstanding with maturities of 15 or more years. These new Principles and Standards (P&S) (WRC, 1973) superseded Senate Document 97. A simplified set of Principles and Guidelines (P&G) was issued by Presidential order in 1983 (WRC, 1983). But, shortly after that, the Reagan Administration abolished the active program of WRC, including the federal-state river basin commissions (RBCs) created under the WRPA. Academic Contributions and Controversies In the late 1950s and early 1960s path-breaking contributions to the economic analysis of water systems appeared from Harvard, Resources for the Future (RFF), RAND Corporation and elsewhere. Clawson (1959) and Clawson and Knetsch (1966) elaborated the travel cost method for assessing the value of water-based recreation.11 Kneese (1964), Kneese and Bower (1968), Davis (1968) and others at RFF were developing the economics of water quality management. The concepts of option value, introduced by Weisbrod (1964) and existence value, introduced by Krutilla (1967), brought out new dimensions of resource management reflecting society’s changing values. Techniques for measuring these new values became a major objective of large numbers of environmental economists,

92

The evolution of water resource planning and decision making

thus extending the reach of efficiency analysis, though not necessarily to the exclusion of other descriptive measures. More of the impacts earlier described under the EQ account of the P&S could now be brought under the economic efficiency umbrella. However, the reconciliation is still not complete. There is, for example, little agreement on measuring community and cultural values associated with water allocation and development. There also remain questions of how far the benefit quantification techniques like contingent valuation and hedonics can be credibly pushed: to assess existence values or to value endangered species? There remains a role for the multi-objective planning and evaluation process first acknowledged by Gallatin and the French engineers at ENPC. These developments are treated in following sections of this chapter. Two major books were published in 1958: Otto Eckstein’s WaterResource Development: The Economics of Project Evaluation (Eckstein, 1958) and the Krutilla-Eckstein volume Multiple Purpose River Development: Studies in Applied Economic Analysis (Krutilla and Eckstein, 1958). Eckstein’s book was a revision of his PhD dissertation at Harvard but it was destined to become one of those classics that remain relevant over the decades. The book critiques the procedures for measuring benefits and costs used by USBR and USACE, using welfare economics as the basis of critique and assuming that distributional, political and social objectives can be left to other public sector programs. The later chapters apply the principles to flood control, irrigation, navigation and electric power generation. The importance of cost-sharing in motivating socially responsible project selection is emphasized. The Krutilla-Eckstein book concentrates on the river basin as the natural unit for planning and project analysis, emphasizing the interdependence of projects and purposes and situations of complementarity and substitutability between projects. These principles are then applied to several detailed case studies: the Hells Canyon case that compares the benefits and costs of a high dam to those of three low dams and a two dam plan. The analysis includes assessment of a natural river and flat-water recreation benefits, pointing to the unique values of the natural river and the existence of extensive flat-water opportunities already in the region. Much of the analysis was done in connection with the Federal Power Commission (FPC) hearings on license applications from the Idaho Power Company. Conclusions of the study included the sensitivity of plan selection to the discount rate and the importance of requiring licensees to take into account the effects of their stream regulation on downstream power potential. Hirschleifer et al. (1960) produced Water Supply: Economics, Technology and Policy (1960) (sponsored by RAND and published by University of Chicago Press), to educate the public, especially that of California,

Theory and practice of benefit-cost analysis

93

on principles for evaluating the economic worth of water projects. This book was published at the time the large California State Water Project was being undertaken and one intent of the book was to demonstrate the economic superiority of conservation, reallocation of existing supplies and better irrigation technologies over further large-scale construction. The importance of water prices was emphasized while pointing out that raw water supplies were grossly underpriced by both the earlier Central Valley Project (USBR) and the new State Water Project. Recommendations of the study include (1) adopting marginal (rather than average) cost pricing of water; (2) clarifying property rights in water so that efficient trading would be encouraged; (3) establishing procedures to reduce negative externalities from water use and water development; and (4) providing the public with information on the alternatives available. The Harvard Water Program began in 1955 as a program of engineering and economics innovation as well as training for many public agency personnel. The research purpose was to improve the methods for designing water resources systems taking advantage of emerging advances in probability theory, statistics, operations research and welfare economics. The resulting methodology involved (a) identifying the objectives of design, (b) translating these objectives into design criteria, (c) optimizing specific water systems and (d) evaluating the consequences of the developed plans. A major advance was to join engineering and economics in the analysis of complex river basin systems for which analytical production functions could not be specified. Uncertain hydrology was innovatively handled through the invention of synthetic hydrology that permitted the derivation of probability distributions of system outputs and extended the analysis beyond reliance on the historical hydrologic record. The analysis of water demand was also extended and its role in system design strengthened. A major product of the program’s early years, The Design of Water-Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning (Maass et al., 1962) is a classic in the water resources field. Table 3.1 summarizes in chronological order the major contributions described previously and puts them in the context of the evolving federal guideline documents. In the light of the enormous quantity of work summarized in Table 3.1, it is instructive and somewhat amusing to note some of the reactions to the 1973 P&S by groups from the academic economics profession. Paraphrasing Bromley (2000, pp. 7–8): The academic community, or that exceedingly minor fraction of it that paid any attention to Federal water policy, was choosing sides. It is not unduly melodramatic to refer to these as the water wars. In one camp we found the Axis Powers emanating from Washington, D.C. (Knetsch, Haveman, Krutilla, Brewer, Howe . . .) that saw water policy as pork barrel politics that could be stopped only

94

The evolution of water resource planning and decision making

Table 3.1

Historical contributions to the economic analysis of water resources

Contributor

New Insights

1807

Economic efficiency in terms of annual benefits and costs:

Albert Gallatin

● ● ●

transport savings interest during construction interest on total invested capital

Necessary role for government Systems analysis of induced traffic 1831–44 (French) ENPC

Economic efficiency: ● ● ● ● ● ●

transport savings alternative cost measure of benefits compound interest and discounting diminishing marginal utility derivation of the demand curve area under the demand curve as the benefit measure

Supply-demand price determination Importance of competition and free trade 1920

A.C. Pigou

Externalities and use of taxes and subsidies: ● ●

importance of distribution of benefits and costs efficiency-equity trade-offs

1936

Flood Control Act

The benefit-cost test of all flood control projects Public safety and well-being objective

1950

The ‘Green Book’ Economic efficiency in monetized present values (Federal Interagency Intangible benefits, including saving of life Committee) Regional benefit and cost calculation Applicability of secondary benefits and costs

1952

Budget Circular A-47 (US Bureau of the Budget)

Comparative benefit-cost assessment of alternatives The benefit-cost assessment in total and by project purpose

Theory and practice of benefit-cost analysis

Table 3.1

95

(continued)

Contributor

New Insights Other purposes stated in quantitative terms (with lesser weight)

1958

Otto Eckstein, Water Resource Development: The Economics of Project Evaluation

Welfare economic foundations of the benefitcost analysis Only economic efficiency (other programs take care of equity and so on) Applications of the benefit-cost on a uniform basis to flood control, irrigation, navigation and power

1958

Krutilla-Eckstein, Multiple Purpose River Development: Studies in Applied Economic Analysis

The river basin as the natural and necessary unit of analysis Importance of the choice of discount rate Natural river and flat-water recreational values differentiated

1960

Hirschleifer, Dehaven and Milliman, Water Supply: Economic Technology and Policy

River basin as the natural unit of analysis Alternatives to new supplies: reallocation, conservation, irrigation improvements, water marketing Marginal cost pricing Importance of property rights in water Public education on water issues

1960s

1961

Development of methods for non-market valuation: travel cost, hedonics, early contingent valuation Hufschmidt, Krutilla, Margolis and Marglin, Standards and Criteria for Formulating and Evaluating Federal Water Resources Developments

Economic efficiency objective Need for integrated river basin planning Distributional objectives Aesthetic and cultural values to be taken into account General merit wants Private versus social discount rates Secondary benefits and costs applicable under less than full employment conditions Risk and uncertainty to be considered Importance of reimbursement policies

96

The evolution of water resource planning and decision making

Table 3.1

(continued)

Contributor

New Insights

1961

Senate Document 97, Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources

Three objectives:

1962

Harvard Water Program, The Design of WaterResource Systems (Maass, Hufschmidt, Dorfman, Thomas, Marglin and Fair 1962)

Methods for design of water systems Objectives; economic design criteria; economic evaluation Use of stochastic methods of analysis, including synthetic hydrology and optimization Study of water demand functions

1973

Principles, Standards and Procedures (P&S) (WRC)

Multi-objective approach:

● ● ●

economic development (efficiency) preservation of environment and resources well-being of people (hardship, basic needs, saving of life)

Economic efficiency baseline river basin plans from which to measure the implied costs of other objectives No requirement for the benefit-cost > 1.0

● ● ● ●

NED (economic efficiency) environmental quality regional development social well-being

Discount rate 5 federal opportunity cost of funds 1983

Principles and Guidelines (P&G) (Presidential order)

Single objective: NED

with hard-edged economic analysis. This was a time when unnecessary dams and bizarre inland seaports like Lewiston, Idaho and Tulsa, Oklahoma were being proposed and constructed. The Axis Powers saw the P&S as soft analysis that would continue to justify such projects. A pamphlet on the indispensability of efficiency über alles (Federal Natural Resource Development: Basic Issues in Benefit and Cost Measurement) was published in May (Knetsch et al., 1969).

Theory and practice of benefit-cost analysis

97

The Allied Powers (Kalter, Lord, Allee, Castle, Kelso, Smith, CiriacyWantrup, Weisbrod, Bromley . . .) produced a countervailing 1969 pamphlet Criteria for Federal Evaluation of Resource Investments and declared the war to be over. In essence, the struggle was over the nature and scope of welfare economics and its ability to identify the public interest in selecting public investments. The Axis Powers placed more credence in this weapon, based on the first half of the Flood Control Act’s ‘if the benefits . . . are in excess of the estimated costs . . .’ to justify a holy war against waste – if not corruption. The Allied Powers understood that water policy was a complex mix of regional development, agricultural issues, transportation policies and other issues and concluded that welfare economics alone was simply unable to identify the public interest in selecting public projects. While the benefit-cost analysis (based on welfare economics) was indispensable in organizing the many impacts of a public investment, it was neither necessary nor sufficient to link a proposed project with its impact on social welfare (Kalter et al., 1969).

MEASURING PROJECT BENEFITS AND COSTS We now turn to more specific descriptions of how we measure compensating variation for different changes associated with water projects. Following up on the historical perspective provided in the previous section, the section begins with benefits and costs directly measurable through markets and then addresses benefits and costs for environmental/ ecological flows and services not directly traded in markets. Measuring Benefits and Costs in Markets Price changes and consumers We begin by considering the impacts of a commodity price change, first on consumers and then on producers. Absent other changes, a price increase for consumers resulting from a project is a bad thing and so compensating variation is negative, meaning consumers would need to be compensated in order to make them indifferent to the change.12 For a price decrease, compensating variation is positive, meaning consumers are winners and money would have to be taken away to make them indifferent. Compensating variation for a price change is approximated using the demand curve for the commodity. A commodity demand curve has two interpretations. The first is that it registers the quantity demanded of a good given that good’s price and the prices of other goods consumed. In a functional form, demand for good i, depends on the good’s own price, pi, a vector of other commodity prices, P{-i}, and the consumer’s income, y: x 5 xi (pi, P{ 2i}, y)

(3.1)

98

The evolution of water resource planning and decision making

Price for good i x(pp P–i, y) New price

CV estimate

Initial price

x1 x0 Figure 3.1

Quantity demanded

Compensating variation estimate for a price increase

The second interpretation of the demand curve, important for measuring the benefits and costs of price changes, is as a marginal valuation curve or function. The logic behind this is simple. In a free-choice, market situation a consumer gets to choose how much of their income to spend on a good. If the consumer is trying to achieve as much satisfaction/utility as possible through commodity choice, consumption will occur up to the point where the marginal benefit of consuming the good exactly equals its price. Thus, we know that at the current price, a utility-maximizing consumer has a marginal value for the good equal to its price. If this were not the case, the consumer could do better by adjusting consumption down when the marginal benefit is below the marginal cost or up when the marginal benefit is greater than the marginal cost. Hence, movement along the demand curve reflects quantity demanded at the market price and the marginal value of consumption of the selected quantity. Integrating the demand curve over the price change produces a monetary measure of the benefit of a price decrease or the cost of a price increase. Figure 3.1 depicts the integral for a price increase as the hatched area between prices to the left of the demand curve.13 For a price decrease, the figure looks similar, with the exception that the initial price would lie above the new price. In the case of a price decrease, the monetary measure would have to be taken away from the consumer to make them indifferent; for a price increase, the monetary measure would be given as compensation. Compensating variation requires that the consumer be made indifferent to the price change, which in economic terms requires that the consumer’s satisfaction/utility level remains as before the price change. Movement in

Theory and practice of benefit-cost analysis

99

prices along the demand curve, however, results in a utility decrease for a price increase and a utility increase for a price decrease. Hicks (1943) developed the conceptual relationship between demand and compensating variation. As it turns out, for goods where demand goes up with income, this integral/area will underestimate the magnitude of compensating variation for a price increase and overestimate the magnitude for a price decrease. As pointed out by Willig (1976), the degree of error is small in most cases.14 When multiple commodity price changes occur, the analysis should be conducted as a sequence of price changes. The analysis would proceed as: (1) calculate compensating variation for the first commodity price change;15 (2) adjust income accordingly; (3) calculate compensating variation for the second price change, but at the adjusted income; (4) add together the compensating variation for the first price change to the compensating variation obtained from step three; and then (5) repeat for all remaining price changes. Changes that affect producers and workers On the production side of the economy, project analysis mainly focuses on changes in outputs and the associated changes in commodity supply. For consumers, significant supply impacts will be felt through price changes, which are valued as described previously. For producers, supply impacts may result in changes in profits, which are revenues minus costs. In project analysis, changes in producer profits are the producer-side equivalent to compensating variation. Thus, when a project affects a firms’ productive capacity, the effect of price changes should be considered on the consumer side along with changes in producers’ profits. Positive or negative changes in employment resulting from project impacts on firms are counted only to the extent workers’ incomes change (assuming full-time employment levels). For example, a project resulting in a firm’s closure and the layoff of workers typically does not reduce income by the total of the laid off workers’ wages. In a properly functioning labor market these workers would typically find other jobs. For these workers, losses are only the reduction in income, if the new wage is less than the old, not the total income loss from their previous job. Changes in wages and employment hours are slightly more complicated. A wage increase may result in an increase in labor supplied while a wage decrease may result in a decrease in labor supplied. In the case of a wage increase, the change in income overstates the benefit to the worker because some leisure was given up in order to work more. For the wage decrease, the change in income overstates the loss because the worker made the decision to work fewer hours and gained some leisure. The degree that changes

100

The evolution of water resource planning and decision making

in income overstate benefits or losses of wage change will depend on the responsiveness of labor supply to the wage. Land use changes Projects often result in a variety of land use changes. For example, some land may be inundated by a large water project, rendering the land useless. At the same time, other land may become lake front property. For economic analysis, the proper measure of accounting is the change in affected land’s market value. It is important to recognize that through the marketplace for land, land is treated as a replaceable commodity by businesses and residents. In response to land use changes, residents and profitable firms, even farmers and ranchers, can usually relocate. Firms and residents adequately compensated for their replaceable land, including relocation expenses, are not any worse off than before the project. Some care needs to be exercised when full compensation does not take place. A firm not fully compensated for loss of the use of its land may be forced out of business, thus costing it profits and potentially resulting in income changes for workers. When this is the case, changes in profits and workers’ income should be included in the analysis. Hydroelectric benefits Many large water planning projects involve changes in hydroelectric power production. In unfettered electricity markets the market benefits and costs of changing hydroelectric production are measured as described previously.16 Changes in production affect supply, which affects prices for consumers and thus consumer costs or benefits are reflected in compensating variation for those price changes. On the producer side, benefits and costs are reflected in changes in profits. In many regions, however, electricity prices are regulated. Utilities are required to meet electricity demand while utilities’ cost structure determines allowable prices. In regulated electricity markets in the USA prices are regulated to allow for the recovery of capital and operating costs of meeting demand, including a rate of return on invested capital. Electricity consumers face a price that reflects these allowances regardless of temporal demand. When prices are regulated in this fashion, the economic benefits and costs of changes in hydroelectric production are measured through the change in capital and operating costs relative to the most likely replacement for the electricity produced through the project.17 Further insights from demand curves: changes in output Much relevant information can be gleaned from a simple estimated demand curve for a project-produced commodity: What change in price

Theory and practice of benefit-cost analysis

101

Price 16.01

7.13 5.23

Quantity

0 221.9 Figure 3.2

269.4

400.25

Estimated demand curve for Idaho potatoes

is likely to result? What gain in consumers’ surplus will result? If the new output will be produced by new producers entering the market, what revenues will they receive? For the producers previously in the market, how much revenue will they lose as a result of the price change? Estimates of these values can be determined from the demand curve. An example is seen in Figure 3.2. In the 1960s the USBR undertook a large irrigation project in Idaho for the production of potatoes. Data derived from earlier expansions of output and the current price-output point resulted in the estimated demand curve for Idaho potatoes (Howe, 1971): P 5 16.01 2 0.04 Q

(3.2)

where: P 5 price of potatoes ($ per hundredweight) Q 5 potato harvest (millions of hundredweight) The average experience over the previous several years was an output of 221.9 million hundredweight and a price of $7.13. The new project was estimated to add 47.5 million hundredweight annually. The demand curve then enables us to approximate the new market-clearing price of $5.23, a substantial reduction. Planners must know this change to determine whether or not the new farmers will make a profit and how much revenue the old farmers will lose. In spite of the price fall, the added output has a substantial value to society, namely $293.5 million per year under the demand curve between the old output (221.9) and the new output (269.4).

102

The evolution of water resource planning and decision making

Of this, $248.4 million will be paid to the producers and $45.1 is consumer’s surplus from the new production. The customers purchasing the former output will gain $421.6 million per year in consumer surplus, which equals the loss of revenue to the producers of the prior output. While the consumer surplus measures are not identical to the theoretical measure of compensating variation described earlier, they serve to inform us who gains and who loses from the proposed project. Non-Market Benefits and Costs Often projects affect goods and services not directly traded in markets. For example, a project may change the availability of different types of recreational activities not priced in the marketplace. Similarly, a project may affect the management area’s ecology. A number of techniques specifically address these issues. We begin with a discussion of measuring benefits and costs associated with recreation benefits. Recreation benefits Conceptually, recreation can be viewed as any other good. People participate in recreation to the extent that the benefit to them outweighs their costs. For ordinary marketed goods, the cost of consumption is readily observable through posted prices. Data on prices and quantities demanded facilitates estimation of demand curves that can then be used to measure the economic benefits and costs (compensating variation) of price changes or quantity restrictions, as just illustrated. For recreation experiences, costs are not directly observable, other than occasional entrance fees, which are not the full cost. The first non-market technique we consider, the travel cost method,18 provides a way of inferring consumer costs that then facilitate recreation demand estimation. These demands can be used to value changes in recreation as well as changes in environmental quality at recreation sites. Travel cost method The key breakthrough of the travel cost method was the recognition that much of the cost of recreation can be attributed to time spent traveling to the recreation site. Price variation for recreationists in a single time period can be observed since people travel from different home locations to a given recreational site. Home location, used to infer travel costs, combined with the number of trips suggests an avenue for statistically estimating the relation between trips demanded and price. The economic value of a trip is linked to the notion of consumer’s surplus, as graphically depicted in Figure 3.3. This figure depicts the relationship between trips demanded and price. For consumers, who face trip

Theory and practice of benefit-cost analysis

103

Travel cost for recreation site

Consumer’s surplus (shaded area) TCi

0

ti

Trips demanded

Figure 3.3 Recreation demand and travel cost (a)

cost, TCi, the number of trips demanded is ti. As mentioned earlier, in addition to providing the relationship between quantity demanded and price, a demand curve also shows the marginal value of units chosen at different levels of consumption. In Figure 3.3 the value of another trip to the (arbitrarily identified) marginal consumer at the current level of trips demanded, ti, is exactly equal to the cost of the trip, TCi. Consumer surplus is the shaded area above the price line and under the demand curve (the difference between the gross value of consumption and its cost). For market goods where all consumers face the same price, like the example of potato harvest previously, it makes sense to aggregate demand across consumers by horizontally summing individual demand into market demand. For the travel cost method, demand can be aggregated, but consumers face different prices and so we do not get the simple graphical representation that is available for market goods with a single market price. Calculating aggregate consumer surplus requires us to calculate each consumer’s surplus individually and then sum across individuals. For this reason, we focus our analysis at the individual level. If we were to price individual i out of the market for recreation at the site, the change in that consumer’s surplus would simply equal the individual’s entire surplus. Thus, if we eliminated this recreation site, the lost surplus would be equal to the entire area under the demand curve. (This, of course, simplifies by ignoring the existence of substitute sites, a matter discussed in

104

The evolution of water resource planning and decision making

future sections.) Working in the opposite direction, where a site is opened, the consumer surplus represents i’s economic benefit from the new site. Given the travel demand concept, economic analysis of closing a recreation site is accomplished by determining the increase from current travel cost to the travel cost that completely chokes off demand. A site opening is analysed as the surplus generated by a price change from the choke price to the actual travel cost faced by the individual. Discussions of the value of adding or taking away recreational opportunities are usually cast in terms of average consumer surplus per trip.19 The primary methodological contribution of travel cost is the fact that by virtue of different home locations for recreationists we observe price (travel cost) variation for a target site in a single time period/season.20 It was once believed this variation facilitated appropriate statistical estimation of the relationship between trips demanded and travel cost, accomplished by fitting a regression line of trip demand on travel cost. Unfortunately, while there is price variability across recreationists for the target site, there is also price variability for all other substitute recreation sites people might visit. Ignoring price variability across recreationists for other substitute sites will result in biased demand estimates for the target site. This is true because for each recreationist, trip demand for the target site is a function of the target site’s travel costs as well as the travel costs to other sites. If we change the travel cost associated with one of the substitute sites a recreationist visits, their individual demand curve for the target site will shift. Similarly, since other recreationists face different travel costs for both the target site and substitute sites, their observed demand for the target site falls along different, shifted individual demand curves. The only way to remedy this problem is to estimate demands for the target site along with substitute sites, which is considerably more data intensive. Ignoring the problem often results in significantly biased estimates of consumer’s surplus, in most cases overstating the economic benefit of recreation. Valuing changes in environmental quality through travel cost A further important application of travel cost is to value changes in environmental quality at a target recreation site. Conceptually, demand for recreational activities, such as hiking and fishing, will be positively related to environmental quality.21 In these cases improvements in the environmental quality will result in a shift in demand for site recreation and thus changes in recreation benefits. Figure 3.4 depicts this shift in demand from D0 to D1. The shaded area shows the change in consumer’s surplus associated with the demand shift. Given weak complementarity, a concept introduced by Mäler (1974), the change in consumer’s surplus associated with the change in quality

Theory and practice of benefit-cost analysis

105

Travel cost for recreation site

Change in consumer’s surplus (shaded area) TC

D0 0 Figure 3.4

t0

D1

t1

Trips demanded

Recreation demand and travel cost (b)

at the site in question will closely approximate compensating variation for environmental quality. Weak complementarity is the condition that environmental quality improvements are of zero value when the demand for the complementary good, here recreation at the given site, is zero. This condition implies that recreationists only care about environmental quality when they use a site. In many cases weak complementarity is not satisfied. For example, hikers may still care about environmental quality of an area, even if denied access. In cases where weak complementarity is not satisfied, the change in consumer surplus measured on the recreation demand curve will underestimate both the economic benefits of environmental improvement and the economic costs of environmental degradation. Correctly estimating the benefits of changes in environmental quality through travel cost requires estimating the demand functions for the target site and substitute sites as a function of their prices and environmental qualities. Ordinary demand estimation requires data containing variation in trips demanded, variation in travel costs for each site and variation in environmental quality at each site. Though variation in trips demanded and travel costs is generally satisfied, the last requirement of variation in environmental quality for each site is rarely satisfied. In order to circumvent this problem, Morey (1981) adapted a different approach called random utility modeling, which takes the probability of demand for each site to be a function of differences in travel costs and differences in environmental quality across the sites. In this framework variation

106

The evolution of water resource planning and decision making

in environmental quality is only required across sites as opposed to the ordinary demand system approach that requires variation in environmental quality for each site. Conceptually the change in consumer’s surplus is still used as an approximation for compensating variation.22 The random utility approach represents the current state-of-the-art in recreation demand modeling. In particular, random utility modeling is the most effective way of modeling demand for a target site and substitute sites in relation to environmental quality. Travel cost studies that fail to model substitutes should be viewed as suspect for the reasons raised above. Survey approaches to estimating recreation benefits Survey research is usually needed to collect basic trip demand data. One natural extension is to ask questions about maximum WTP per trip to recreate under hypothetical scenarios of quality. This maximum WTP has been interpreted as representing average total consumer’s surplus or compensating variation, for on-site recreation. Questioning of this kind was the first application of what is now referred to as the contingent valuation/method. Davis (1963) introduced this approach and was soon followed by Cicchetti and Smith (1973), Brown and Hammack (1973), Brown and Hammack (1974) and later by many others. The advantage to a survey approach is that recreation demand curves need not be estimated if the goal of the analysis is to determine compensating variation. The questions attempt to directly measure compensating variation as opposed to estimating recreation demand curves and then deriving consumer’s surplus (and thus compensating variation) changes from the estimated demand curves.23 Another survey approach to estimating recreation benefits is to ask recreationists about how their demand would change under varying environmental quality scenarios across sites. These stated choices can then be used to estimate demand for the relevant sites, facilitating benefit estimation for a variety of environmental quality scenarios, including site closure. Standard demand analysis or an attribute-based, random utility approach can be used to estimate demand. As in the case with actual recreation data, careful attention must be paid to substitute sites when estimating demand to avoid biased demand and hence biased benefit estimates. Amenity benefits and costs Many people value the amenities provided by natural environments. Because water projects may affect these amenities, the economic benefits and costs of these changes should be considered in economic analysis. People are exposed to these amenities in several ways. One way is through recreation, the recreation techniques described above are often used to estimate amenity benefits and costs. If amenities can be quantitatively

Theory and practice of benefit-cost analysis

107

measured, then these amenities are a form of environmental quality that can be considered in a random utility framework. In the case of unique resources, such as the Grand Canyon, amenities are not easily quantified, particularly in relation to substitute sites. In instances of unique resources, survey methods are the primary avenue for measuring amenity benefits and costs associated with recreation. Hedonic techniques Another way people are exposed to amenities is through their residential location choices. If residential sites have different relative amenities and people value these amenities, then the price of houses should vary with amenities, after all other sources of variation are ‘removed’. Obvious candidates include proximity to the beach or lake and canyon views. A large water project might positively affect property by creating more lake front lots and lake views, while, at the same time, perhaps eliminating canyon views for some lots. Given that the prices of houses and lots vary with amenities, an indirect market for amenities in the housing market exists. Rosen (1974) developed the hedonic method around the idea, originally suggested by Lancaster (1966), that goods, such as houses, can be viewed as bundles of valuable attributes. In the case of housing, these attributes include structural characteristics, such as size, number of bedrooms, number of bathrooms; neighborhood characteristics, such as school quality and safety services; and site characteristics such as amenities and lot topography.24 In the housing market the differentiation of housing by these characteristics is the basis of price variation. The relative supply and demand of these characteristics determines price characteristics. Home purchasers buy these characteristics up to the point where the marginal benefit equals the marginal cost, the attribute’s market price. Thus the market price of the attribute reflects its marginal value. Statistical estimation of attribute prices is fairly straightforward. Multivariate regression is used to model housing prices. The standard approach is to regress the natural logarithm of individual house prices on the houses’ structural, neighborhood and amenity characteristics. The estimated regression coefficients can then be used to infer the marginal values of characteristics. This technique provides an estimate of the marginal benefit of amenities, but care must be exercised when inferring benefits or costs for non-marginal changes. For example, multiplying the amount of amenity improvement by the marginal value of the amenity will tend to overestimate benefits because, as the amenity before the change is increased, the marginal benefit typically goes down. The reverse is true for declining quality. It is important to recognize that this approach assumes that changes in environmental quality are localized to the extent that

108

The evolution of water resource planning and decision making

they do not affect the overall price equilibrium. Bartik (1987) pointed out that large environmental quality changes imply an overall shift in supply of environmental quality and that the price equilibrium will shift. Large supply shifts create a fundamental problem for identifying, and even bounding, the benefits or costs from an estimated hedonic price function. Non-use benefits The approach to recreation and amenity benefits discussed in the previous section revolves around use of a target recreation or residential site that will be affected by a project. Krutilla (1967) raised the prospect of benefits from the natural environment even for people who do not currently use the resource. In particular Krutilla noted that people such as the spiritual descendants of John Muir may value natural areas or scenic wonders for their mere existence. The Arctic National Wildlife Refuge in Alaska is a good example, with many non-users valuing preservation, as Congress has discovered when considering allowing oil and natural gas development in the refuge. Many constituents who have never visited nor intend to visit the refuge have protested the prospect of such development to their Congressional representatives by letter, fax, email and telephone. Measuring this class of benefits has, however, proven to be both difficult and controversial. Non-use benefits are difficult to measure because nonusers, unlike consumers of a product, recreationists and so on, leave no behavioral trail to link them to the resource. Even the identification of non-users is difficult since those who value preserving a natural area are likely to be geographically and demographically dispersed. Some progress on this challenge has, however, been made by application of so-called ‘contingent valuation’ techniques. Because contingent valuation (CV), as it is commonly known, has also been applied much more widely than just in search of non-use values, the following subsections discuss it and one of its important cousins in that broader context. Contingent valuation Survey techniques, especially the CV method,25 have been applied extensively to measure environmental benefits and costs, including non-use benefits and costs. The idea behind these surveys is to create a hypothetical market from which individuals’ values can be inferred. Survey respondents are contacted using random sampling techniques. These surveys can be administered in person, by mail, by telephone, by Internet, as well as combinations of these modes (for example, telephone and mail). A properly designed valuation survey carefully explains how a particular project or program will affect a resource. Then a hypothetical payment proposal is made to the survey participant. When CV was first applied, payment proposals simply asked open-ended

Theory and practice of benefit-cost analysis

109

questions such as: what is the most you would be willing to pay for this program? Open-ended questions are easily manipulated. For example, people who really want the project may express very high amounts for their maximum WTP, even though they may not be willing to pay the stated amount. To reduce manipulation, payment proposals took a discrete form such as: would you favor the program if it cost your household $10 for a one-time tax assessment? If the respondent says yes, then the analyst infers the most this person is willing to pay, their compensating variation, is more than $10. A no response is interpreted as implying that this person’s compensating variation is less than $10. In order to estimate the distribution of individual compensating variations, the cost amount is randomly varied across participants. Typically, analyses focus on estimating the mean of the distribution of individual compensating variation. The estimated mean can be used to calculate total benefits by multiplying the estimated mean and the number of households in the affected population. The CV method has been applied extensively to value the environment and other public goods. In a recent bibliography Carson (2004) notes over 5500 CV studies. While CV applications are plentiful and growing more so, the method has its critics.26 An obvious issue is that survey respondents state their preferences and their choices are non-binding.27 Another potential problem is that many survey respondents may lack familiarity with the affected area and yet they still respond. Finally, unlike marketing research where stated preference estimation can be checked against actual market choices, external validation for CV-based benefit estimates is often quite difficult because of the difficulty of matching the changes being valued in different studies using different methods. In cases of benefits involving use, such as recreation and housing amenities, there have been comparisons of values obtained from CV and those obtained using methods such as travel cost and hedonic analysis. Carson et al., (1996) gathered 83 studies that provide 616 comparisons, in which the CV estimates averaged slightly lower than the estimates obtained from the other methods. Much of the liveliest CV controversy arose because of its applications to natural resource damage assessment cases, where real money would be changing hands. In the court case Ohio vs US Department of Interior (USDOI), the US Federal Court of Appeals ruled that Congress intended for non-use values to be included in natural resource damage assessments conducted under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the same law that established the Superfund. The Court further ruled that CV was the only method capable of measuring non-use values. Probably the most prominent application example is the CV application that valued protecting Alaska’s Prince William Sound from future oil spills like the one created

110

The evolution of water resource planning and decision making

by the grounding of the Exxon Valdez in 1989 (Carson et al., 1992). Estimates of the non-use economic damages from that study were in the order of $2.8 billion. Potential liability from natural resource injuries to non-users of this magnitude created considerable concern among potentially responsible parties from industry. By the late 1980s, the CV method was so embroiled in controversy that the National Oceanic and Atmospheric Agency (NOAA), the federal trustee for natural damage assessments in navigable waters of the USA, convened a panel of prominent economists, including two Nobel laureates, to assess the validity of CV in damage assessment cases. In their report, published in the Federal Register, Arrow et al. (1993) concluded ‘contingent valuation studies can produce estimates reliable enough to be the starting point for a judicial or administrative determination of natural resource damages – including lost passive-use value’ (p. 4610). Choice-based conjoint While the NOAA panel supported the use of CV, it is being replaced in natural resource damage assessment by a related, but distinct technique referred to as choice-based conjoint (Adamowicz et al., 1999). Choice-based conjoint is useful when projects can be represented according to the quantitative levels of the major attributes provided by the project. Like CV, choice-based conjoint is a survey-based technique and survey respondents state their choices. The primary difference is that choice-based conjoint provides hypothetical choices between alternative projects that differ by the levels of these attributes, including cost. Typically a single survey respondent makes multiple choices between different ‘designs’ at each choice occasion. In contrast, CV survey participants typically face one choice: between the proposed project (or policy) with some form of payment and the option of doing nothing at no cost, that is, the status quo. Similar to the hedonic method, in choice-based conjoint analysis the marginal values for the attributes are inferred from the data, only here the data reflects stated rather than market choices. Federal statutes require that money recovered in natural resource damage litigation be directed exclusively toward restoration of injured resources and the restoration of other resources as a form of compensation. Choice-based conjoint has gained popularity in natural resource damage assessment because it facilitates measuring damages in both monetary and compensatory resource terms.28 In most cases of water planning project analyses, however, only monetary measures are required. Nonetheless, there are those situations in which projects are most clearly described in terms of attribute levels. For these cases, choice-based conjoint can provide an avenue for easily considering projects of different make-up and scale, particularly when compensatory restoration will be used to offset ecological losses.

Theory and practice of benefit-cost analysis

111

Overall, the stated choice methods of benefit and damage estimation have a major advantage, flexibility, over the older methods that rely on revealed preference data from markets and complex reasoning and econometrics to tease out estimates. That is, stated choice surveys can be designed to ask exactly what is at issue, and the value of preserving something or of building something or of putting in place a particular policy. It is often difficult to design revealed preference studies that can address what is actually of interest and the analyst may be forced to measure a highly imperfect proxy. It is also true, as noted in passing previously, that CV or conjoint studies can reveal non-use values, but in general only as parts of the aggregate benefit or damage estimates and not as separate numbers. Inferring Non-Market Benefits Using Benefits Transfer Many planning exercises have insufficient financial resources or insufficient time to conduct original studies to estimate non-market benefits and costs. Lacking resources, the method of benefits transfer can sometimes be used to analyse projects, particularly in preliminary stages of planning. As the name suggests, benefits transfer applies results from existing economic analyses to infer costs and benefits for the project at hand. While the way benefits are transferred can vary considerably, some basic guidelines exist for evaluating a benefits transfer.29 First, the benefits transfer should carefully lay out the benefit and cost data requirements necessary to adequately evaluate the project, regardless of the availability of existing studies. This process includes laying out the likely impacts of the project and then identifying the population likely to be affected. Second, the benefits transfer should identify as many relevant studies as possible for the task at hand, even studies not ultimately used to infer benefits. The burden is then on the analyst to convincingly explain the logic behind the choice of studies to include in the benefits transfer and studies to exclude. Two primary screens for selecting projects are overall analytical quality and correspondence of conditions. The quality of a benefits transfer relies on the quality of the existing studies used to generate the benefits. Studies using outdated techniques or substandard research methods, while worthy of mention for potential relevance, should not be considered in a benefits transfer, no matter how convenient. There also needs to be reasonable correspondence between the character of the project being analysed and conditions reflected in the studies included in the data set. The resources involved for the target project should be similar to the resources involved in existing studies. For example, when considering changes in recreation benefits for a Rocky Mountain trout fishery, the

112

The evolution of water resource planning and decision making

analyst should favor existing studies that estimate benefits for similar fisheries, as opposed to fisheries with flat water and different fish species. The demographic composition of the population affected by the target project should also be similar to the demographic composition of the population in the chosen studies. Lacking correspondence on all dimensions, the analyst should explain what, if any, problems are likely implied by this lack of correspondence. The first major type of benefits transfer is often called ‘unit value transfer’. A common example is the estimation of the average consumer’s surplus estimate for a day’s recreation of a particular kind. Returning to the Rocky Mountain trout fishery, average per trip consumer’s surplus estimates from several studies of other Rocky Mountain trout fisheries may exist and the average of those unit values could be transferred from the existing studies to the new problem setting. Non-use benefits can, in principle, also be transferred. For example, suppose a project would eliminate natural habitat. There may exist CV studies that value natural habitat preservation in other similar areas. These will usually reflect both use and non-use values and separating the two may or may not be possible. But the unit value of compensating variation per household could be transferred from these existing studies so that some unknown amount of non-use value will be reflected in the analysis. A second type of transfer is that of activity data. Returning to recreation, we may need the change in recreational demand resulting from the project in addition to a unit value. Studies estimating demand shifts for similar areas can be used to infer demand shifts for the target area. The final type of value transfer we mention is ‘value function’ transfer. This method uses the estimated demand or preference functions from existing studies and then predicts using data for the existing study. For example, an existing study may correspond closely except with regard to the income distribution. If the estimated demand or preference function from the existing study depends on income, the benefit estimates can be adjusted through the estimated function. In an environment of declining budgets, benefits transfer is likely to play an increasing role in project analysis. Though traditionally touted as a preliminary screening device, benefits transfer is quickly becoming an inexpensive substitute for original analysis, even for large projects. Credibility of original analysis requires adhering to best practice research standards. High quality benefits transfer requires form (studies used must meet best practice standards) but also requires art, where this is the process of justifying the use of particular existing studies and explaining their relevance to the task at hand.

Theory and practice of benefit-cost analysis

113

Benefit-cost inference and incomplete economic analysis In some cases time or resource constraints may result in an analysis lacking benefit or cost estimates for some categories, most often in areas involving non-market benefits and costs. Fortunately, in many instances, an incomplete analysis is still sufficient for judging the economic merits of the project. Suppose, for example, a project will result in environmental losses affecting recreational fishing and white water boating. Further suppose the losses are only measured for recreational fishing, but that these are larger than the benefits of the project. No loss estimates are required for white water boating, although the analysis should mention the prospect of these losses because, even without the recreational boating losses, the project fails to generate positive net economic benefits. Similarly, a project may provide several categories of benefits, with some of these going unmeasured, while all expected costs are satisfactorily measured. Again, if the estimated categories provide a total larger than estimated costs, an incomplete analysis is sufficient for the benefit-cost test. At other times, a determination cannot be made because of missing benefits or cost estimates. In these cases good practice dictates a consideration of the magnitude of missing benefits or costs that would result in a project failing or passing the benefit-cost test. Suppose a project will provide water supply benefits valued at $4.2 million per year at a construction and maintenance cost of $3 million per year. The only unmeasured costs are lost white water recreation opportunities. From area visitation surveys, analysts infer there were 5000 white water recreation days in the last year. The relevant question is whether the economic losses from reduced white water recreation exceed $1.2 million. Given the potential for substitution to other recreation sites, 5000 lost white water recreation days represents an upper bound to the reduction in demand for white water recreation. Using this upper bound, we can construct the required per trip value that would equate benefits to costs (that is, divide $1.2 million by 5000 which equals $240 per trip). A survey of the recreational demand literature suggests that $240 per trip is well outside the range of existing WTP estimates for a day of white water recreation. The large requisite per trip value and the conservative estimate of trip loss allows for credible inference that the project passes the benefit-cost test. Economic Analysis at the Margin As the preceding discussion suggests, economic analysis relies on the notion that people have preferences for those things provided, or perhaps destroyed, by competing projects and that knowledge of these preferences is potentially useful in helping decision makers weigh the merits of

114

The evolution of water resource planning and decision making

competing alternatives. Some scholars30 fundamentally reject both the notion and role of individual preferences in public decision making. We believe most economists, ourselves included, accept the notion and usefulness of preferences without apology. Regardless of whether the reader accepts or rejects the notion and usefulness of preferences, the central conceptual foundation underlying economic project analysis is likely to continue to be preference based for the foreseeable future. As pointed out by Russell and Sagoff in Chapter 5, economists view choices as a window on preferences. Assuming people weigh competing alternatives, economists reason that their choices will generally provide insight into what they want (that is, their preferences). It is important to recognize, however, that in order to draw meaningful inferences regarding preferences the analyst must identify the margin on which people operate, which is not always obvious. Following in this same tradition, economists also tend to view projects in terms of their marginal contributions, a world view Russell and Sagoff contrast with that of ecologists, for whom the total environment is always at risk. We readily admit that analysts, when inferring preferences, can misidentify the margin on which people operate. Similarly, public policies may not be designed to lead to the appropriate margin. However, there is a flip side to this coin and that is that if the proper margins are identified, then the calculus of choice may indeed positively serve society.

SPECIAL ISSUES IN THE ESTIMATION OF COSTS Many costs take the form of foregone benefits; so many of the techniques described previously apply directly to estimating that part of the cost side. However, some issues are unique to the cost side. For example, questions on the appropriateness of market prices of inputs are important. These prices can be distorted by monopoly suppliers, by deviations between traditional wages and real opportunity costs, by price support programs like those applied to agricultural products, by manipulated exchange rates and so on. But not all costs are communicated through market prices. As water volumes, quality and flow patterns change negative externalities prevail. Damage to riparian ecosystems frequently occurs, while changes in groundwater levels (beneficial or damaging) can result from reservoir storage. Much discussed in the literature is the question of how to allocate the total cost for a multi-purpose project to its various purposes. Such allocations are desirable for appropriate pricing of the several outputs and in meeting various financial requirements, such as cost repayment and no

Theory and practice of benefit-cost analysis

115

profit conditions for public utilities. The problem arises from the existence of joint project components that are parts of the project that lie behind the successful fulfillment of more than one purpose. The obvious example is a dam, the existence of which allows for flood control, navigation improvement, electric power generation and perhaps irrigation. Technical personnel may identify the primary purpose of the project and then other purposes that may warrant inclusion. Design is carried out along with cost estimation. Separable costs are easily assigned (for example, water distribution system costs for irrigation, power plant costs for electric generation, locks and associated facilities for navigation). However, the joint costs (for example, the costs of the reservoir) pose a problem. Any procedure for dividing those costs is arbitrary (Young, 1985). Procedures have been developed (the separable costs-remaining benefits method) that do the job in a reasonable way in the sense of public perception, but distortion of output prices may still result.

INTEGRATING BENEFITS AND COSTS The foregoing discussion of benefits and costs neglects a critical dimension of project evaluation: that of time. The fact that all benefits and all costs do not occur at the same instant creates a number of concerns not yet treated here. For one thing, monetary values change over time (price inflation). For another, neither individuals nor society are indifferent as to when benefits or costs occur (time preference). Also, the passage of time reduces the certainty with which effects can be measured (risk and uncertainty). Finally, because of the long lives and long-term impacts of many water resources projects, questions arise about the desire of society to transfer benefits or costs to future generations (intergenerational equity). Temporal Issues in Project Analysis Water resources projects, like other investments, incur most of the costs early in the life of the project, while most benefits accrue later. This, in itself, creates an evaluation problem, since costs at one time cannot be directly compared to benefits at another. Moreover, neither costs nor benefits occur at a single time; they are continuously varying streams of expenditures or benefits that extend throughout the life of a project and sometimes beyond. Even a simple question such as: what is the cost of this project? requires attention to the temporal dimension of cost. The answer to this question is found by calculating the present value of project

116

The evolution of water resource planning and decision making

costs – a single sum at a specified time that is, given certain assumptions, equivalent to the stream of costs over the life of the project. A comparison of benefits to costs, then, requires calculation of the present value of benefits and the present value of costs. These two single sums can be compared and conclusions drawn regarding the worth of the project. Price inflation Since project effects are forecasted over time and then monetized, it is important to note that the value of money changes over time. In most cases the value of money falls from year to year. This fact is communicated to consumers by rising market prices for goods and services. Wages, pension payments and other amounts also increase as the value of money decreases, often through the use of Cost of Living Adjustments (COLAs) or other escalator clauses. Changes in the value of money are described as price inflation and measured by one of a number of indices. Different indices are appropriate in different circumstances, but most discussions center on a version of the Consumer Price Index (CPI), the Producer Price Index (PPI) or the Gross Domestic Product Implicit Price Deflator series. The CPI for all urban consumers (CPI-U) is the most frequently quoted measure of price inflation, while the CPI for urban wage earners and clerical workers (CPI-W) is commonly used to escalate wages and pension payments. Monetizing project effects requires knowledge of prices, wages and other values related to prices and wages. Generally, these values are known at the present time. However, since project evaluation deals entirely with hypothesized future events, some assumption must be made about future prices and wages. Two approaches are possible: (1) make some assumption about the rate of price inflation from now until the time of the valuation (the time when the cost or benefit is projected to occur); or (2) value all future costs and benefits in terms of present-day prices and values. The first approach produces an estimate of nominal costs and benefits, an estimate that depends on the assumed rate of price inflation. The second approach produces an estimate of real costs and benefits. Conventional practice in public sector benefit-cost analysis is to employ real estimates of benefits and costs, often referred to as measuring values in today’s dollars. As will be seen below, both methods produce the same present value provided appropriate discount rates are used. The convention of using real values does not entirely dispose of the issue of price changes. In certain circumstances, prices of specific goods or services change over time for reasons other than general price inflation. For example, consider a period when prices in general are escalating at an annual rate of 3.0 per cent. But suppose that prices for gasoline and

Theory and practice of benefit-cost analysis

117

other petroleum products increase at an average annual rate of 7.0 per cent. This rate of increase is partly due to general price inflation, but also reflects some other factor or factors. Perhaps the world demand for petroleum products is growing, causing the price to be bid up. Or perhaps the increase is due to the exercise of market power by oil-exporting countries. Whatever the reason, it is clear that prices of petroleum products are rising faster than prices in general. The difference is expressed by the following equation: 1.07 5 1.0388 1.03

(3.3)

Based on this calculation, the price of petroleum products is increasing 3.88 percentage points faster than prices in general. This is the annual rate of differential inflation. Even when project impacts are expressed in real terms (that is, in today’s prices), it is still necessary to identify goods or services that may be subject to differential inflation. These items must still be escalated: not at the projected rate of price increase, but at the differential rate. Note that negative differential price changes (deflation) may also occur; for example, in the case of electronic equipment. This is handled in the same way, except that the rate of differential inflation is negative. Principle of present value If an individual is promised a sum of money, they will probably prefer to receive it now rather than receive the same sum at some future time. Similarly, if a debt must be paid, most people prefer to make the payment later, as compared to paying the same sum now. These preferences reflect the factors noted previously (time preference, price inflation, risk). Since these same factors affect governments and society as a whole, similar concerns are expected at all levels of aggregation. In order to compare sums received or paid at different times, it is necessary to develop some notion of equivalence. This is done by observing that there must be some sum of money, received or paid at the present time, which would be regarded as equivalent to the future sum. In the case of a sum to be received in the future, a smaller amount received now may be equivalent. This equivalent amount is the present value of the future sum. If a debt must be paid in the future, the equivalent present value is also smaller than the actual amount to be paid. In both cases the test of equivalence is that the individual is indifferent between the actual future sum and its present value. Applying this notion to water resources development, projects have future costs and future benefits and each cost and benefit has an equivalent

118

The evolution of water resource planning and decision making

present value. Once all future costs have been restated as their equivalent present values, they can be added to give the present value of project cost. This is a consistent measure of total cost, taking into account not only the amounts that must be expended in the future, but the time at which those expenditures occur. The same logic applies to benefits: if all future benefits are restated as their equivalent present values, they can be summed to yield the present value project benefit. Since both costs and benefits are stated at present value as of some base year, they can be compared to each other or to the costs and benefits of other projects stated as present values for the same base year. The calculation of present values is accomplished through the use of a discount rate, defined as the rate with which the present value of a sum changes from period to period. The present value as of time 5 0 of a single benefit received or cost incurred in time t is found as follows: P.V. (St) 5

1 S (1 1 i) t t

(3.4)

Where: St 5 benefit or cost occurring at time t i 5 discount rate The present value of a stream of benefits or costs occurring over the life of a project, T, is found by adding individual present values: T 1 P.V. (S) 5 a c Sd ( 1 1 i) t t t51

(3.5)

Where: S 5 vector of future benefits or costs T 5 project life In both cases the present value is calculated as of time 5 0. Choice of appropriate discount rate In the case of market transactions involving future payments, the associated market interest rate performs the function of the discount rate. For public sector decision making, market interest rates are either not available or of dubious applicability, so an appropriate discount rate must be determined. This subject has been the focus of considerable controversy over the years and remains unsettled to some degree. The specific areas of disagreement can be identified by considering the following decomposition of a discount rate:31 (1  i)  (1  r) (1  p) (1  a)

(3.6)

Theory and practice of benefit-cost analysis

119

Where: i 5 discount rate r 5 simple rate of time preference (also called consumption discount rate) p 5 risk premium a 5 inflation allowance The first set of controversies applies to the rate of time preference. Some argue that this should reflect the time preference characterizing market transactions. For example, the rate of time preference reflected in US Treasury Notes and Bonds (assuming that risk is zero and after removing the effect of price inflation) has typically fluctuated in the range of 1.0 to 4.0 per cent per year. For the 2007–10 period, the OMB forecasts this rate at 2.5 per cent (OMB, 2007). Another school of thought says that since society consists of both present and future generations, there should be no time preference; that is, the rate of time preference should be zero. Yet another view is that in the face of future environmental events that may reduce the welfare of society compared to present levels (resource exhaustion, global warming), considering a negative rate of time preference is appropriate (Mäler, 1997). All market interest rates incorporate some allowance for risk. Indeed the wide range of risk associated with various financial instruments is the major source of variation in observed interest rates (consider, for example, interest rates for home mortgages as compared to those for unsecured credit card debt). Some would argue that public sector discount rates should reflect either (1) the risk associated with the specific project, (2) portfolio risk for a class of projects, or (3) government-wide investment risk. In the latter case most would agree that government investments as a whole are so many and diverse as to render the overall risk premium negligible. The inclusion of an inflation allowance in the discount rate reflects whatever inflation rate was incorporated in the estimates of the future benefits and costs that are to be discounted. If all future amounts have been escalated at a constant 4.0 per cent annual rate, the inflation allowance should be 4.0 per cent. Similarly, if the usual convention of the benefit-cost analysis is applied so that all future amounts are measured in real terms (escalation rate 5 0), the inflation allowance should also be zero. Both methods result in the same present value. This can be seen by examining the following equality: T (1 1 a) t 1 S 5 c d a c [ (1 1 r) (1 1 p) (1 1 0) ] t St d a [ (1 1 r) (1 1 p) (1 1 a) ] t t t51 t51 (3.7) T

120

The evolution of water resource planning and decision making

The convention, therefore, is to utilize real (inflation-free) valuations of future benefits and costs and to discount them with a real (inflation-free) discount rate. The real discount rate has two components: time preference and risk premium. Alternatively, full consideration of inflation gives the same value. In both cases the discount rate and the valuations must reflect the same assumption. In Circular A-94 (of 1992) the OMB proposed that government investments and regulations be evaluated using a real discount rate of 7.0 per cent. This rate is meant to reflect the real pre-tax time preference observed in the private sector, together with the marginal risk premium characterizing private sector investments (OMB, 1992). The calculation is ultimately derived from the work of Stockfisch (1969), who concluded that private sector investments produce an average real return between 7.0 and 10.0 per cent. The rationale for using private sector pre-tax preferences and risk premiums is complex, but the basic idea is that funds spent in the public sector can be viewed as having been diverted from the private sector; therefore, it is reasonable to expect similar economic performance. The OMB rate of 7.0 per cent does not apply to water resources projects, however. The Water Resources Development Act (WRDA) of 1974 requires that these projects be evaluated using a discount rate based on the average yield of US Treasury Securities with remaining terms of 15 or more years. This rate is calculated annually. For example, it was set at 5.625 per cent for fiscal year 2004 (USDOI, 2004). Although quantitatively similar, the water resources rate differs conceptually from the OMB rate. First of all, since it is an average of market interest rates, it incorporates assumptions regarding future inflation; in other words, it is a nominal, not a real rate. Second, since the reference market is US Government Securities, the resulting discount rate incorporates a low risk premium, perhaps approaching zero. Finally, the rate reflects the time preferences of those private sector investors active in the market for US Government Securities: it is not a social or a resource-constrained time preference. However, Federal Law requires the application of the nominal water resources interest rate, even though benefits and costs are measured in real terms. The calculation, therefore, is conceptually inconsistent. Another approach to the discount rate debate would be to combine the following assumptions: (1) social rate of time preference of zero or near zero, (2) risk premium of zero, reflecting diversified investment by the government, and (3) inflation allowance of zero reflecting measurements of future benefits and costs in real terms. This would produce a discount rate near zero. Since benefits tend to appear late in project lives, while costs are incurred early, lower discount rates make projects appear more worthy. The OMB rate of 7.0 per cent would result in approving

Theory and practice of benefit-cost analysis

121

the fewest projects, the zero rate would favor the most projects and the water resources rate of 5.625 would fall between these extremes. While some advocates of public investment favor a very low rate, this could also result in substantial distortion of investment policies (marginal returns on investment would be much higher in the private sector than in the public sector). The result could be less, rather than more, public investment. Intergenerational equity Because of their long lives, water resources projects have the potential to reallocate benefits and costs between generations. Development projects, such as dams and waterways, create costs for the present generation while providing economic benefits to future generations. The same projects, however, may create environmental costs in the future. Ecosystem restoration projects, in effect, pose the opposite problem because the failure to implement ecosystem restoration may impose the environmental costs of present economic activities on future generations. All of these examples raise ethical issues concerning the present generation’s rights and responsibilities as the steward of the environment. Many critics of water resources policy pointed to discounting as a problem for intergenerational equity. For example, some projects may be evaluated at a particular discount rate and judged infeasible, even though they would be feasible at a lower discount rate. Future generations have, thereby, been denied access to the benefits of these projects because of the present generation’s myopic time preference. But to manipulate the discount rate in order to achieve some distributional goal destroys the information needed to allocate capital efficiently in the present, possibly to the detriment of future generations. Attempts to employ discounting as a tool of intergenerational equity, or to blame discounting for failures to achieve intergenerational equity, rest on faulty logic. More important, they conceal the real ethical issues and trade-offs. A better approach is to identify the kinds of redistributions that are unacceptable and should be avoided and to plan water resources development within these constraints. The decision criterion The purpose of identifying and measuring the effects of a water resources project and of monetizing the measurements wherever possible is to help find answers to a number of basic questions about the project. Is the project worth doing? Would the project be more desirable if it was larger, smaller or otherwise reformulated? Should the project be implemented now or would it be better to wait? What priority should be assigned to the project, given a finite budget and the existence of competing projects?

122

The evolution of water resource planning and decision making

The original goal of benefit-cost analysis was to develop a single decision criterion, a metric that could be used to provide answers to these questions.32 The first step in developing a decision criterion is to convert all monetized effects to present values. Then, at least three metrics can be considered: ● ● ●

Net present worth – the excess of the present value of benefits over the present value of costs, given the selected discount rate. The benefit-cost ratio – the ratio of the present value of benefits to the present value of costs, given the selected discount rate. Internal rate of return – the discount rate at which the net present worth is zero.

Although common in the private sector, internal rate of return is not used much in the public sector. In the case of real discount rates, it offers few advantages over other decision criteria. Both the net present worth (also known as net present value) and the benefit-cost ratio answer the question of whether a particular project is worth doing. A positive net present worth and a benefit-cost ratio greater than unity convey the same information: the project is economically feasible. If the question is which of two (or more) projects, all aimed at essentially the same outcomes, is the better (or best) the two criteria are again, for practical purposes, identical. But, if the decision to be made involves choosing from among a large number of substantially different, discrete projects, a subset that makes the best use of a fixed investment budget, neither criterion leads to optimality.33 This is a problem of the ‘knapsack’ variety and requires, in effect, complete enumeration of all feasible combinations, though the integer programming technique can be used to cut down on the need for brute force. Nevertheless, both the P&G (WRC, 1983) and OMB’s Circular A-94 (OMB, 1992) advocate formulating projects to maximize net present worth, as well as ranking projects by the same criterion. Uncertainty in Benefit-Cost Analysis The procedure for identifying the beneficial and adverse consequences of a project is to project future conditions without the project, then to project all conditions again with the project. Any differences between the withand without-project projections are considered to be the effects of the project. A major characteristic of this approach is the high level of uncertainty surrounding many estimates of project effects. Forecasts of all kinds are inherently uncertain, due to imprecision of underlying data and model assumptions and to the influence of unknown but possible exogenous

Theory and practice of benefit-cost analysis

123

events. That uncertainty rises as the forecast periods lengthen. Differences between forecasts may be more or less uncertain than the forecasts themselves, depending on the models used. Most benefit-cost analyses are conducted by developing single estimates of all effects and values, then treating those estimates as if they were deterministic. This method omits important information about the project. For example, in comparing alternative projects, those with relatively higher levels of uncertainty may be less desirable than projects with lower but more certain benefit-cost ratios. Financial markets account for uncertainty by building a risk premium into the interest rate. As noted in the discussion of discount rates, the same approach can be taken in the pubic sector. But this is a relatively crude approach and, furthermore, it is precluded by legislation that fixes the discount rate on federal water resources projects. A preferable method is to deal with uncertainty explicitly, identifying the principal sources of uncertainty and quantifying the impact on project decision criteria where possible. Scenario methods Where the major sources of uncertainty are believed to be assumptions about major drivers of the phenomena being forecast (for example, population, household income, unemployment and so on), it may be helpful to define a number of scenarios, each characterized by a set of specific assumptions about those drivers. The probability of any one scenario actually occurring is not generally known. However, they should collectively represent a reasonable range of plausible outcomes. The project is then evaluated under each scenario and the range of outcomes examined. Projects that prove feasible for most or all scenarios are considered robust and good candidates for implementation. Those feasible under one or a few scenarios, but not under others, may require further study. Sensitivity analysis Another approach to examining the impact of uncertainty on project evaluation is sensitivity analysis. Major assumptions are varied systematically and the project evaluation is recomputed for each value. Where the project evaluation proves sensitive to a particular assumption, the assumption is subjected to further analysis to improve accuracy. It is also possible to vary more than one assumption at a time, but this quickly becomes complex. Simulation techniques Ideally, the analyst would have available probability distributions for all key elements of the benefit-cost analysis, leading ultimately to a probability

124

The evolution of water resource planning and decision making

distribution for the decision criterion (for example, benefit-cost ratio). However, this kind of information is rarely found. Instead, where something is known of the parameters of uncertainty for some assumptions and outcomes, it is possible to simulate a range of values, approximating a probability distribution. If the simulation model is extended to include the entire project and all benefits and costs, then methods such as Monte Carlo simulation can be used to obtain a probability distribution for the decision criterion (Vaughan et al., 2000). The Importance of Financial Analysis and Financial Policies The preceding sections describe how benefit-cost analysis brings together in present value terms benefits and costs to reflect the positive and negative impacts of projects (or policies or programs) on human welfare. These impacts may or may not take the form of cash flows or observable market transactions (for example, the non-monetary items previously discussed). Also, benefit-cost pays no attention to the incidence of these benefits and costs (for example, how project beneficiaries will share in paying project costs). These issues are among the concerns of financial planning and the results of financial policies. In a broad sense, financial planning is concerned with a project’s inflows and outflows of cash: who will pay for project outputs and who will cover project costs, both the initial capital cost and continuing operations, maintenance and repair costs. Construction costs must be paid out of accumulated funds, by current appropriations of public funds or by the issuance of bonds. How and what parts of these construction costs must be repaid by beneficiaries or others (for example, real estate tax payers) represents part of the financial policy of the relevant agency or governmental unit. The payment of ongoing operations, maintenance and repair costs and often repayment of construction costs depend heavily on the pricing of project services. Clearly, careful financial analysis and planning is needed to permit the project to meet its financial and contractual obligations. The realities of the cash flows and financial arrangements for a project are likely to differ substantially from the flows of benefits and costs used to evaluate a project from an economic point of view. This can motivate decisions by private and public actors and at least some of these are likely to be economically inefficient. For example, it is obvious that policies reducing cost repayment for beneficiaries will affect the beneficiaries’ private assessment of the project. It is then likely political pressures will be used to promote projects regardless of the economic benefit-cost assessment.

Theory and practice of benefit-cost analysis

125

In a prominent article, Krutilla (1966) emphasized the importance of repayment policies, hopefully policies that would motivate political and professional decision makers to mimic correct benefit-cost assessments of projects. As an example, the early navigation work of the USACE was all publicly funded. Following the Flood Control Act of 1936, the USACE continued to fund the reservoir storage components of flood plans, while requiring cost sharing by local entities for levees. Local areas bore any costs associated with zoning and other non-structural measures. This motivated local entities to advocate reservoir storage even in situations where storage was not the most effective strategy. The Water Resources Development Act of 1986 required cost sharing for the USACE and NRCS projects. At present, there is a range of required cost sharing (see Table 2.7 in Chapter 2 for details). Thus, large elements of subsidy remain and these separate the economics from the financing of projects and are likely to continue to stimulate inefficient project promotion and design. The history of the Reclamation Program that started in 1902 exhibits a pattern of increasing subsidies to irrigated agriculture through decreasing repayment requirements. The initial Reclamation Fund of $10 million was to be loaned to irrigation sponsor organizations for project construction and to be repaid in ten years. The repayment of capital costs was never accomplished within the specified period and Congress repeatedly extended the repayment period, finally to 50 or more years. Repayment contracts with the USBR require no payment of interest on the unpaid balances, nor are any allowances made for inflation, repayment being in nominal (inflated) dollars. Three other financial arrangements serve to further reduce the real values of repayment: (1) the acceptability of balloon payments wherein much of the nominal repayment was allowed to be made in the last few years of the repayment period; (2) the specification of non-reimbursable project purposes, such as flood control, recreation, Native American uses, fish and wildlife enhancement; and (3) the ability-to-pay limit on beneficiary repayment. Since cost allocation among purposes is usually quite arbitrary, the existence of non-reimbursable purposes motivates allocation of costs toward non-reimbursable purposes. The introduction of the ability-to-pay limit (Reclamation Project Act of 1939) means that beneficiaries of poor projects are relieved of a large part of any repayment obligation. Under the Reclamation Program overall only 10.5 per cent of costs allocated to irrigation are repaid in real terms by beneficiaries (GAO, 1996). This recital of financial arrangements makes quite clear that the financial attractiveness of projects can differ greatly from the economic efficiency measure used in the benefit-cost analysis. This is particularly true from the

126

The evolution of water resource planning and decision making

point of view of the beneficiaries who are often relieved of a large part of project costs by virtue of special interest-oriented financial arrangements. This is not to deny the need for careful financial analysis so that project financial obligations and contract requirements are met. However, these financial arrangements have historically been subject to manipulation and serious distortion from an economic efficiency point of view.

OVERVIEW AND ASSESSMENT The idea that water resources development should be subject to some kind of economic calculus is older than the economics profession itself. Some of the earliest manifestations of applied economic reasoning dealing with the benefits and costs of public investment appear at the beginning of the nineteenth century. Water resources projects figure prominently in these writings. In the USA the Flood Control Act of 1936 set into motion an intensive study of water resources project evaluation, culminating in the development of the first detailed procedures for a benefit-cost analysis. These procedures, first published in 1950, underwent continuous and extensive revision and augmentation over the years. In reviewing the history of economic analysis of water resources projects, two things are evident: (1) the conceptual simplicity of benefitcost analysis, despite the complexity of implementation and (2) the close linkage between the state-of-the-art and changing social goals and values. Benefit-cost analysis is a simple idea. The effects of a project are identified, measured and monetized where possible; beneficial effects are compared to adverse effects. Projects demonstrating a favorable comparison (benefits exceed costs) are declared feasible. Those with the most favorable comparisons are placed at the top of priority lists. But in applying these simple ideas, numerous complications arise. We need to know: how to identify project effects, how to place monetary values on effects, what to do with effects that cannot be monetized, how to find equivalent present values for future values, how to evaluate and rank competing projects and so on. These and many other questions occupied the profession for almost 60 years and much progress has been made. But it is instructive to note the areas in which the major breakthroughs occurred. As the broader environmental and social implications of water resources development attracted notice in the 1950s and 1960s, benefitcost analysis incorporated the notions of non-monetized effects and multiobjectives. At the same time, major strides were made toward making analysis more transparent and reducing opportunities for misallocating public funds. As concern for impacts on the environment grew in the

Theory and practice of benefit-cost analysis

127

1970s and 1980s, pioneering work was done on the economic valuation of non-market goods, such as recreation and environmental quality. The techniques developed during this period proved useful in other applications, including the determination of natural resource damages due to release of hazardous wastes. At the end of the twentieth century, prior developments continued to evolve and mature while additional progress was made in rendering project planning more accountable to local needs. The principal lesson to be learned from this history is the extent to which economic theory and economic analysis kept pace with changing social goals and values. This relationship is evident today and will doubtless continue in the future. The result has been a highly evolved technique for economic analysis of water resources projects, one that has largely kept pace with the concerns and demands of society. Benefit-cost analysis today is a disciplined process for identifying and measuring the impacts of a project on society. But some developments are not complete; some problems are not yet solved. Published Standards for Benefit-Cost Analysis A specialized set of principles, standards and procedures, known most recently as the P&G, governs the benefit-cost analysis for water resources projects (WRC, 1983). From 1965 to 1983, the predecessors to the P&G were published and periodically revised by the WRC. That body passed out of existence with the issuance of the last revision in 1983. Since then, the IWR has maintained the P&G informally for the USACE. This ad hoc arrangement is unlikely to be adequate to the demands of the future, which may require substantial revision and broader dissemination of the P&G. The Role of Willingness-to-Accept The advent of stated preference methods for valuing environmental goods (such as the CV method) gave researchers the opportunity to explore willingness-to-accept (WTA) valuations as well as the customary WTP. Whereas a WTP valuation measures the amount a respondent would pay for something of value (or for removal of some undesirable condition), WTA measures the amount that would be accepted as compensation for tolerating an undesirable condition (or foregoing something of value). In the terminology adopted in this chapter, WTP to gain something of value is a measure of compensating variation, whereas WTA the absence of that same thing is a measure of equivalent variation.

128

The evolution of water resource planning and decision making

It is possible to think of many environmental goods from either perspective and CV surveys have inquired about both measures. For example, respondents may be asked their WTP for a recreation opportunity or they may be asked their WTA in the absence of that same opportunity. One might assume that the results would be similar, as is the case for many market goods, but early attempts at measurement often found wide variances between WTP and WTA. For a variety of reasons, including WTP’s intrinsic similarity to familiar market transactions, most practitioners concluded that the WTP was the most appropriate measure of value for non-market environmental goods. Many thought that the unfamiliarity of the WTA choice scenario produced arbitrary and unreliable responses, thus explaining the large divergences between WTP and WTA. The NOAA panel concurred with this view (Arrow et al., 1993) and the WTA measures were generally abandoned after that time. But several decades of work in experimental and behavioral economics have demonstrated clear reasons why the WTP measures differ from the WTA measures of the same choice. In fact, the disparities are pervasive and predictable (Kahneman et al., 1990). In particular, when a WTP measure is used to measure a negative environmental impact (the WTP to avoid), the true value of that impact may be significantly understated (Knetsch, 2004). This work has been largely ignored in the benefit-cost community, which continues to rely on the WTP measures for all applications of stated preference methods. But there are definable situations where this measure will understate or overstate value. Improved guidance is needed to identify the correct value measure in each type of situation. The Appropriate Discount Rate Much scholarly and what might be called political attention has been paid to the question of the appropriate discount rate for evaluating public sector investments such as water resources projects. The conceptual bases and implications of the various theories regarding discount rates are now widely understood and the possibility of reaching a consensus on this matter appears closer. Yet water resources project analysis remains mired in the largely discredited notion of using the cost of federal borrowing as an estimator of the discount rate. This practice was imposed by Congress in the WRDA of 1974, despite the obvious inconsistency of applying a nominal discount rate to real data. Over the years, no real effort has been invested to either (1) build support for a change in the law or (2) modify benefit-cost procedures to be consistent with the existing law.

Theory and practice of benefit-cost analysis

129

Treatment of Uncertainty Despite much discussion of the importance of full consideration of uncertainty, few examples in the water resources benefit-cost literature of serious engagement with this problem exist. A number of techniques have been proposed, but little is known of their practicality or usefulness in actual project planning. If project selection is to reflect both expected net benefits and relative uncertainty, much work needs to be done. Non-Monetized and Non-Quantified Effects Perhaps the most impressive achievement of the past several decades is the development of sound, practical methods for placing monetary values on certain kinds of non-market goods. This work, which proceeded apace with public demands for more attention to the environmental consequences of public investment, dramatically improved the reach of benefitcost analysis. Previously, non-monetized and non-quantified effects could be identified and described, but they were often given little weight in the final evaluation. Some kinds of non-market goods can now be included with more conventional market-oriented project effects. This work must go on and should be extended to new classes of non-market goods wherever possible. But many project effects will never be monetized and some seem unlikely to be even quantified. Benefit-cost analysis must evolve to incorporate and to give appropriate weight to all project effects. Intergenerational Equity Large, long-lived water resources projects are often criticized for their possible impact on the distribution of benefits and costs among successive generations. Some commentators fear that the present generation will underinvest in benefits for future generations and many suggest that changes in discounting practices will correct this perceived problem. Actually, such changes may promote inefficient investment and may create more problems than they cure. There is a need for a better understanding of this problem and a clearer idea of possible strategies. Ecosystem Restoration At the beginning of the twenty-first century, some of the largest water resources projects under consideration are not development projects but rather ecosystem restoration projects. The benefits from these projects may be in part the restoration of lost economic values, but they are more

130

The evolution of water resource planning and decision making

likely to be the avoidance of future environmental costs, achieved by arresting further ecosystem deterioration. Also, most such avoided costs are non-monetized and some are non-quantified. While conventional approaches to identifying and measuring benefits and costs have been applied to some of these projects, it is not clear that they are fully appropriate. In particular, where individual projects are to work in concert with other past and future projects to benefit a large interconnected ecosystem and where the benefits of such individual projects consist mostly of future system-level improvements, conventional benefit-cost analysis provides little assistance. This area merits substantial attention to improving both economic theory and economic analysis.

NOTES 1. 2. 3. 4. 5. 6. 7. 8.

9. 10. 11. 12. 13. 14. 15.

The origins of modern welfare economics can be traced to Pigou (1932), Kaldor (1939) and Hicks (1943). This concept was developed by the nineteenth century Italian economist Vilfredo Pareto. Another, perhaps more familiar, term is ‘consumer surplus’. In most cases consumer surplus is a useful approximation to compensating variation (Willig, 1976). These advances have only partially solved the practical (and moral) problem of determining true compensating variation for winners (that is, their ‘willingness-to-pay’) and for losers (their ‘willingness-to-accept’). For evidence of this practice, see Eckstein (1958) which at the time of its publication represented the state-of-the-art in the economic analysis of water projects. While Krutilla’s ideas are not now viewed as controversial, there were at the time criticisms of his reasoning, for example, Cummings and Norton (1974). The discussion in Chapter 5 of this book, on the difficulties of reconciling concerns of economists and ecologists, affirms the persistence of this problem. This section is quoted and paraphrased from Caulfield (2000). Henry P. Caulfield, Jr was a Professor of Political Sciences, Colorado State University, after a distinguished public service career, having served as Assistant Director and Director of the Resources Program Staff, Office of the Secretary, Department of the Interior (1961–65) and as the first Executive Director of the Water Resources Council (WRC) (1966–69). Wild areas of rivers had already been officially proposed in the interdepartmental comprehensive study of the Arkansas, Red, White River Basin Study at the urging of Irving Fox representing the Department of the Interior. This replaced the President’s WRC created by Executive Order several years earlier. A similar method had been suggested earlier by Harold Hotelling, but Clawson’s approach was developed independently (personal communication, Jack L. Knetsch to Charles W. Howe, 15 September 2004). Recall that compensating variation is the amount subtracted from or added to income that makes a person indifferent to the project. This area is also known as the change in consumer’s surplus where consumer’s surplus is the area under the demand curve above the market price. Hausman (1981) provides one way to reconcile the difference between compensating variation for price changes and the approximation discussed here. The order of price changes considered matters due to the fact that this method approximates compensating variation. The best rule of thumb for price increases is to order

Theory and practice of benefit-cost analysis

16.

17. 18.

19. 20.

21.

22.

23. 24. 25. 26.

27. 28.

29. 30. 31. 32.

131

by relative size of independent compensating variation (considering each price as the only change), from largest to smallest independent compensating variation. For price decreases, the ordering is reversed. This rule of thumb will result in the closest approximation for multiple price changes. Here market benefits and costs refer to those benefits and costs that can be measured directly in markets. There are often non-market benefits and costs associated with changes in hydroelectric production. Non-market benefits are taken up in future sections. Black et al. (1998) provide a comprehensive analysis and explanation of this issue. The concept of recreational demand modeling through travel cost is typically traced back to an unpublished letter from Harold Hotelling to the Director of the National Park Service (NPS) in 1947. But current practice is derived from the later and apparently independent work of Clawson (1959). Morey (1984). Normally demand estimation requires data from multiple periods in order to observe variation in price and quantity demanded. Across individuals in a single period we have price variation (through differences in home location) and individual trip demand variation. In particular, changes in water quality often affect site demand for fishing. For this reason the travel cost method is used to identify and measure benefits for water quality improvement or degradation. The CV method, which is discussed in a future section, has also been used to measure the benefits of water quality improvements both for recreationists and non-recreationists. A frequently cited CV study is Carson and Mitchell (1993) who estimate the public’s willingness-to-pay for boatable, fishable and swimmable water quality as mandated by the Clean Water Act (CWA). In the random utility framework the change in consumer’s surplus is expressed in probabilistic expectation. Though derivation of the expected change in consumer’s surplus is different from the derivation of estimated consumer’s surplus from ordinary demand system estimation, the basic concepts and their relation to welfare economics are the same. Later paragraphs discuss perceived problems with survey approaches to measuring benefits. Amenities can include many things such as proximity to good things (beach, lake and so on), proximity to bad things (hazardous waste site, landfill), views (beach, mountains, power plant) and air quality. While the recreation application of Davis (1963) discussed above is the earliest application of CV, a later landmark is the highly influential book by Mitchell and Carson (1989). The Journal of Economic Perspectives published three articles on the reliability of CV. The first article is an introduction to the controversy (Portney, 1994), the second article is a defense of the technique (Hanemann, 1994) and the last article (Diamond and Hausman, 1994) is a criticism of the technique. This is the basis of Bohm’s criticism of the method. For example, see Bohm (1994). Using a goods-for-goods approach in natural resource damage assessment is sometimes referred to as habitat equivalency. Flores and Thacher (2002) provide discussion and analysis of the ability to use and measure compensatory resources in natural resource damage assessment. Here we touch on some of the basic issues faced in benefits transfer. For a comprehensive discussion offering multiple points of view, see the collection of papers in Water Resources Research, 28 (3), 1992. See, for example, Sagoff (2003a), Sagoff (2003b) and Sagoff (1994). Note that financial institutions conventionally decompose market interest rates in the same way, except that they typically neglect cross-products so that I 5 r + p + a. This is a close approximation provided that all components are small. Although the single decision criterion remains at the heart of benefit-cost analysis,

132

33.

The evolution of water resource planning and decision making there has long been recognition that significant non-monetized benefits and costs exist, requiring the use of multiple criteria decision methods and other approaches. If the projects are infinitely divisible into tiny pieces, and therefore can be arrayed along a continuum as though they constituted one large project, the benefit-cost ratio can be used as the choice criterion.

REFERENCES Adamowicz, W.L., P.C. Boxall, J.J. Louviere, J. Swait and M. Williams (1999), ‘Stated-preference methods for valuing environmental amenities’, in I.J. Bateman and K.G. Willis (eds), Valuing Environmental Preferences: Theory and Practice of the Contingent Valuation Method in the U.S., EU and Developing Countries, Oxford: Oxford University Press. Arrow, K.J., R. Solow, P.R. Portney, E.E. Leamer, R. Radner and H. Schuman (1993), ‘Report of the National Oceanic and Atmospheric Administration panel on contingent valuation’, Federal Register, 58 (10), 4601–14. Bartik, T. (1987), ‘The estimation of demand parameters in hedonic price models’, Journal of Political Economy, 95 (1), 81–8. Black, R., N.E. Flores, B. McKenney and R. Unsworth (1998), ‘Economic analysis for hydropower project relicensing: guidance and alternative methods’, paper prepared for Division of Economics, US Fish and Wildlife Service, US Department of the Interior, Cambridge, MA, and Industrial Economics, Inc., University of Colorado, Boulder, CO. Bohm, P. (1994), ‘CVM spells responses to hypothetical questions’, Natural Resources Journal, 34 (Winter), 37–50. Bromley, D. (2000), ‘Program evaluation and the purpose of rivers’, Water Resources Update, 116, 7–10. Brown, Jr, G.M. and J. Hammack (1973), ‘Dynamic economic management of migratory waterfowl’, Review of Economics and Statistics, 55 (1), 73–82. Brown, Jr, G.M. and J. Hammack (1974), Waterfowl and Wetlands: Toward Bioeconomic Analysis, Baltimore, MD: Johns Hopkins University Press, p. 95. Carson, R.T. (2004), Contingent Valuation: A Comprehensive Bibliography and History, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Carson, R.T. and R.C. Mitchell (1993), ‘The value of clean water: the public’s willingness to pay for boatable, fishable and swimmable quality water’, Water Resources Research, 29, 2445–54. Carson, R.T., R.C. Mitchell, W.M. Hanemann, R.J. Kopp, S. Presser and P.A. Ruud (1992), A Contingent Valuation Study of Lost Passive Use Values Resulting from the Exxon Valdez Oil Spill, La Jolla, CA: Natural Resources Damage Assessment, Inc. Carson, R.T., N.E. Flores, K.M. Martin and J.L. Wright (1996), ‘Contingent valuation and revealed preference methodologies: comparing the estimates for quasi-public goods’, Land Economics, 72 (1), 80–99. Caulfield, Jr, H.P. (2000), ‘Early Federal guidelines for water resource evaluation’, Water Resources Update, 116, 14–17. Cicchetti, C.J. and V.K. Smith (1973), ‘Congestion, quality deterioration and optimal use: wilderness recreation in the Spanish peaks primitive area’, Social Science Research, 2 (1), 15–30.

Theory and practice of benefit-cost analysis

133

Clawson, M. (1959), Methods of Measuring the Demand for a Value of Outdoor Recreation, reprint no. 10, Washington, DC: Resources for the Future. Clawson, M. and J.L. Knetsch (1966), Economics of Outdoor Recreation, Baltimore, MD: Johns Hopkins University Press. Cummings, R. and V. Norton (1974), ‘The economics of environmental preservation’, American Economic Review, 64 (6), 1021–4. Davis, R.K. (1963), The Value of Outdoor Recreation: An Economic Study of the Maine Woods, Cambridge, MA: Department of Economics, Harvard University. Davis, R.K. (1968), The Range of Choice in Water Management: A Study of Dissolved Oxygen in the Potomac Estuary, Baltimore, MD: Johns Hopkins Press. Diamond, P.A. and J.A. Hausman (1994), ‘Contingent valuation: is some number better than no number?’, Journal of Economic Perspectives, 8 (4), 45–64. Dupuit, J. (1844), ‘On the measurement of utility of public works’, translated by R.H. Barback (1952) for International Economic Papers, no. 2, London: Macmillan, pp. 83–110. Eckstein, O. (1958), Water-Resource Development: The Economics of Project Evaluation, Cambridge, MA: Harvard University Press. Ekelund, Jr, R.B. and R.F. Herbert (1973), ‘Public economics at the Ecole des Ponts et Chaussees: 1830–1850’, Journal of Public Economics, 2, 241–56. Flores, N.E. and J. Thacher (2002), ‘Money, who needs it? Natural resource damage assessment’, Contemporary Economic Policy, 20 (2), 171–8. Gallatin, A. (2 March 1807), Report of the Secretary of the Treasury on the Subject of Public Roads and Canals Made in Pursuance of a Resolution of Senate, Washington, DC: R.C. Weightman. Hanemann, W.M. (1994), ‘Valuing the environment through contingent valuation’, Journal of Economic Perspectives, 8 (4), 19–43. Hausman, J.A. (1981), ‘Exact consumer’s surplus and deadweight loss’, American Economic Review, 71 (4), 662–76. Hicks, J.R. (1943), ‘The four consumer’s surpluses’, Review of Economic Studies, XI, 31–41. Hirshleifer, J., J.C. DeHaven and J.W. Milliman (1960), Water Supply: Economics, Technology and Policy, Chicago, IL: University of Chicago Press. Howe, C.W. (1971), Benefit-Cost Analysis for Water System Planning, Washington, DC: American Geophysical Union. Hufschmidt, M.M., J.V. Krutilla, J. Margolis and S. Marglin (1961), Standards and Criteria for Formulating and Evaluating Federal Water Resources Developments, Washington, DC: US Bureau of the Budget. Kahneman, D., J.L. Knetsch and R.H. Thaler (1990), ‘Experimental tests of the endowment effect and the Coase Theorem’, Journal of Political Economy, 98, 1325–48. Kaldor, N. (1939), ‘Welfare propositions of economics and interpersonal comparisons of utility’, The Economic Journal, 49 (195), 549–52. Kalter, R.J., W.B. Lord, D.J. Allee, E.N. Castle, M.M. Kelso, D.W. Bromley, S.C. Smith, S.V. Ciriayy-Wantrup and B.A. Weisbrod (1969), ‘Criteria for federal evaluation of resource investments’, Water Resources and Marine Sciences Center, Cornell University, Ithaca, NY. Kneese, A.V. (1964), The Economics of Regional Water Quality Management, Baltimore, MD: Johns Hopkins Press.

134

The evolution of water resource planning and decision making

Kneese, A.V. and B.T. Bower (1968), Managing Water Quality: Economics, Technology, Institutions, Baltimore, MD: Johns Hopkins Press. Knetsch, J.L. (2004), ‘Gains, losses and the U.S. EPA economic analyses guidelines: a hazardous product?’, Environmental and Resource Economics, 32 (1), 91–112. Knetsch, J.L., R.H. Haveman, C.W. Howe, J.V. Krutilla and M.F. Brewer (1969), Federal Natural Resources Development: Basic Issues in Benefit-Cost Analysis, Natural Resource Policy Center, Washington, DC: George Washington University. Krutilla, J.V. (January 1966), ‘Is public intervention in water resources development conducive to economic efficiency?’, Natural Resources Journal, 6, 60–75. Krutilla, J.V. (1967), ‘Conservation reconsidered’, American Economic Review, 57, 777–86. Krutilla, J.V. and O. Eckstein (1958), Multiple Purpose River Development: Studies in Applied Economic Analysis, Baltimore, MD: Johns Hopkins Press. Lancaster, K.J. (April 1966), ‘A new approach to consumer theory’, Journal of Political Economy, 74, 132–57. Maass, A., M.M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr, S.A. Marglin and G.M. Fair (1962), The Design of Water-Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning, Cambridge, MA: Harvard University Press. Mäler, K.G. (1974), Environmental Economics: A Theoretical Inquiry, Baltimore, MD: Johns Hopkins Press. Mäler, K.G. (1997), ‘Social discount rates, environmental resources and global warming’, lecture given to the International Institute for Applied Systems Analysis, 11 June, Laxenburg, Austria. Mitchell, R.C. and R.T. Carson (1989), Using Surveys to Value Public Goods: The Contingent Valuation Method, Washington, DC: Resources for the Future. Morey, E.R. (December 1981), ‘The demand for site-specific recreational activities: a characteristics approach’, Journal of Environmental Economics and Management, 8 (4), 345–71. Morey, E.R. (1984), ‘Confuser surplus’, American Economic Review, 74 (1), 163–73. Office of Management and Budget (OMB) (29 October 1992), Circular Number A-94, Revised, Washington, DC: US Government Printing Office. Office of Management and Budget (OMB) (January 2007), Appendix C, Circular Number A-94, Revised, Washington, DC: US Government Printing Office. Pigou, A.C. (1932), The Economics of Welfare, 4th edn, London: Macmillan and Company. Portney, P.R. (1994), ‘The contingent valuation debate: why economists should care’, Journal of Economic Perspectives, 8 (4), 3–18. Rosen, S. (1974), ‘Hedonic markets and implicit markets: product differentiation in perfect competition’, Journal of Political Economy, 82 (1), 34–55. Sagoff, M. (1994), ‘Should preferences count?’, Land Economics, 70 (2), 127–44. Sagoff, M. (2003a), ‘On the relation between preference and choice’, Journal of Socio-Economics, 31 (6), 587–98. Sagoff, M. (2003b), ‘Cows are better than condos, or how economists help solve problems’, Environmental Values, 12 (4), 449–70. Stockfisch, J.A. (1969), ‘Measuring the opportunity cost of government investment’, Institute for Defense Analysis research paper, no. 490, p. 29.

Theory and practice of benefit-cost analysis

135

US Bureau of the Budget (BOB) (1952), Budget Circular A-47, Washington, DC: US Government Printing Office. US Department of Interior (USDOI) (26 April 2004), ‘Change in the discount rate for water resources planning’, Federal Register, 69 (80), 22556. US Government Accountability Office (GAO) (1996), U.S. Bureau of Reclamation: Information on Allocation and Repayment of Costs of Constructing Water Projects, US Governmental Accountability Office/RCED-96-109, Washington, DC: US Government Printing Office. US Interagency Committee on Water Resources (USIACWR) (1950), Proposed Practices for Economic Analysis of River Basin Projects, The Green Book, revised 1958, Washington, DC: US Government Printing Office. US Senate (1962), Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources, Senate Document 97, 87th Congress, 2nd Session, Washington, DC: US Government Printing Office. US Water Resources Council (WRC) (1973), ‘Establishment of principles and standards for planning water and land resources’, Federal Register, 38 (174), 24778. US Water Resources Council (WRC) (1983), Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, Washington, DC: US Government Printing Office. Vaughan, W.J., C. Russell, D. Rodriguez and A.C. Darling (2000), ‘Cost-benefit analysis based on referendum CV: dealing with uncertainty’, Journal of Water Resources Planning and Management, (November/December), 351–7. Weisbrod, B.A. (1964), ‘Collective-consumption services of individualconsumption goods’, Quarterly Journal of Economics, 78 (3), 471–7. Willig, R.D. (1976), ‘Consumer’s surplus without apology’, American Economic Review, 66 (4), 589–97. Young, H.P. (1985), ‘Methods and principles of cost allocation’, in H.P. Young (ed.), Cost Allocation: Methods, Principles, Applications, New York: NorthHolland.

4.

Environmental issues and options in water resources planning and decision making David H. Moreau and Daniel P. Loucks

INTRODUCTION When asked, Americans usually express environmental concerns about a variety of water-related issues, including: drinking water quality; ambient water quality in streams and lakes as this relates to water-contact recreation; health of aquatic ecosystems and the abundance of game fish; preservation of streams and related habitat, including lands of natural, scenic and historical interest; and water supply in ample amount and sufficient quality for industry and agriculture. These concerns are outward expressions of values increasingly woven into the fabric of US culture, especially since 1970. That is not to say that all citizens share the same priorities, but there is evidence that most share the same broad goals and concerns. Related advances in science, policy formulation, and project planning, evaluation and implementation, have been substantial, especially over the past four decades, yet major uncertainties and issues remain. Examining the emergence of policy and planning techniques addressing water resources issues, will help us identify the matters yet to be resolved.

ENVIRONMENTAL VALUES Environmental concerns expressed by Americans arise from several basic values. Kempton et al. (1995) relied on several studies as well as their own anthropological research to conclude: Americans’ environmental values derive from three sources: (1) religion, whether traditional Judeo-Christian religious teaching or a more abstract feeling of spirituality; (2) anthropocentric (human-centered) values, which are largely utilitarian and are concerned with only those environmental changes that affect human welfare; and (3) biocentric (living-thing-centered) values, 136

Environmental issues and options

137

which grant nature itself intrinsic rights, particularly the rights of species to continue to exist. (p. 87)

Whatever their ultimate source or sources, environmental values are manifested in at least four themes of public policies: (1) preservation of areas of natural beauty and natural features; (2) protection of individual species from extinction, either from overharvesting or destruction of habitats; (3) protection of public health; and (4) protection of complex ecosystems. In examining two periods, pre- and post-1965, we shall find specific policies emerging from those themes and be in a position to assess how well the evolution of planning techniques, especially environmental effect prediction modeling, has served the needs of those formulating and implementing these policies.

PRE-1965 ENVIRONMENTAL POLICIES Preservation of Natural Areas Early attitudes about environmental values associated with water resources cannot be divorced from attitudes about riparian land resources. Over half of the 220 million acres of wetlands existing in the coterminous USA at the time of the Revolutionary War have been lost (Dahl, 1990). As the country developed and as the population grew and moved westward into the Lower Mississippi River Valley in the first half of the nineteenth century, vast wetlands of that region were drained and transformed into productive agricultural lands. Swamps and overflowed lands with their rich and productive soils were seen as opportunities for economic gain. For more than 20 years states and landowners in the Lower Mississippi Valley petitioned Congress to transfer those lands to the private sector. Congress eventually responded by passing the Swamp Lands Acts of 1849 and 1850. These acts eventually led to the transfer of 64.9 million acres to states, approximately 4 per cent of all the 1840 million acres of public domain lands in the USA (US Bureau of Land Management (USBLM), 2003). If those lands were all wetlands, as currently defined, they would have accounted for nearly 30 per cent of wetlands existing during the colonial period. Four states, Louisiana, Arkansas, Missouri and Mississippi, got 24 million acres. Robert Harrison referred to those acts as the ‘first important Federal legislation relating to land reclamation’. Transfers of lands to states under these acts were made on the condition that they were to be sold. Proceeds from sales were allocated to build levees and drainage works for the purpose of economic development (Harrison, 1961, p. 68).

138

The evolution of water resource planning and decision making

The Swamplands Acts were an early part of the great land rush of the late 1800s that gave scant attention to environmental values. From 1875 to 1900, the federal government either gave away or sold at minimal prices over 1 billion acres of land, more than three-fourths of all lands acquired by the USA from 1781 up to the time Alaska was purchased in 1867. Mineral and forest rights were largely sold or given with rights to the land. Some seeds of change had been sown in the 1850s. A number of writers and artists, including Thoreau, began calling attention to the need for preserving some lands for recreation and inspiration. Their calls did not go entirely unheeded. Numerous individuals urged President Lincoln to take steps to preserve lands around Yosemite Valley in California. Most notable among them was Galen Clark, a miner from New England, who moved to the area to establish a homestead. Lincoln acceded to these requests by signing a bill in 1864 granting California lands to be held for public use and recreation, lands now part of Yosemite National Park. The conservationist John Muir first visited the area in 1868 and began writing of the need to preserve it as early as 1869. Muir and Robert Underwood Johnson, the influential editor of Century Magazine, convinced Congress in 1890 to establish the area around Yosemite Valley as a national park. A decade later, Muir, with the help of railroad magnate Edward Harriman and President Theodore Roosevelt, managed to get California to cede Yosemite Valley back to the federal government as part of the new park. Yellowstone National Park had been the first of the national parks, created in 1872 when President Ulysses Grant signed the originating legislation. That action followed several explorations of the area that documented its unique natural features (Dombeck et al., 2003). The conservation movement that flourished under the administration of President Theodore Roosevelt had its roots in the last quarter of the nineteenth century, but its guiding philosophy was wise use of resources, not preservation. In 1878 Major John Wesley Powell, prominent explorer of the West, delivered his famous Report on the Lands of the Arid Region of the West. In that report Powell argued for reform of land policy so as to better coordinate the use of land and water resources. Soon after that report was delivered, Congress created the US Geological Survey (USGS) and Powell was appointed its director in 1881. He attracted a number of bright and energetic people to the USGS, people who would take prominent roles in the Roosevelt Administration and promote the philosophy of rational development of the nation’s water resources. Among them were Frederick Newell, the second director of the USGS and W.J. McGee, who has been described as the chief theorist of the conservation movement (Hays, 1959).

Environmental issues and options

139

A parallel development was taking place in forestry under the influence of Gifford Pinchot, a Yale graduate and European trained forester and a pioneer in scientific management of forest resources in the USA. Pinchot began his career managing the Biltmore forests near Asheville, North Carolina in 1892. He quickly built a national reputation and, after serving on the National Forestry Commission, he took a position with the Division of Forestry in the Department of the Interior (USDOI) in 1897. He later became Chief of the Division and a prominent advisor to Presidents McKinley and Roosevelt. McGee, Pinchot and Newell had many occasions during these administrations to advocate their views. One of their proposals was establishment of the Inland Waterways Commission (IWC). After acting on their recommendation in 1907, the President then appointed the three of them, as well as several leaders of Congress, to the IWC. The Commission’s preliminary report issued in 1908 articulated several fundamental principles for efficient use of water resources, including treatment of an entire river basin as a single hydrologic system, development of multi-purpose facilities and comprehensive planning. Reconciliation of conflicts between those promoting wise use and those seeking to preserve resources in their natural state was not always possible then as it is not always possible today. Among the most heated controversies was the debate over use of the Hetch-Hetchy watershed in Yosemite Valley as a water supply for San Francisco. Hayes (1959) recounts the long and bitter conflict over this issue that began in 1901 and placed Roosevelt between his friend John Muir and the wise use advocates Pinchot, Newell and other influential officials of the administration. The fight to prevent construction of the reservoir continued until it was approved in 1914, and continues to this day, now fought by those advocating removal of the dam. Protection of Individual Species Destruction of habitat and depletion of populations of fish and wildlife accompanied the massive program of land grants. As the population grew at a rapid rate, large areas of land were converted to animal and row-crop agriculture. Perhaps the best known symbol of wildlife depletion was the elimination of large herds of bison from their original rangelands, but the number of species that have become extinct, not just depleted, since the colonial period is estimated to be in excess of 500. Fragmentation of habitat is commonly cited as the reason for the extinction of over 90 species, subspecies and varieties of plants in the continental USA and over 270 in Hawaii (Czech and Krausman, 2001).

140

The evolution of water resource planning and decision making

Advocates for the protection of wildlife came from both preservationists and sport hunting groups. Establishment of Yellowstone National Park in 1872 was in part a response to these interests and in 1894 Yellowstone was established as a de facto national wildlife preserve when Congress passed the Yellowstone Park Protection Act (ibid.). President Theodore Roosevelt established the first of the official wildlife reserves. At the turn of the century Pelican Island, Florida was the last breeding ground for brown pelicans along the east coast of Florida. At the urging of a number of prominent people, Roosevelt elevated the importance of wildlife protection to a level of national concern when, by executive action, he established the Pelican Island Wildlife Refuge in March 1903 (US Fish and Wildlife Service (USFWS), 2007a). Unlike later actions taken by hunters to preserve migratory game, this step marked one of the first times the public acted to preserve a species for its intrinsic rather than its utilitarian value. During Roosevelt’s Administrations, a total of 53 wildlife reserves were established. Attitudes toward wetlands remained largely unchanged until game hunters became alarmed at the declining population of migratory birds, particularly along the flyway of the Mississippi River during the late 1920s and the Dustbowl era of the 1930s. The Migratory Bird Conservation Act, passed in 1929, authorized the USDOI to purchase or rent water and water-related lands to establish waterfowl refuges. Money to support that activity was limited until passage of the Migratory Bird Hunting and Conservation Stamp Act of 1934. This Act established what has become known as duck stamps, a fee charged on hunting licenses. Funds derived largely from that source have been used to acquire over 4 million acres of migratory bird habitat, most of which are wetlands (US Government Accountability Office (GAO), 1991; USFWS, 2007b). With the acceleration of large dam construction in the 1920s, concerns grew over the effects they might have on fish and wildlife. Public Law 121, now referred to as the Fish and Wildlife Coordination Act of 1934, took the first step toward integrating water resources developments with fish and wildlife concerns. Although it did not give any explicit authority to the fish and wildlife agencies to alter primary uses of projects, the Act did require that the Bureau of Fisheries be given an opportunity to use all federal impoundments for fish culture stations and resting places for migratory birds. The Act also required the construction agencies to consult with the Bureau of Fisheries before any new federal dam was built. Any necessary and feasible means to mitigate blockage of migratory patterns was required to be incorporated in the project. Amendments to the Coordination Act in 1946 extended the required consultation with

Environmental issues and options

141

USFWS to include consultation, for the purpose of preventing loss of or damage to wildlife resources, with state agencies on all projects that would impound, divert, control or otherwise modify streams. Stronger language was added in 1958 requiring equal consideration and coordination of wildlife conservation with other water resources development purposes (USFWS, 1980). Protection of Public Health and Aquatic Life Even though the geographic center of the American population steadily moved westward after 1850, American cities in the East were also growing rapidly. In 1840 only five cities claimed a population of 50 000 or more. That number increased dramatically as shown in Figure 4.1, especially after 1840, tripling by 1860 and doubling again by 1880. As shown in Figure 4.2, about 6 million people or about 20 per cent of the population lived in urban places in 1860. That population exploded to over 30 million by 1900 when 40 per cent of the total population lived in urban places. Urban services could not keep pace with growth. Sanitation in many of those cities was deplorable, especially for the poor. 160 140

Number of places

120 100 80 60 40 20 0 1820

1840

1860

1880

1900

1920

Year

Figure 4.1

Number of urban places in the USA with population over 50 000

The evolution of water resource planning and decision making 180

100

160

90

140

80 70

120 100

60 Per cent of total population

50

80

40

60

30

40

20

20 0 1750

Urban as % of total

Urban population (millions)

142

Urban population 1800

1850

1900

1950

10 0 2000

Year

Figure 4.2

Urban population of the USA

In 1838 Edwin Chadwick, the principal author of the 1842 Report of the Poor Law Commissioners Concerning the Labouring Population of Great Britain, had launched a movement toward the cleanup of England’s cities. Chadwick’s continued advocacy for reform was a key motivation for the 1848 Public Health Act. While the Act was a timid first step, it did establish the General Board of Health and required the mapping of districts for sewage systems, an unprecedented requirement for cities (Platt, 1996). US cities, taking a lead from England, awakened to the need for improvements in sanitation in the 1850s. Lemuel Shattuck of Boston, author, merchant, member of the common council of Boston and representative in the legislature, took the lead in pushing for sanitary reform. He became the principal author of the Report of the Sanitary Commission of Massachusetts, published in 1850. That report led eventually, in 1869, to the creation of the Massachusetts State Board of Health, as ‘the prototype of the modern state health authority’ (Hynning, 1939, p. 72). Within a decade, 17 other states had followed suit. Lack of adequate sewers was a matter of high priority for urban reformers, but installation of sewers was slow in coming. National data on the extent of sewer service even in the early 1900s is sparse, but one of the earliest national assessments of water pollution control estimated that as of 1910 only 37 per cent of urban residents were served by sanitary sewers (National Resources Committee, 1939). Trends given in that report are shown in Figure 4.3. By 1938, only 56 per cent of urban residents were served by sewers.

Environmental issues and options

143

60

Per cent of urban population

50

Sewered Sewage treatment

40

30

20

10

0 1910

Figure 4.3

1932 Year

1938

Urban population served by sewers and sewage treatment 1910 to 1938

Sewage treatment lagged further behind. In 1910 only 9 per cent of urban residents were connected to sewer systems for which any treatment was provided. That percentage had risen by 1938 to 54 per cent, but that figure is likely to be somewhat misleading. No information in the report indicated how effective that treatment was, though it was referred to as ‘secondary’. There is little doubt, however, that it was substantially less effective than what qualifies as secondary treatment today. If these numbers are reasonably accurate, they indicate that in excess of 90 per cent of municipal wastewater was discharged as raw sewage in 1910. When direct discharge of industrial waste is added, it is not difficult to imagine the conditions that must have existed in the streams receiving these wastes. Although it is difficult to find data on ambient water quality for the period, the adverse impacts on both human health and aquatic life of streams must have been appallingly large. Effects of pollution on public water supplies were the initial concerns that brought the issue to lawmakers’ agendas. Massachusetts was the first state to take legislative action to address deterioration of water quality with passage of ‘An Act to Protect the Purity of Inland Waters’ in 1886. It authorized funding of a full-time engineering staff in the state board of health (Fair, 1950). Even though at least 40 states had some law on their books regarding water pollution by 1905, many were vague and

144

The evolution of water resource planning and decision making

subsumed under broad powers to protect public health. Only eight states had explicit enforcement authority (Tarr et al., 1980). But by 1938 almost every state had vested authority to control water pollution in its board of health, though explicit enforcement authority still existed in only 20 states (National Resources Committee, 1939). Federal action on water quality began in 1912 and then only with a research program. In that year the US Public Health Service gained approval to extend its research to include sanitation and pollution. The resulting research program in Cincinnati, Ohio attracted some of the nation’s most distinguished sanitary engineers and scientists, including Harold Streeter and Earle Phelps, who conducted extensive research on water pollution in the Ohio River. Twenty-five years later, in 1937, bills were introduced in Congress to provide financial assistance for pollution control to the states. Separate versions of the bill passed in the House and Senate, but a conference committee could not resolve their differences before World War II intervened. A Congressional bill, similar to the one proposed in 1937, passed shortly after World War II and was known as the Water Pollution Control Act of 1948 (WPCA). It authorized the Public Health Service to develop and adopt comprehensive programs in cooperation with states, local governments and industries; authorized federal grants to states and interstate agencies to support studies; authorized grants for plans and engineering of treatment plants; encouraged adoption of uniform state laws; and established an enforcement policy to be implemented with consent of states after all state efforts were exhausted (Davies, 1970). The permanent Federal Water Pollution Control Act (FWPCA) passed in 1956 as Public Law 84-660, but its effect was primarily limited to interstate water bodies. States were required to establish a system of stream classifications and related water quality standards for those streams. Classifications were to reflect the highest and best use for each stream segment. Many states had already established classifications and standards; the 1956 Act required that for all states but only for interstate streams. The Act also authorized grants to states and interstate agencies to support comprehensive pollution control programs and included authorization for construction grants. A 1962 state-by-state survey by McKee and Wolf (1963) identified about 20 states with reasonably comprehensive pollution control programs but also revealed that nearly half of the states had no water quality standards or only minimal guidelines. Progress toward cleaning up wastewater discharges continued to be slow. The Federal Water Pollution Control Administration (FWPCA), one of the predecessors of the US Environmental Protection Agency

Environmental issues and options

145

(EPA), estimated that in 1960 the sewered population of the country was about 110 million. Only 56 per cent of that population was served by secondary treatment (FWPCA, 1969). Even though the data are limited, estimates of sewered population and wastewater treatment and the status of state institutions for water pollution control indicate that by the 1960s there remained much to be done in protecting water quality. Those factors set the stage for bold federal initiatives beginning in 1965. Environmental Values In Water Resources Planning Programs Planning for the rational use of the nation’s water resources was an important part of President Franklin Roosevelt’s New Deal programs. The National Planning Board (NPB) was established in 1933, the President’s Committee on Water Flow and the National Resources Board (NRB) in 1934 and the National Resources Planning Board (NRPB) in 1939. Negative Congressional reaction to the proliferation of new agencies led to their demise, but in 1943, the Departments of War, Interior and Agriculture and the Federal Power Commission (FPC) voluntarily created the Federal Interagency River Basin Committee (FIARBC). In 1946 that committee established a Subcommittee on Benefits and Cost and its report, Proposed Practices for Economic Analysis of River Basin Projects, published in 1950, is commonly referred to as the ‘Green Book’ (USIACWR, 1950).1 In the ‘Green Book’, distinctions were drawn between tangible and intangible effects. Intangibles were defined as those benefits impractical to express in monetary terms. Examples included scenic values, improvements to health and prevention of loss of life. Authors of the ‘Green Book’ argued that intangibles should be described and not ignored in project evaluation, but there was no guidance on what intangible effects should be included or how they were to be described. A more balanced, multi-objective view was introduced by Senate Document 97 (US Senate, 1962), which defined the basic objective as ‘to provide the best use, or combination of uses, of water and related land resources . . . (and that) full consideration shall be given to each of the following objectives and reasoned choices made between them when they conflict’. The three objectives were National Economic Development (NED), preservation and well-being of people. In this context, the preservation objective is particularly noteworthy. It included: ● ●

Protection and rehabilitation of resources to insure their availability in time of need. Maintenance and use of open space, green space and wild areas of streams and mountains for recreational use.

146 ●

The evolution of water resource planning and decision making

Preservation of areas of unique natural beauty, historical and scientific interest.

Standards in Senate Document 97 directed federal agencies to use the plan that maximized net benefits as the baseline against which to consider effects of intangibles. Agencies were directed to estimate the extent to which they departed from the maximum net benefit plan when they took intangibles into account. Even while addressing a number of issues related to environmental quality, Senate Document 97 used the word environment only once and then only to refer to the general setting for planning based on the expectation of an expanding national economy, growing population and higher incomes. The term was not used to refer to the quantity and quality of natural resources.

ENVIRONMENTAL POLICIES AFTER 1965 It is clear from the above that environmental values were increasingly brought into consideration in water resources policy and planning guidance prior to 1965. The extent to which water resources development reflected those policies and planning directives is debatable, but both state and federal policies in the post-World War II era reflect a very different attitude about environmental values than had been the norm in the nineteenth and early twentieth centuries. Kempton et al. (1995) demonstrate, using national survey data, that environmental values were increasingly shared by the American population after 1960. They argue further that the change goes beyond shifts in attitudes and opinions to core values and fundamental beliefs. Hays (1987) used a variety of indicators, including Congressional and state legislative voting patterns, growth in environmental organizations, presidential responses and responses of advocacy organizations and management agencies to reach similar conclusions. One illustration of the growth of interest is membership in the Sierra Club from its beginning in 1892 with 182 members to a 1982 membership of 325 000 with over 90 per cent of that increase after 1960 as shown in Figure 4.4 (Sierra Club, 2003). Between 1965 and 1980, a flurry of roughly a dozen major federal laws were passed reflecting the public’s shift in environmental values broadly and those related to water resources specifically. These legislative actions (see Tables 2.4 and 2.5) built on basic themes that had emerged prior to 1965 and on a fundamentally new theme – protection of complex ecosystems to minimize destruction of basic life-support processes.

Environmental issues and options

147

350

Membership (thousands)

300 250 200 150 100 50 0 1890

1910

1930

1950

1970

1990

Year

Figure 4.4

Growth in membership of Sierra Club 1908 to 1980

Preservation of Natural Areas The preservation movement that had led to the establishment of the national parks was extended after 1965 to preservation of selected streams in their natural or near-natural state. The great dam-building era, begun in the 1920s, reached its peak in the 1960s. The loss of free-flowing streams and of riparian habitat associated with those impoundments made dam construction a primary target of preservationists. Congress responded in 1968 by passing the Wild and Scenic Rivers Act (Public Law 90-542). Section 5(d) of the Act directed the Secretary of Interior to identify wild and scenic river areas. It also directed federal agencies involved in development of water and related land resources to take into consideration and evaluate the effects of plans and projects on those areas. In response to that directive, the National Park Service (NPS) developed and continues to maintain the Nationwide Rivers Inventory (NRI) of potentially eligible stream segments. A river segment may be listed in the NRI if it meets several criteria. It must be free-flowing and it must have one or more outstanding remarkable values, among them exceptional scenery, fishing or boating, unusual geological formations, rare plant and animal life and cultural or historical artifacts judged to be of more than local or regional significance (www.nps.gov/ncrc/programs/rtca/nri/hist.html#pwsra). More than 3400 segments had been listed by 2003.

148

The evolution of water resource planning and decision making

Preservation of the nation’s wetlands was not explicitly mentioned in the Clean Water Act (CWA), but a lawsuit by the Natural Resources Defense Council over interpretation of what was included in ‘waters of the United States’ led to them being brought under jurisdiction of Section 404 dredge and fill permits. That decision had a pronounced effect on wetland preservation. During the period 1950–70 the rate of loss was approximately 460 000 acres per year, but under provisions of the CWA, as amended in 1972 and President George H.W. Bush’s ‘no net-loss’ proclamation, losses were reduced to about 60 000 acres a year in the 1990s (Dahl, 2000). Preservation of Individual Species In addition to launching program expansions to preserve natural areas, the post-1965 proliferation of environmental legislation expanded protection of individual species. Following publication of Rachael Carson’s Silent Spring in 1962 and the overwhelming public response, the Bureau of Sports Fisheries and Wildlife compiled and published a list of 63 endangered species. Congress passed a relatively weak Endangered Species Preservation Act in 1966 to protect endangered vertebrates to the extent practicable. A version to protect invertebrates passed in 1969. As the environmental movement strengthened, Congress responded by passing the Endangered Species Act (ESA) of 1973, a far-reaching step with a significant effect on water resources management (Czech and Krausman, 2001). Section 7 of the ESA requires that all federal agencies, in consultation with the USDOI, conserve officially listed endangered and threatened species and must insure that all their actions are ‘not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species’, unless an agency has been granted an exemption by the cabinetlevel Endangered Species Committee. That Committee can grant an exemption if it can be demonstrated by the petitioner that: ● ● ● ● ●

There are no reasonable and prudent alternatives. The benefits of such action clearly outweigh the benefits of alternatives. The action is of regional or national significance. No irreversible or irretrievable commitment of resources has been made. Provisions are made for reasonable mitigation and enhancement measures.

Environmental issues and options

Table 4.1

Animals Plants Total Source:

149

Number of endangered and threatened species in the USA listed pursuant to the Endangered Species Act as of February 2007 Endangered

Threatened

Total

933 599 1532

199 148 347

1132 747 1879

http://endangered.fws.gov.

No. of species 5–24 25–49 50–99 100–500

Figure 4.5

Distribution of threatened and endangered species by states

As of early 2007, almost 2000 species of plants and animals had been listed as endangered or threatened in the USA, as summarized in Table 4.1. See Figure 4.5 for the distribution of federally-listed species. Water resources actions are not the only cause of endangerment of species, but they are important. Czech and Kraussman (2001) identified 18 categories of causes since passage of the ESA. They note several limitations of their analysis, including the facts that species are rarely endangered by a single cause and that it is often difficult to determine which of several causes may be the dominant one. Nonetheless, they rank reservoirs and running water diversions as the third leading cause in the continental USA; aquifer depletion and wetland draining and filling is ranked as the fifteenth leading cause. Pollution of air, water or soil is listed as the fifth leading cause, but their analysis does not differentiate among types of pollution.

150

The evolution of water resource planning and decision making

Protection of Public Health and Aquatic Life Action on water quality became fast and furious by the mid 1960s. The 1965 Water Quality Act (Public Law 89-234) required states to classify all streams and establish related water-quality standards, consistent with federal criteria, for each class of stream. Another provision moved the program out of the Public Health Service to a newly created Federal Water Quality Administration. Protection of groundwater also got a start in 1965 with passage of the Solid Waste Disposal Act that eliminated open dumps and directed the EPA to set standards for sanitary landfills. One year later, Congress passed the Clean Water Restoration Act, the main feature of which was an authorization of $3.9 billion over five years for construction grants. It also moved the program to the USDOI. A very significant reorganization occurred in 1970 when the EPA was created. Clean Water Act The 1972 amendments to the FWPCA, now known as the CWA, brought about fundamental changes to water quality management in the USA. It also had significant implications for management of water resources in general. In addition to the classification and standards requirements of the 1965 Act, its more important provisions included: ● ●

●

●

● ●

States were required to develop basin-wide plans for achieving applicable water quality standards (Section 303(e)). All publicly-owned treatment works (POTW) were required to achieve at least secondary treatment (defined by the EPA as achieving 85 per cent removal of biochemical oxygen demand). All industries that discharged directly to streams were required to have best practicable treatment as defined by the EPA in effluent guidelines. If minimum treatment requirements for either municipalities or industries were not sufficient to satisfy water quality standards in a particular stream, more advanced treatment would be required (such streams are referred to as being water quality-limited). Grants to aid in construction of POTW authorized at a 3-year level of $18 billion. No discharge of wastewater to the waters of the USA was allowed without a permit (Section 402).

Environmental issues and options ●

●

●

151

Enforcement was based on compliance with effluent limits included in discharge permits where compliance was determined by selfmonitoring and reporting. Without specific exemption, permits were required for any activity that dredged material from or placed fill material in the nation’s waters (Section 404). Before a dredge or fill permit could be issued, the state would have to certify that the proposed action would not lead to a violation of water quality standards (Section 401).

Two major sources of pollution, non-point sources and urban storm water run-off, were not addressed by operative sections of the CWA until the amendments of 1987. This was in part because the extent and magnitude of the problems were not adequately known at the time. Nor was there a consensus on how they could or should be controlled. Finally, the political power of the farm lobby, particularly in the Senate, cannot be ignored. Some would argue that all this is still true today, but, nonetheless, Congress directed the EPA, in 1987, to take steps toward the management of these sources. Section 319 of the CWA amendments of 1987 and subsequent EPA regulations for non-point sources required the states to identify: ● ● ●

●

Streams in which water quality standards were violated because of non-point sources. Categories of non-point sources causing problems and the best management practices for each of them. State programs that address non-point sources, how those programs will be implemented over the short and long runs and annual milestones for tracking programs. Sources of funding for programs.

In response to the 1987 directive from Congress on urban storm water management, the EPA formulated a two-phase program: Phase I regulations, adopted in 1990, covered incorporated places and counties with populations over 100 000 and Phase II regulations, adopted in 1999, covered all urban areas with municipal separate storm sewer systems (MS4s) owned by public entities. The directive established a requirement for a discharge permit for facilities and activities that discharge storm water into surface waters from a pipe or channel. Under Phase I, the EPA required permit coverage for large urban storm water dischargers and 11 categories of industrial activity, including construction activity that disturbs five or more acres of land. Phase II requires permits for small MS4s and construction activities disturbing between 1 and 5 acres.

152

The evolution of water resource planning and decision making

Another significant provision of the CWA was the anti-degradation policy (CFR, Title 40, Part 131.12). It required that the quality necessary to support existing in-stream uses be maintained and protected, with special attention to high quality waters (HQW) where existing stream conditions are substantially better than that required for protection of fish and recreation. The quality of the HQW must be maintained and protected except for special circumstances. Existing quality must be maintained and protected without exception in those HQWs that constitute outstanding national resources, such as national and state parks, wildlife refuges and waters of exceptional recreational or ecological significance. A number of provisions of the CWA have implications for broader aspects of water resources management. First, because allowable loads on water quality-limited streams are directly proportional to stream flow, any modification to low flow regimes in those streams could result in changes to treatment requirements for dischargers. Second, any change in use of a stream segment that might be proposed as part of a water resources project would require a reclassification of the stream segment and impose a different set of water quality standards. For example, to develop a portion of a stream for public water supply that is currently classified for protection of aquatic life would require a formal reclassification process and imposition of a more stringent set of quality standards. Such a change could affect upstream as well as downstream dischargers because the hydrology of the receiving stream would be altered. Third, the anti-degradation policy could represent substantial barriers to development projects and other uses of protected streams. Court challenges and subsequent modifications to regulations governing dredge and fill permits under Section 404 significantly affected all projects impacting wetlands. Sequencing requirements and compensatory mitigation altered planning processes and costs of projects requiring those permits. Section 404(b) (1) of the CWA requires an applicant for a permit to demonstrate no feasible alternative to filling of a wetland. The applicant must show compliance with a sequence of steps to avoid or minimize any adverse impacts to wetlands. Implementation of the Clean Water Act Compliance with some of the mandates of the CWA came about within reasonably short times. Thus, industrial sources were largely in compliance with technology-based treatment requirements within a decade. Progress toward achieving secondary treatment for publicly owned treatment was slower, but, as shown in Figure 4.6, virtually all publicly owned

Environmental issues and options

153

100 90

Per cent of facilities

80 70 60 50 40 30 20 10 0 1988

1992 Year

Beyond secondary Less than secondary Source:

1996 Secondary

USEPA, (2000).

Figure 4.6

Progress toward secondary treatment

facilities were at the secondary level or beyond by 1996 (EPA, 2000). More than 30 per cent are currently rated as being greater than secondary and those facilities serve about 44 per cent of the sewered population of the country. With the exception of a few places like the Chesapeake Bay, tracking changes in water quality in the nation’s streams has proved to be difficult. Section 305(b) of the CWA requires the EPA to prepare biennial reports on water quality conditions in the country. The EPA compiles those reports from data provided by each of the states. Several factors limit the value of the state data, however, including variation in the procedures by which states make assessments and changes in the guidance provided by the EPA over time. It is also worth noting that no attempt is made in the

154

The evolution of water resource planning and decision making

submissions to estimate what the conditions would be without the CWA programs. The National Water Quality Assessment Program, conducted by the USGS, established in 1991, is much more scientific in its approach. It was designed to provide a national perspective on water quality though not to track the effectiveness of CWA implementation. The data are generated in studies of 42 river basins, watersheds and aquifer systems distributed throughout the country. The intent is to assess conditions in each study area on about a ten-year cycle. Since the second cycle of studies began only recently, quite limited time series data are available from that effort. The need for reforming water quality monitoring programs has been noted by an assistant administrator of the EPA (Mehan, 2004). He cited the concluding comment in the Draft Report on the Environment 2003 that there was insufficient information to assess the condition of the nation’s water and watersheds with confidence and scientific credibility. He also cited a survey by the Association of State and Interstate Water Pollution Control Administrators that concluded that states are operating their monitoring programs at about 50 per cent of what is needed. In addition to programs to assess physical, chemical and biological conditions of water bodies, efforts have been made to assess the economic benefits and costs associated with the CWA programs. The Regulatory Right-to-Know Act of 2001 now requires an annual estimate of benefits and costs of major federal programs by the Office of Management and Budget (OMB). In its 2003 report to Congress the OMB estimated that programs administered by the EPA Office of Water, of which the CWA programs are a dominant portion, had benefits in the range $0.89 to $8.08 billion, while costs ranged between $2.42 to $2.93 billion. Net benefits could range from a negative $2 billion to a positive $5 billion (OMB, 2003). Among all the difficulties and uncertainties associated with these estimates, two are especially important. First is the problem of estimating what conditions would be in the absence of federal programs, the baseline for comparing actual conditions. It cannot be assumed that no action would have been taken without the federal programs, but guessing what the actions would have been and what they would have accomplished clearly involves considerable uncertainty. Second, benefits of pollution control are measured by the public’s willingness-to-pay (WTP) for protection of health, aesthetic qualities of the environment, recreation, protection of fish and wildlife, protection of ecosystems and other attributes of water quality. Most of these services are not marketed, so estimates of benefits must rely either on inferences based on what people actually spend in market situations where there is arguably a relation between water quality and marketed goods or services or on what people say they

Environmental issues and options

155

350

0.8

300

0.7 0.6

250

0.5 200 0.4 150 0.3 100

0.2

50

Expenditure/housing unit Per cent of family income

0

0 1972

1977

1982

1987

1992

1997

Year

Source:

0.1

United States Bureau of the Census.

Figure 4.7

Local government expenditures for sewage services

Per cent of median family income

Expenditure per HU in 2001 dollars

are willing to pay in hypothetical markets. The latter method has remained controversial, even after substantial developments over the past 20 years and after having been blessed for use in official natural resource damage assessments by a blue ribbon panel of Nobel laureates. (See Chapter 3 for a fuller discussion of techniques for damage and benefit estimation.) Two other questions of interest concern the affordability of pollution control programs and how affordability may have changed from 1972 to 1997. To provide at least a rough answer, estimated expenditures by local governments (including federal grants) are divided by the number of housing units connected to public sewers to get expenditures per housing unit. That cost is then divided by median family income to get an estimate of expenditure for sewer service as a per cent of family income (PFI). Costs and incomes have been adjusted to 2001 dollars using the CPI for all urban consumers CPI-U-X1 price deflator (see Mini Historical Statistics, Table HS-25, Statistical Abstract of the United States). The results of this calculation, graphed in Figure 4.7, show that over the 25-year period, the real cost of sewer service per household rose from about $226 to $315 per year. That represents an increase in PFI from 0.55 per cent in 1972 to 0.64 per cent in 1997. For families at the median income level (about $50 000 in 1997), the cost clearly has been and remains affordable.

156

The evolution of water resource planning and decision making

Safe Drinking Water Act The Safe Drinking Water Act (SDWA) of 1973 directed the EPA to establish National Drinking Water Standards (NDWS). From the time it was enacted to 1986, the EPA established regulations on about two dozen substances, including inorganic chemicals, microbiological indicators, organic compounds and radionuclides. Dissatisfied with the pace at which the EPA was bringing those substances under the NDWS, Congress amended the Act in 1986. It directed the EPA to consider nearly 100 contaminants over a period of several years. Current standards apply to: ● ● ● ● ● ●

Seven microbiological indicators – some specific to particular organisms, other indicators of possible pathogens. Four disinfection byproducts. Three disinfectants. Sixteen inorganic chemicals. Fifty-three organic chemicals. Four radionuclides.

Failure to satisfy these standards in a lake or stream does not necessarily disqualify use of that resource for public drinking water. Although withdrawing public drinking water from uncontaminated sources is preferable, a source may be acceptable after treatment. The SDWA Amendments of 1986 included the requirement that filtration be used as a treatment technique unless a water supplier can demonstrate that the source water is of sufficiently high quality that filtration is not necessary. Compliance data for the NDWS, as shown in Figure 4.8, tend to reveal steady improvement in drinking water quality for community water supplies, with both the number of systems experiencing violations of maximum contaminant levels and the number of people affected by those violations generally declining from 1995 through 2000. Compliance with drinking water standards is not, however, the most direct measure of increased protection. Incidence of waterborne disease would be a better indicator. Data from the Center for Disease Control on the number of reported outbreaks, shown in Figure 4.9, indicates an overall decline.2 However, the number of people affected by these outbreaks is highly sporadic. Over the past decade the single outbreak in Milwaukee in 1993 affected more than 400 000 people. Since then, reported outbreaks have affected about 1000 annually, but that data may not tell the whole story. It is very likely that many water-related outbreaks of disease affecting relatively small numbers of people go unreported. For some outbreaks of disease, the cause cannot be determined. A further limitation is that

Environmental issues and options

157

5000

25

4500

Number of systems

3500 3000

15

2500 10

2000 1500 1000

Population served (millions)

20

4000

5 Number of systems Population served

500 0

0 1995

1996

1997

1998

1999

2000

Year

Source:

US EPA Annual Compliance Reports.

Figure 4.8

Violations of maximum contaminant levels in national drinking water standards

40 Non-community Community

Number of outbreaks

35 30 25 20 15 10 5 0 1991–92

1993–94 1995–96 Reporting period

Source: CDC Survelliance Reports.

Figure 4.9 Outbreaks of waterborne disease in the USA

1997–98

158

The evolution of water resource planning and decision making 1.00 0.90 300 0.80 250

0.70 0.60

200

0.50 150

0.40

Per cent of median family income

Expenditure per housing unit in 2001 dollars

350

0.30

100

0.20 50

Expenditure per housing unit % median family income

0

0.10 0

1972

Figure 4.10

1977

1982

1987

1992

1997

Local government expenditures for water supply

diseases resulting from long-term exposure to low levels of chemicals in water are not reported as outbreaks. Increased protection of health due to enhanced drinking water standards comes at some increase in cost, but the service remains affordable to most Americans. As shown in Figure 4.10, local government expenditures per household on publicly owned water supplies rose from $217 in 1972 to $294 in 1997 in constant 2001 dollars. This represents an increase of 35 per cent, but in terms of per cent of median family income, the increase in the per cent of family income is from 0.53 to 0.60. Per household costs were estimated by dividing the Bureau of the Census estimates of local government expenditures for water supply by the number of housing units on public supplies (including both publicly and privately owned supplies). It was assumed that 85 per cent of housing units on public supplies are served by publicly owned systems. The Resource Conservation and Recovery Act and Superfund The CWA is directed toward chemical substances and biological organisms that are routinely discharged to streams. It does not directly address episodic releases of hazardous chemicals from industrial operations or leakage from active or abandoned waste disposal sites, the

Environmental issues and options

159

number of which is staggering. To address actual and potential environmental damage from those events, Congress passed the Resource Conservation and Recovery Act (RCRA) of 1976 and the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) or Superfund. The RCRA with its cradle-to-grave manifest system for hazardous substances was designed as a prevention strategy. Among its other provisions, Superfund was designed as a cleanup program for hazardous wastes with liabilities assigned for those sites where responsible parties are known and the use of trust funds for those sites where no responsible party could be identified. Under the Superfund law, the EPA is authorized to take two actions: (1) emergency, short-term action to prevent or remove substantial and imminent threats to human health or the environment and (2) longterm remediation to permanently remove the risk. Long-term remediation can occur only at sites formally added to the National Priorities List (NPL). Since passage of the Superfund program in 1980, the EPA and the states have made final assessment decisions on nearly 40 000 sites. A large number of those required no further action. From the time the NPL was created in 1983 to January 2007, about 1557 sites have been added to the list and 317 have been removed, leaving 1240 active sites (EPA, 2007). Protection of Ecosystems A fundamentally new theme, that of preserving complex ecosystems as basic life-support processes, was introduced by the Anti-degradation Policy of the CWA, the National Environmental Policy Act (NEPA), the ESA and later legislative actions. A White House panel to evaluate the effectiveness of NEPA referred to it as ‘the foundation of modern American environmental protection’ and as ‘the first law to focus environmental concerns within a comprehensive national policy’ (Council on Environmental Quality (CEQ), 1997). Congress declared it the continuing policy of the federal government, in cooperation with state and local governments and the private sector, to use all practical means and measures to protect and enhance environmental conditions. Many of the changes brought about by NEPA were procedural, but those changes broadened the scope of environmental concerns addressed by water resources agencies. By requiring federal agencies to address all significant environmental effects of developmental and regulatory actions, and by opening up the review process to third party intervention, NEPA expanded the scope of environmental assessments. An agency proposing to take an action must not only address specific issues mandated by other statutes, but must consider more general effects on ecosystems.

160

The evolution of water resource planning and decision making

The NEPA and similar statues passed by a number of states greatly increased the extent to which environmental concerns are considered before actions requiring government approval can be undertaken. But the process is reactive in the sense that it is activated only when proposed actions would significantly affect the environment. It was not designed to initiate proactive measures to protect or enhance environmental resources. More specific environmental responsibility was given to the US Army Corps of Engineers (USACE) in 1990. Section 306 of the 1990 Water Resources Development Act (WRDA) directed USACE to include environmental protection as one of its primary missions. It authorized USACE to undertake projects for the protection, restoration and creation of aquatic and ecologically related habitats in conjunction with navigation projects. Among the first and best known project undertaken with that authority is the Kissimmee River Restoration Project. The river was channelized by USACE in the 1960s, but soon after its completion, advocates began a movement to restore the river to its pre-channeled condition. In 1990 the state adopted a restoration plan prepared by the South Florida Water Management District (SFWMD) and Congress authorized a costshared project through the WRDA of 1992. The ecological restoration authority of USACE was further broadened by Section 206 of the 1996 WRDA, under which USACE was authorized to engage generally in restoration of aquatic ecosystems, not simply to mitigate effects of its own projects or to restore areas it had previously degraded, but also to fix problems created by others. The plan to restore the Greater Everglades region in South Florida is one such effort. Congress first authorized the Central and South Florida (C&SF) Project in 1948. The project resulted in a vast network of canals, levees and pump stations for controlling the flow of water through the Everglades to prevent flooding, provide water supply to agriculture and cities in South Florida, control salt water intrusion and protect fish and wildlife. Vast changes to regional ecological and hydrological systems, enormous growth of the population and conversion of land to urban uses and widespread embrace of environmental values brought demands for change. Responses came in both the WRDA 1992 and WRDA 1996 when USACE was authorized and directed to restudy the C&SF Project and develop a comprehensive restoration plan. Congress approved the Comprehensive Everglades Restoration Plan (CERP) in 2000 with an estimated price tag of $7.8 billion for 60 projects to be built over 30 years. Restoration projects by USACE are subject to cost sharing rules. On the one hand, modifications to cost sharing formulas in the 1986 WRDA (as discussed in Chapter 2) placed additional hurdles in the path of

Environmental issues and options

161

development projects that would have adverse environmental effects, but, on the other hand, those same obstacles stand in the path of environmental restoration. Incorporation of Environmental Values in Water Resources Project Planning Several of the environmental statutes directed administrative agencies to develop and adopt formal criteria and processes for environmental analysis to be incorporated into project formulation and evaluation. Provisions of the NEPA, the Water Resources Planning Act (WRPA) and the CWA are particularly noteworthy. Among the more important provisions of the NEPA is the requirement that all federal agencies prepare detailed statements for every contemplated major action significantly affecting the quality of the human environment. The scoping process of the CEQ included in the regulations implementing the NEPA required an early identification of relevant environmental issues that should be addressed during the planning process. Indeed, the NEPA, which was passed as the WRC was developing the Principles and Standards (P&S), heavily influenced their content. The multi-objective planning/evaluation model that the Water Resources Council (WRC) had under development and published in final form in 1973 (WRC, 1973) readily accommodated the new requirement, at least in principle, by requiring federal water resources agencies to formulate and evaluate plans with respect to beneficial and adverse effects on four accounts, namely NED, regional economic effects (REE), environmental quality (EQ) and other social effects (OSE). The NED and EQ effects were to be equally weighted in selecting a preferred project from among alternatives. How ‘equal weights’ were to be applied to objectives expressed in different metrics was not determined, at least not by formal criteria. Beneficial and adverse effects of alternatives on the EQ objective were to address the separate resource elements listed in Table 4.2. Evaluation of effects on Classes A and B required assessments of the sizes and various measures of the quantities of resources, descriptions of the project’s effects on those resources with and without a proposed plan, the extent of improvements and actions to protect and preserve these resources. For each Class C effect, evaluation of beneficial and adverse impacts was required for the full range of parameters relevant to applicable environmental standards. When the Principles and Guidelines P&G replaced the P&S in 1983 (USACE, 2000), the EQ objective was eliminated. Instead, the federal objective was to contribute to the NED objective consistent with protecting

162

Table 4.2

The evolution of water resource planning and decision making

Classes of environmental effects in Principles and Standards (P&S)

Class A

Class B

Class C

Open and green space Wild and scenic rivers Lakes Beaches and shores Mountains and wilderness areas Estuaries Other areas of natural beauty

Archeological resources Historical resources Biological resources Geological resources Ecological systems

Water quality Air quality Land quality

the nation’s environment, pursuant to national environmental statues, applicable executive orders and other federal planning requirements. Furthermore, the guidelines placed greater emphasis on a general evaluation framework and process and less emphasis on specific components of the EQ account and measurement of beneficial and adverse effects. How much change in plans was brought about by the change in objectives from the P&S to the P&G would be difficult to assess. Although the P&S required equal weighting of the NED and EQ objectives, no unambiguous measure existed for judging if equal weighting had been achieved. Although the P&G only requires the preparation of the NED plan that satisfies the stated objective, it also states: ‘Other alternative plans should be formulated to adequately explore opportunities to address other Federal, state, local and international concerns not fully addressed by the NED plan.’ When the CWA passed, it authorized a separate multi-tiered framework for planning. Basin-wide plans were required in Section 303(e) as the basis for State Implementation Plans; area-wide plans were required in Section 208 for all complex urban-industrial areas where NPS and urban run-off could be significant sources and facility plans were required under Section 201 as a prerequisite to receipt of construction grants. Congress provided generous funding for these planning activities in the 1970s. Section 209 authorized completion of the comprehensive basin-wide and regional water resources plans as envisioned under WRPA, but no funds were ever provided under the CWA. Although Congress never explicitly provided a directive or funding for watershed planning after about 1980, the EPA initiated its watershed protection approach in the early 1990s (EPA, 1991a, 1991b). Through that initiative, the EPA encouraged states to take a watershed approach

Environmental issues and options

163

to planning and regulatory activities. Despite its use of terms such as ‘integrated’ and ‘holistic’, the program was largely limited to problems of water quality and related land management. The framework document (EPA, 1991b) laid out a rather informal planning process. The two examples that follow illustrate general observations about some strengths and weaknesses of watershed planning as practiced today. Some watershed planning activities have been started in response to the EPA regulations or other incentives; individual states, local governments or non-profit organizations have initiated other activities. One of the examples cited by the EPA early in its watershed approach was North Carolina’s basin-wide water quality planning program, initiated by the Division of Water Quality of the Department of Environment and Natural Resources (DENR) in 1991. This program was developed to provide a rational basis for simultaneous issuance of all five-year National Pollution Discharge Elimination System (NPDES) permits within a basin. Since then it has been expanded to include a NPS program as required by Section 319 of the CWA. North Carolina’s basin-wide plans represented a major step forward. By providing a more complete picture of water quality conditions, sources of pollution and recommendations for improvements in each basin than had been available, they constitute a stronger basis for issuing permits and establishing priorities for developing policy and allocating available funds to reduce non-point source pollution. The highest priority in the first round generally was given to point source discharges and their effects on surface water quality. The Neuse and Tar-Pamlico River Basin plans did include the first set of basin-wide estimates for nitrogen and phosphorous loads. Supplemental studies for those two basins were necessary to establish basin-wide regulatory policies for nutrient load reductions and nutrient trading programs. Although these efforts represent a substantial advance over previous planning activities, they are not comprehensive. Designated uses as specified in the existing stream classification system are taken as a given, but no consideration is given to future needs that could lead to changes in use. Perhaps the most significant omission is the absence of any analysis of evolving demands for, and supplies of, surface and groundwater withdrawals. Operating policies for reservoirs are not included as options for enhanced management. (See the discussion in Chapter 2 of the Washington, DC water supply study of the 1970s, in which altering operating rules was key to large cost savings.) Flood damage reduction is considered only incidentally to the protection of riparian areas for water quality improvements. Those omissions could have important consequences. In many instances balancing supply and demand for

164

The evolution of water resource planning and decision making

public water supplies, industrial supplies, agricultural uses and cooling water for thermoelectric power plants can have significant consequences on water quality and aquatic ecosystems. In North Carolina planning for water supply is primarily a local government responsibility. The state water supply plan, prepared by another division of the DENR, is largely a compilation of local plans with some state oversight. Another example of watershed planning is Pennsylvania’s Unified Watershed Assessment begun in 1998 to address non-point sources as required by the CWA. In that program major river basins in Pennsylvania were divided into sub-basins and within sub-basins watersheds were delineated by 8-digit Hydrologic Unit Codes. Watershed Restoration Action Strategies (WRAS) were then developed for each of the watersheds having the highest potential for pollution (www.dep.state.pa.us). As with North Carolina’s basin-wide planning, the WRAS plans are primarily limited to existing water quality problems. They do not address demand for, and supply of, water and other potential uses of the resource. Indeed, one of the significant losses that has come from the demise of WRC is the lack of any integrated assessment of both quantitative and qualitative aspects of the nation’s water resources. Sustainability The concept of sustainability or sustainable development has attracted widespread attention over the past two decades. For example, a keyword search of a major university library catalog using ‘sustainable’ turned up a list of 3200 references, not including articles in journals. That list covered a wide range of topics, including building materials, architecture, transportation, land use, work environments, natural environments, higher education, terrorism, communities, neighborhoods, enterprises, energy, natural resources, economics and diplomacy. Kirby et al. (1995) trace the history of the concept to a report by the International Union for Conservation and Natural Resources (IUCN) entitled World Conservation Strategy: Living Resource Conservation for Sustainable Development (IUCN, 1980). They cite literature that reported the existence of 70 definitions of sustainable development, the most widely quoted being that of the report of the World Commission on Environment and Development (WCED), commonly referred to as the Brundtland Report (WCED, 1987). In brief, that source defined sustainable development as that which meets the needs of the present without compromising the needs of future generations. Some have sought to add greater specificity to the concept as it may be applied to the management of water resources. A joint working group of

Environmental issues and options

165

the American Society of Civil Engineers (ASCE) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) defined sustainable water resources systems as those that fully serve social objectives while maintaining ecological, environmental and hydrological integrity (ASCE and UNESCO, 1998). That report included a large number of recommended criteria for incorporating concepts of sustainability in designs for water resources systems. Martin and Stakhiv (1999) examined a large body of literature on sustainability in search of concepts and goals that could be relevant to water resources programs of the civil works programs of the USACE. A particular focus of their review was the report of the President’s Council on Sustainable Development (PCSD, 1996). In its view of sustainable development, the PCSD emphasized three goals – economic prosperity, environmental health and social well-being and equity. Although sustainable development, sustainable use and sustainability do not appear in any federal water resources statutes or regulations, Martin and Stakhiv point to a strong parallel between the PCSD’s three goals and the four evaluation accounts in the WRC’s P&S and P&G as discussed earlier. Recommendations of the PCSD never became directives to federal water resources planning agencies. A major barrier to making operational multiple-objective or multiplegoal concepts of sustainability is the problem of weighting. While it is possible to use documents related to actual water resources decisions, determining if and how multiple goals were considered in the planning process, no common metric for comparing competing goals has yet been devised.

TECHNIQUES FOR PREDICTING ENVIRONMENTAL EFFECTS Demand for Techniques Inclusion of environmental analyses and values in water resources project planning and program and policy formulation, as required by provisions of water resources and environmental statutes, especially those of the last three decades of the twentieth century, has created a demand for analytical techniques to predict beneficial and detrimental environmental consequences of such projects and programs. This sort of evaluation requires predicting the states of the environment with and without the contemplated actions. In many, if not most, project and program evaluations, it is not sufficient to simply predict that some good things and some bad

166

The evolution of water resource planning and decision making

things will happen. It is most often the case that decision makers need to know how much good and how much bad will happen, where, when and to whom. The need for predictive models is especially compelling when a policy dictates that one or more specific technologies be designed to achieve specific ambient environmental standards. Equally compelling is the case where policies require mitigation to offset adverse impacts of proposed projects. In those cases statutes require establishment of quantitative relationships between a proposed action and the consequences to the ambient environment. Despite the difficulties of establishing those relationships and of the substantial uncertainty often associated with them, agencies have had to develop or adapt techniques that could at least be judged as providing objective assessments of environmental consequences of proposed actions.3 Predictions of future states of the environment have been based on simulations of environmental systems, using either physical or mathematical models or both. Regardless of the type of model used, the strategy is to make adjustments to the model until it is reasonably representative of existing conditions, then it can be manipulated to predict how the system will respond to proposed projects or programs. Each of the two approaches, physical and mathematical, has its advantages and disadvantages. A principal limitation of physical models of ecosystems is one of scaling. Unlike physical hydraulic models where principles of similitude between models and prototypes are well known, no such principles of scaling have been established for biological systems. Selected biological effects of proposed water resources projects are subject to physical experiments, but simulation of any large-scale ecosystem is likely to be more effectively done using mathematical models. At the time of passage of much of the environmental legislation reviewed in the previous sections of this chapter, modeling methods for conducting assessments either did not exist or had not been developed to the level at which they could be widely and confidently used in practice. For instance, when Congress passed NEPA, it recognized that existing methods of analysis were insufficient. In addition to NEPA’s other requirements, language in it directed federal agencies ‘to identify and develop methods and procedures . . . to insure that (previously) unquantified environmental amenities and values may be given appropriate consideration in decision making along with economic and technical considerations’. In 1980 the EPA promulgated its second version of Section 404(b) (1) guidelines for permitting dredge and fill permits in wetlands. Those guidelines included the use of compensatory mitigation as a permissible action USACE could use to minimize adverse effects of development in wetlands.

Environmental issues and options

167

With the guidelines came the need for techniques to determine the extent of adverse effects and what would constitute adequate compensation. Few were available at the time. Some provisions of the CWA could only be implemented with the establishment of quantifiable relationships between wastewater effluents and water quality in receiving streams, lakes and estuaries. Even in relatively simple cases where mandated minimum treatment techniques were sufficient to satisfy water quality standards, water quality models had to be used to demonstrate that assessment. For more complex stream segments where minimum treatment requirements would be insufficient to satisfy water quality standards, states were required to establish total maximum daily loads (TMDLs) that segments could sustain without violation of water quality standards. Only simulation or lengthy and costly on-site field experiments can determine relationships between allowable loads and ambient water quality attained. Although water quality simulation models are subject to error, design of wastewater treatment plants on the basis of field experiments would have an unacceptably high cost. The simplest such model relating discharges of biochemically oxidizable wastes and oxygen balances in streams was first published in the 1920s (Streeter and Phelps, 1925), but that model was largely confined to textbooks until the 1960s. Estimation of actual loads on streams is relatively easy and precise for municipal and industrial sources discharged through one or a small number of pipes subject to routine monitoring. Far more difficult is the problem of estimating loads from row cropping, animal agriculture and forestry, where sources are diffuse and run-off is subject to large temporal and spatial variability associated with precipitation events. Models that incorporate information about land use, land cover, management practices, soils, slopes, stream density, precipitation and other factors are often necessary to estimate loads from those sources. The earliest of those models were not developed until the early 1970s. Environmental and ecosystem restoration projects placed an even greater demand on USACE and other federal agencies. These projects put the agencies squarely in the business of predicting responses of ecological systems to projects specifically designed to alter existing conditions, a very demanding task. Most, if not all, predictive models of environmental systems have as their outputs indicators of the level of individual physical variables or chemical or biological species at a given time and location. For even a modestly complex system, the number of variables or species may be quite large and the times and locations at which the variables and species are to be predicted may be enormous. To avoid being overwhelmed by the sheer volume of predicted outcomes, it is desirable to find integrated measures

168

The evolution of water resource planning and decision making

that summarize outcomes comprehensible to both model builders and the general public. Considerable effort has been spent to develop approaches that support that goal. It has also been argued that assessments of ecological systems based on individual species are less informative than those based on measures of ecological communities. That argument is based on the view that ecological health is reflected not only by the numbers of individuals of any given species but also by the diversity of species and their relative abundance. Appropriate indices or models of ecological health are needed to assess existing systems as well as to predict future states of those systems. State of Development Models have been developed for a wide variety of environmental systems and components of systems. Within each type there may be hundreds of models reflecting: bases in statistical or mechanistic approaches; alternative representations of physical, chemical and biological processes and how they are included; variations in the number of spatial dimensions; how time is treated; and the use of alternative solution techniques. This section focuses on a few criteria for judging the potential utility of models, including: ● ● ● ● ● ●

Their general state of readiness for use in the field (conceptual versus operational). The extent to which responsible public agencies have established continuing development, training and support activities. The depth of experience that accompanies their use. Availability of supporting databases. How the models treat uncertainty and the level of uncertainty associated with them. Cost of their calibration, verification and execution.

The first two criteria above are used here to significantly narrow the discussion to those models ready for use and supported by one or more agencies or organizations involved in water resources management. Looking only at settings frequently encountered in water resources planning imposes a further limit. These are: ● ● ●

hydrologic and hydraulic systems of surface water groundwater quantity and quality watershed models for transport and delivery of pollutants to streams

Environmental issues and options ● ●

169

water quality for streams, lakes and estuaries terrestrial and aquatic ecosystems.

Hydrologic/Hydraulic Models Hydrologic and hydraulic models focus primarily on the movement of water over and through various types of conveyances and media over time and space, addressing critical variables such as velocity, depth and mixing. There is probably little dispute that hydrologic and related hydraulic models of surface water systems are the best developed water related environmental models. Scientific investigation of hydraulic processes is centuries old (Rouse and Ince, 1957) and emergence of the science of hydrology since the mid nineteenth century is well documented. The National Research Council’s (NRC) review of fundamental scientific needs in hydrology (NRC, 1991) contains a brief summary of key developments. Simulation of large-scale river basin systems was the subject of considerable development efforts in the 1960s, especially in the work of the Harvard Water Program (Maass et al., 1962). Noteworthy among the successful application of these computer-based simulation methods was the study of the Potomac River Basin in the mid 1970s. A group from Johns Hopkins University showed, through simulation studies, that if all the various water utilities serving the metropolitan Washington, DC area cooperated during a drought, the construction of a proposed reservoir on the Potomac River would not be necessary. This resulted in a large economic and social cost savings, substantially more than the cost of all the federally funded research programs in water resources systems engineering up to that time. To facilitate continued cooperation, these utilities get together to carry out real-time drought simulation exercises each year. Since these early years of computer modeling, USACE’s Hydrologic Engineering Center (HEC) and USGS have developed and continue to support a variety of hydrologic/hydraulic models. The HEC, established in 1964, has for decades developed and presented training courses in hydrologic engineering and has produced well-known software packages. Its first packages addressed watershed hydrology, river hydraulics, reservoir analysis and stochastic stream flow generation. More recent ones are designed to provide the River Analysis System and Hydrologic Modeling System packages with an expanded array of options and interfaces (www.hec.usace.army.mil). In addition to HEC’s work, independently created generic modeling shells exist for simulating water resources systems. The AQUATOOL (Andreu et al., 1991), the RIBASIM (Delft Hydraulics (DH), 2002), the MIKE-BASIN (Danish Hydraulic Institute (DHI), 1997) and the Water Evaluation and Planning System (WEAP) (Raskin et al., 2001) are

170

The evolution of water resource planning and decision making

representative of interactive river-aquifer simulation shells in which the system is represented by, and drawn in as, a network of nodes and links. Each node and link require data and these data depend on what that node and link represent, as well as what the user wants to get from the output. A few of these shells include both quantity and quality variables. They are particularly user-friendly because of the interactive and adaptive process they support in defining models and managing data. The impetus for development of the first generation of these models was the need to provide support for design and operation of large-scale river basin development projects. As environmental effects of both design and operation became more important, the models were used to enhance environmental quality in at least two ways: (1) improving operational efficiency to avoid new, potentially damaging development projects and (2) exploring how changes to system operation might affect variables such as velocity and depth at ecologically critical times of the year. Data for river basin models are readily available from the USGS, which maintains one of the finest acquisition and dissemination networks in the world. Nonetheless, uncertainty in hydrologic aspects of river basin models is primarily caused by limitations of the data, including measurement errors at stream gages, short lengths of the historical records, spotty spatial density of stream flow gages and lack of knowledge of the effects of upstream regulation. Flows in surface water systems are highly variable and the ranges of the confidence intervals on estimates of key parameters made using historical records are inversely related to the length of record. That said, however, uncertainty surrounding the predictions of river basin management models in the USA is generally attributable to projections of inputs such as populations, technologies and prices rather than to hydrologic or hydraulic parameter errors. Groundwater Models Models of groundwater flow and quality have reached a high level of development but the data necessary to fully calibrate and verify those models lag behind. Hundreds of variations had been developed as early as 1980, reflecting various combinations of: the number of dimensions included, treatment of temporal variability, choice of saturated or unsaturated conditions and how solute transport is dealt with. However, only a few of them were considered usable based on judgments about general data availability, adequacy of documentation and prior experience (Bachmat et al., 1980). Since then, the USGS has developed a number of fully documented and freely available models. As of 2004 the USGSs website listed approximately 30 software packages, about half of which were models

Environmental issues and options

171

and the other half graphical interfaces, pre- and post-processors and supplementary calculations. The models cover a range of two- and threedimensional models of groundwater flow including: heat transport; single and multiphase transport; multi-species transport in heterogeneous, variably saturated porous media; and flow-through variable density media. They also include a small number of models that couple surface water and groundwater processes. Data for calibrating and validating groundwater models is much less available than for their surface water cousins, in large part because of the cost of acquiring such data. Values of key parameters for groundwater models have been published at the regional scale through the USGS’s Regional Aquifer System Analysis Program (water.usgs.gov/ogw/rasa/html/introduction.html), but sitespecific values must be determined by field investigations. Obtaining a sufficient quantity of such data is often very expensive. (Committee on Opportunities in the Hydrologic Sciences (NRC, 1991)

The USGS has had a wide range of experiences with application of groundwater models. Several sites have been heavily instrumented to calibrate and verify those models. There is also a large body of application experience stemming from cleanup programs under the Superfund. But because those experiences are so widely distributed among consulting firms working in a wide variety of chemical and geologic settings, it is difficult to draw any general conclusions from them and there has been little effort made to synthesize the findings. Many express concern about the funding necessary to support collection of basic data for both surface and groundwater analyses. A task force operating under authority of the Advisory Committee on Water Data, established under the Federal Advisory Committee Act, undertook an extensive review by high-level stakeholders external to the USGS in 1999 (http://pubs.usgs.gov/circ/circ1192/). The task force noted: Current funding for the Cooperative Water Program is not adequate to satisfy all the needs identified for additional stream flow data, regional ground-water information, updated hydrologic models and technical publications. Funding levels have not kept pace with inflation or the increased demand for the services of the program. (http://pubs.usgs.gov/circ/circ1192/html/executive.html)

A report by the NRC’s Water Science and Technology Board (WSTB, 2004) makes the argument that despite repeated calls to protect and enhance key legacy monitoring systems, the downward trend in funding for those programs continues. This is reflected in programs involving monitoring of stream flow, groundwater, sediment transport, water quality and water use.

172

The evolution of water resource planning and decision making

Watershed Models For more than a century, dating to work on the rational method (where run-off is assumed to be proportional to rainfall intensity times the drainage area) by Kuichling in 1889 and Lloyd-Davies in 1906 (Bedient and Huber, 1988) various models have addressed the problem of obtaining better estimates of surface water run-off associated with precipitation events. As for other models of water resources systems, the advent of digital computers made possible the development of more detailed watershed models. The Soil Conservation Service (SCS) published its method in 1964 and Crawford and Linsley (1966) developed the Stanford Watershed Model two years later. The Stanford model was then adapted by Donigian and Crawford (1976) to include transport of selected contaminants from the land surfaces to streams. The EPA initiated a parallel model with development of its Storm Water Management Model (Metcalf and Eddy, Inc., University of Florida and Water Resources Engineers, Inc., 1971) that focused primarily on run-off from urban watersheds. The US Department of Agriculture, Agricultural Research Service (USDA-ARS), also developed a progression of watershed models with a particular emphasis on run-off of non-point source pollution from agricultural lands. The progression included the CREAMS, GLEAMS, AGNPS, SWRRB and SWAT models, moving from a field-scale, singleevent model to one that considers a continuous sequence of discrete time periods at a watershed or river basin scale (Arnold et al., 1998). The Soil and Water Assessment Tool (SWAT) models daily time steps and integrates the run-off of water, nutrients and sediments from large numbers of watersheds. Several federal agencies continue their support of watershed models. The EPA’s Watershed/Water Quality Modeling Technical Support Center (WWQMTSC) continues to support BASINS, a modeling tool that includes the current version of the Hydrological Simulation Program FORTRAN (HSPF) that grew out of the Donigian and Crawford adaptation of the Stanford Watershed Model. BASINS also includes the latest version of SWAT (www.epa.gov/water/soft.html), actively supported by the USDA-ARS’s Grassland, Soil and Water Research Laboratory in Temple, Texas. The HEC supports its own watershed model within its Hydrologic Modeling System. All of the time-variant, mechanistic watershed models have extensive data requirements. The HSPF and the SWAT track several species of chemicals as they undergo transformations and are transported in surface run-off, infiltration and groundwater discharge to streams. Time steps are relatively small. With large numbers of species, large numbers of kinetic

Environmental issues and options

173

rate coefficients and transport rate coefficients, there are numerous parameters to estimate if the models are to be calibrated to field data. One of the largest applications of the HSPF has been to the watersheds of the Chesapeake Bay, a drainage area of approximately 64 000 square miles. The watershed model estimates how much sediment and how much of the nutrient of the load of nutrients applied to lands in the watershed are delivered to the bay. Investigators at the USGS took an alternative approach to tracking seasonal loads of nutrients from watersheds. Smith et al. (1997) developed a model they call SPARROW, using spatially referenced regressions of contaminant transport on watershed attributes. It is a non-linear regression model that includes two phases of transport and fate of nutrient loads. First, it accounts for the delivery of nutrients to streams as a function of watershed characteristics, not unlike those in the USDA’s Universal Soil Loss Equation. Second, it accounts for the fate of delivered loads discharged to streams as a function of travel in streams of several orders of magnitude. Instead of integrating over many small time steps to get seasonal loads, as is the case with the HSPF and the SWAT, SPARROW attempts to estimate seasonal or annual loads directly. As a regression model, it lacks the detailed specification of processes included in other models, but it provides an explicit procedure for estimating parameters and assessing uncertainty, something lacking in those other models. The USGS has summarized several applications of the model (www.water. er.usgs.gov/nawqa/sparrow/index.html). It has also been used as part of the process of establishing a TMDL for the Neuse River Basin in North Carolina. Water Quality Models Improvements in water quality models have been driven by mandates of the CWA. The basic Streeter-Phelps model for dissolved oxygen (DO) was first expanded to include the process of sedimentation. Diffusion terms were added for application in estuarine systems. Additional terms were added later to account for sedimentation and the distinctions between carbonaceous and nitrogenous biochemical oxygen demand. As effluent limits on many wastewater treatment plants went beyond secondary treatment to meet instream DO and other standards, as previously shown in Figure 4.6, models expanded to include oxygen consuming nitrification processes. To address problems of eutrophication in lakes and estuaries, additional species were added to the models. Advances accounted for nitrogen and phosphorous cycles including synthesis and respiration of algae. Most advances came as extensions of mechanistic mass balance

174

The evolution of water resource planning and decision making

models, complete with large numbers of kinetic terms for biochemical oxidation and reduction processes. Those kinetic terms include many temperature-sensitive rate coefficients. Not surprisingly, the EPA has supported the development and application of the water quality models. The WWQMTSC currently supports the Enhanced Stream Water Quality Model (QUAL2E), a steady-state one-dimensional model for laterally and vertically well-mixed streams that can predict up to 15 water quality variables. One version of the QUAL2E allows the user to examine uncertainty using Monte Carlo techniques. The EPA also supports WASP6, a non-steady-state model that includes most of the same constituents as QUAL2E but allows variations in lateral and vertical as well as longitudinal dimensions (www.epa.gov/waterscience/ wqm/index.html#epa). Documentation for both QUAL2E and WASP6 include likely ranges for all of the kinetic and stoichiometric expressions included in the models. However, considerable knowledge and skill are required for judicious selection of specific values within those ranges for any particular application. This class of models has been widely and relatively successfully applied to streams and rivers dominated by point sources. There is much less confidence in their applications to large, complex bodies of water, such as the Chesapeake Bay and the Great Lakes, that receive loads from both numbers of point and non-point sources. In those instances any changes in water quality have been observed over long periods of time and it is not easy to judge whether a particular model could explain why changes did or did not occur as the result of some management action. It is also true that, with a few rare exceptions, regulatory agencies have underinvested in monitoring programs supporting continued evaluation and improvement of models of particular systems. All too often water quality models have been calibrated on data from one comprehensive survey, used to support regulatory decisions and then discarded without any follow-up monitoring and model or data modification if warranted. That cycle tends to be repeated during the next round of regulatory decisions. Terrestrial and Aquatic Ecosystem Models Management agencies use a limited set of models to assess the effects of water resources projects on terrestrial and aquatic habitats and ecosystems. The WRC published its proposed rules for the environmental quality evaluation part of its Level C implementation studies in 1980 (WRC, 1980). These rules focused almost exclusively on ‘ecosystem’ habitat. Results were to be reported in acres of habitat characterized by values of an associated Habitat Suitability Index (HSI, measured on a 0–1

Environmental issues and options

175

scale). When P&G replaced P&S in 1983, the suggested techniques for evaluating ecosystems used the Habitat Evaluation Procedures (HEP), which produces an estimate of effective habitat units for one or a few key animal species in a given stream segment or terrestrial area as the product of raw acres of habitat and the HSI. Reliance on spatial extent of habitat remains the rule after more than two decades. A 1996 review of monetary and non-monetary valuation of environmental investments (Feather et al., 1995) listed 15 techniques for ecological assessment, about two-thirds of which were the HEP and its variants adapted to specific types of habitats or geographical areas. Adaptations were made by several states to support their wetland mitigation programs under Section 401 of the CWA or independent state authority. One of an array of methods used in the In-stream Flow Incremental Method for assessing the effects of minimum flow requirements to protect fish life is also a variant of the HEP (Stalnaker et al., 1995). The PHABSIM model, developed by the USFWS, is an adaptation of the HEP where the HSI values are functions of depth, cover, bottom structure, temperature and other factors affecting fish survival and propagation. The model has been widely used to establish in-stream flow requirements attached to federal and state permits for new dams, relicensing of existing dams or other actions that could alter in-stream flows. The HEP and the PHABSIM are methods for assessing the quantity and suitability of a given set of habitat conditions for the reproduction and feeding of selected species. The given habitat conditions may be either those of existing habitats or those of predicted future habitats. For future habitat conditions, the basic hydrology, hydraulics, geomorphology and vegetation must be predicted by other means. For example, the River of Grass Evaluation Methodology (ROGEM) used by the USACE and the SFWMD to evaluate outcomes of Everglades Restoration actions is a variant of the HEP. It was used to estimate the magnitude of habitat under current conditions and under projected future conditions with the restoration project. Future habitat conditions were predicted using the SFWMD model and the Across Trophic Level System Simulation (ATLSS). It was assumed by USACE and SFWMD that optimal habitat conditions would occur if hydrologic conditions were managed to achieve natural or pre-development conditions (USACE and SFWMD, 1999). ATLSS is a predictive model consisting of a large set of linked models for lower trophic levels; population models for functional groups of fish, macro invertebrates, amphibians and reptiles; and individual-based models for consumers (including Cape sable seaside sparrow, snail kite, wood storks, white-tailed deer and Florida panther). Developers describe the models as still evolving and identify four primary sources of uncertainty:

176 ● ● ● ●

The evolution of water resource planning and decision making

Future climate and weather. Imperfect understanding and representation of major processes in physical and biological models. Important physical and biological parameters used in equations describing processes or initial conditions. Stochastic components.

For complex models, such as ATLSS, issues of model validation and other uncertainties are difficult to assess. It is argued that ATLSS is intended to provide relative assessments of alternative management strategies, not exact quantitative predictions. The assumption, then, is that uncertainties do not affect relative assessments (see the ATLSS attachment to USACE and SFWMD, 1999). That assumption is testable but only over a very long time period if sufficient data from continued monitoring are available. The EPA and other federal agencies support a variety of studies of terrestrial ecosystems covering such topics as data collection on land use and land cover, regional landscape characterization, effects of chemicals and land use and related topics. Few of these efforts have advanced to the stage where they can be used in predictive models for effects of water resources management decisions. The EPA also supports one model for freshwater ecosystems, AQUATOX (Park et al., 2004), which extends water quality models similar to those in QUAL2E and WASP6 by tracking temperature and concentrations of nutrients and organic chemicals and predicting their effects on selected species in the ecosystem, including fish, invertebrates and aquatic plants. It can represent vertically stratified lakes and streams (www.epa.gov/waterscience/models/). A sketch of interactive components in AQUATOX is shown in Figure 4.11. AQUATOX, similar mechanistic water quality models and the ATLSS ecosystem model being developed for the Everglades Project are built on a combination of mass balance equations (one for each species in the model) and biochemical kinetic expressions for rates of transformation from one species to another. Outputs are the concentrations or masses of species distributed over time and space. That approach is appropriate for programs where objectives are stated in terms of quantities of selected species of aquatic plants or animals. Among a limited number of applications, AQUATOX has been used to track the fate and effects of PCBs in Lake Ontario and as part of the study of PCB contamination, attributed to the General Electric Company, of the Housatonic River in Massachusetts (EPA, 2004). The framework proposed to model the latter problem setting consisted of the HSPF for

Environmental issues and options

Nutrients

177

Suspended sediment Upt

Light Atmospheric deposition Temperature Wind Inflow

Decay

ake

Organic toxicant Algae

Plants Macrophytes Outflow

th ea

D

Organic matter

Oxygen

Animals

Death

Invertebrates

Fish

Inorganic sediment (streams only)

Figure 4.11

EPA’s AQUATOX model for freshwater ecosystems

the watershed, a fluid dynamics model to simulate hydrodynamics and sediment transport by the stream and a food chain model to track the fate of PCBs in fish. Outputs of the proposed food chain model were compared to similar outputs of the AQUATOX to test the proposal for consistency. The model has been calibrated and explains the existing distribution of PCBs in the river very well (Weston Solutions, Inc., 2004). It remains to be seen how well the model can predict outcomes of the cleanup process. In a series of articles Richter and his collaborators, drawing on their own work and that of others, critiqued a number of existing methods for setting stream flow targets for restoring riverine ecosystems (Richter et al., 1997; Richter et al., 2003). They argue that the flow regime of a river is now recognized as a master variable and the natural variability of a stream should be restored as nearly as possible to achieve ecologically sustainable conditions. Citations of a large number of studies support their argument that modifications in the timing, frequency and duration of floods can destroy spawning and other signals to migratory fish. Such modifications may push some food sources, young fish and eggs out of their preferred habitats, thereby reducing fish production.

178

The evolution of water resource planning and decision making

Stanford (1994) provides details of such effects in a review of flow recommendations by USFWS for the Upper Colorado River. He argued that none of the methods used to estimate flows necessary to create stream conditions favorable to selected endangered species was sufficient to be used exclusive of other ecological factors. He cited effects of flow on food webs in particular. Backwater food webs provide an abundant source of food for young squawfish, one of the endangered species. However, many backwater areas in the upper Colorado have become ecologically disconnected from the river channel due to man-made revetments, sand bars or encroaching riparian vegetation. Some of the discontinuities are attributable to reductions in sediment scour that accompanied flood events prior to regulation of the stream. He also cited changes in temperature and the invasion of non-native riparian vegetation, displacing native species that flourished in an environment of more frequent and severe floods and droughts. Unstable base flow conditions also disrupt the stream ecology. For some reaches of the rivers, the most productive food web is located in the shallow area along the shoreline, but frequent flushing of these areas by hydropower operations can disrupt the web. Stanford concludes that river ecosystems are too complex to be described by deterministic models, and that construction of an ecosystem model including all relevant processes is unreasonable. His preferred alternative is to assemble all available information about the ecosystem to derive a flow regime and quantify variables that significantly affect the extent to which endangered species may recover. His prescription, then, is a process involving multiple disciplines along the lines of an environmental impact statement. Much of the ecological literature in the past two decades has focused on measures of ecological health other than habitant extent and has been reviewed in the context of the USACE search for improving measures of performance for environmental restoration by Stakhiv et al. (2003). Fundamental attributes of ecosystems are described in terms of physical and biological structure and the natural functions that are both controlled by and produce a particular structure at a particular time. One measure of the health of such a system is the degree of its naturalness, reflected, at least in part, by the richness of species or diversity present in the system. Thus, in contrast to the HEP and its variants, which focus on one or a few key indicator species, measures of ecosystem health tend to focus more on community. However, only a small number of operational indices of community health have reached the status of being widely accepted and widely interpretable. One of those community health indices is the Index of Biological Integrity (IBI) developed by Karr (1981) and Karr et al. (1986) for freshwater ecosystems. The index is constructed by adding indices for a number

Environmental issues and options

179

of attributes of community structure that indicate the extent to which they vary from their natural, undisturbed condition. An equal weighting of each attribute is implicit in the rules by which IBI is constructed. Advances in mechanistic modeling of aquatic ecosystems have resulted in our ability to include greater process (especially trophic) detail and complexity, as well as to perform dynamic simulations (Chapra, 1997; McCutcheon, 1989; Thomann and Mueller, 1987; Orlob, 1983; Schnoor, 1996). Still, these models have not advanced to the point of predicting community structure or biotic integrity. The Modeling Process In addition to technical advances in model development and implementation, there has been an evolution in processes by which models have been constructed and used. Some of the early environmental systems studies were undertaken with a naive view of the appropriate role and impact of models and modelers in the policy-making process. That is, policy makers were assumed to be able to foresee the need for analysis. The staff of analysts would, at their request, study the problem and, if appropriate, construct a model, identify feasible solutions and their consequences and recommend one or at most a few alternative solutions. The policy maker, after waiting patiently for these recommendations, would then make a yes or no decision. Experience to date, however, suggests the following: ●

●

●

A final solution to an environmental problem rarely exists – plans and projects are dynamic. They evolve over time as facilities are added and modified to adapt to changes in system understanding, management objectives and in the demands placed on the project or policy. For every major decision there are many minor decisions made by different agencies or management organizations responsible for different aspects of a project. The time normally available to study a particular environmental problem will be shorter than the time needed, or if there is sufficient time, the objectives driving the original study will likely shift significantly before the study is completed.

This experience emphasizes some of the limitations and difficulties any water resources systems study may encounter, but more importantly, it underscores the need for constant communication among the analysts, system planners, managers, operators and policy makers. The success or failure of past water resources studies may often be traced to the level of

180

The evolution of water resource planning and decision making

effort expended in ensuring adequate, timely and meaningful communication. Decision makers who need information that can be derived from various models and analyses need it at particular times and in a form useful and meaningful to them. Once their window of opportunity for decision making passes, such information, no matter how well presented, will often be useless. Over roughly the last two decades, interactions among decision makers and model builders have been enhanced by developing and implementing decision support systems (DSS) (Fedra, 1992; Georgakakos and Martin, 1996; Loucks and da Costa, 1991). These interactive modeling and display technologies can, within limits, adapt to the level of information needed and give decision makers some control over data input, model operation and data output. But will each decision maker and stakeholder trust the model output? How can they develop confidence in the models contained in a DSS? How can they modify the sub-models within a DSS to address issues the DSS developer may not have considered? An answer to these questions has been to involve the decision makers themselves, in interactive model building as well as use. Through such model-building exercises it is just possible that those involved will reach not only a better understanding of stakeholders’ concerns, but also a common or shared vision of at least how their water resources system (as represented by their model) works. Experience in stakeholder involvement in model building suggests such model-building exercises can also help multiple stakeholders reach a consensus on how their real system should be developed and managed. In the USA one of the major advocates of shared-vision modeling is the Institute for Water Resources (IWR) of USACE. They have applied their interactive general purpose model-building platform in a number of exercises where conflicts existed over the design and operation of water systems (Palmer et al., 1996; Palmer et al., 1993; Werick et al., 1996a; Werick et al., 1996b). Each of these model-building shared-vision exercises included numerous stakeholders together with experts in the use of the software. As expressed by the USACE (www.iwr/usace.army.mil/iwr/svp/svmpage.htm): Shared-vision models are the tools that set shared-vision planning apart from other collaborative processes. Shared-vision models provide the technical rigor necessary in a successful planning process for identifying alternatives and tradeoffs in a manner where stakeholders without modeling experience can actively participate in the modeling process. Because experts and stakeholders can build these models together, including elements that interest each group, the models become trusted, consensus views of how water systems work, and how they affect stakeholders and the environment. Without adding new bureaucracies or reassigning decisionmaking authority, the shared-vision model and the act of developing it create a

Environmental issues and options

181

connectedness among problems solvers that resembles the natural integration of the conditions they study.

CLOSING REMARKS Having spent the better part of two centuries developing the use of natural resources across our continental nation, and in the process making major alterations to what we now call environmental quality, the USA has for the past 40 years embarked on an admittedly uneven effort to preserve, protect and restore both those resources and the surrounding environment. The effort has resulted in a stream of legislation, some of it quite controversial and the inevitable accompanying stream of regulations, incentives and penalties. The laws, for a variety of reasons, attack the problems in what seems to many experts a piecemeal fashion, so that the multi-dimensional and interconnected natural world seems to have been chopped into isolated bits and dealt with via very different, sometimes conflicting, policy tools, from technology specification, to ambient quality standards and from capital subsidies to tradable discharge permits. In the first half of this chapter we worked to put some flesh on that skeletal observation. To some large extent, both past actions that caused what we now see as harmful consequences and current programs and policies that seem ad hoc and even ineffective reflect an evolving but still imperfect understanding of the natural world in all its complexity. If earlier generations had understood the consequences of damming east and west coast salmon rivers, would they have proceeded so enthusiastically and without more effort at mitigation? Would it have remained legal for so long to dispose of hazardous chemicals by stacking barrels of them on the ground if it had been understood that this amounted to waiting for rust to disperse the chemicals onto the soil and then into groundwater? Would we have gone so far down the path of creating acid precipitation by unregulated sulfur dioxide discharge from tall utility stacks if we had understood the transport and fate implications for eastern lakes and rivers? Possibly, but it would have been politically harder. The search for understanding firm enough to allow the construction of mathematical representations of the natural world is the subject of the second major part of the chapter. One lesson we take away from that section is that much progress has been made, especially in hydrology and the simpler processes such as the breakdown of oxygen demanding organics in streams. Another, however, is that much remains to be accomplished if we are to be able to inform the process of restoration of ecological

182

The evolution of water resource planning and decision making

systems, such as the salmon rivers and the Florida Everglades. Complexity and interconnectedness are fine words but difficult realities, and building predictive ecosystem models that capture these realities is still in relative infancy. Advancing the state-of-the-art toward maturity will require sustained investment in serious interdisciplinary work. (As the next chapter argues, there are substantive reasons for the difficulties we have observed in trying to get such work off the ground.) There is also a continuing need for data: to enhance our understanding, to allow estimation of parameters for models and to allow validation of candidate representations of specific systems. This is a need we see being pushed far to the back of the stove top rather than being given the attention it deserves.

NOTES 1. For more background and detail on the ‘Green Book’ and Senate Document 97, see Chapters 2 and 3. 2. In Figure 4.9 a community outbreak refers to an outbreak in a public water system that serves year-round residents of a community, subdivision or mobile home park that has > 15 service connections or an average of > 25 residents for > 60 days per year. A non-community outbreak is one that occurs in a public water system that: (1) serves an institution, industry, camp, park, hotel or business that is used by the public for > 60 days per year but not year-round; (2) has > 15 service connections or serves an average of > 25 persons; and (3) is not a community water system (www.cdc.gov/MMWR/preview/ mmwrhtml/ss5308a6.htm). 3. In this context, the term ‘assessment’ is used in the narrow sense, namely as the process of measuring and estimating the effects (consequences such as hydrological, biological and chemical) of a plan. By way of contrast, the term ‘appraisal’ is used by the P&G to refer to the process of assigning social values to effects as discussed in Chapter 3.

REFERENCES American Society of Civil Engineers (ASCE and UNESCO) (1998), ‘Sustainability criteria for water resource systems’, report by the Task Committee on Sustainability Criteria and United Nations Educational, Scientific and Cultural Organization, American Society of Civil Engineers, Reston, VA. Andreu, J.J., J. Capilla and E. Sanchis (1991), ‘AQUATOOL: a computer assisted support system for water resources research management including conjunctive use’, in D.P. Loucks and J.R. da Costa (eds), Decision Support Systems, Berlin: Springer-Verlag, pp. 333–5. Arnold, J.G., R. Srinivasan, R.S. Muttiah and J.R. Williams (1998), ‘Large area hydrologic modeling and assessment, part 1: model development’, Journal of the American Water Resources Association, 34 (1), 73–89. Bachmat, Y., J.D. Bredehoeft, B. Andrews, D. Holtz and S. Sebastian (1980), Groundwater Management: The Use of Numerical Models, water resources monograph, Washington, DC: American Geophysical Union.

Environmental issues and options

183

Bedient, P.B. and W.C. Huber (1988), Hydrology and Floodplain Analysis, 1st edn, Reading, MA: Addison-Wesley Publishing Co. Chapra, S.C. (1997), Surface Water: Quality Modeling, New York, NY: McGrawHill. Council on Environmental Quality (CEQ) (1997), The National Environmental Policy Act: A Study of its Effectiveness after Twenty-five Years, Washington, DC: US Executive Office of the President. Crawford, N.H. and R.K. Linsley (1966), ‘Digital simulation in hydrology: Stanford Watershed Model IV’, Stanford University Civil Engineering Department, technical report 39, Stanford, CA. Czech, B. and P.R. Krausman (2001), The Endangered Species Act: History, Conservation Biology and Public Policy, Baltimore, MD: Johns Hopkins University Press. Dahl, T.E. (1990), Wetlands Losses in the United States 1780s to 1980s, Washington, DC: US Fish and Wildlife Services. Dahl, T.E. (2000), Status and Trends of Wetlands in the Conterminous United States 1986 to 1997, Washington, DC: US Fish and Wildlife Services. Danish Hydraulic Institute (DHI) (1997), ‘MIKE-BASIN’, operating manual, Danish Hydraulic Institute, Hørsholm, Denmark. Davies, III, J.C. (1970), The Politics of Pollution, New York, NY: Pegasus Books. Delft Hydraulics (DHL) (2002), ‘RIBASIM’, operating manual, Delft Hydraulics, Delft, Netherlands. Dombeck, M.P., C.A. Wood and J.E. Williams (2003), From Conquest to Conservation – Our Public Lands Legacy, Washington, DC: Island Press. Fair, G.M. (1950), ‘Sanitary engineering in a changing world’, Sewage and Industrial Wastes, 22 (1), 11–16. Feather, T.D., C.S. Russell, K. Harrington and D.T. Capan (1995), Review of Monetary and Nonmonetary Valuation of Environmental Investments, report 95-R-2, Alexandria, VA: US Army Corps of Engineers, Institute for Water Resources. Federal Water Pollution Control Administration (FWPCA) (1969), The Cost of Clean Water and its Environmental Impact, Washington, DC: US Government Printing Office. Fedra, K. (1992), Advanced Computer Applications, Options, Laxenburg, Austria: International Institute for Applied Systems Analysis. Georgakakos, A.P. and Q.W. Martin (eds) (1996), An International Review of Decision Support Systems in River Basin Operation, Proceedings of the Fifth Water Resources Operations Management Workshop, Arlington, VA: American Society of Civil Engineers. Harrison, R.W. (1961), Alluvial Empire: A Study of State and Local Efforts Toward Land Development in the Alluvial Valley of the Lower Mississippi River, the Delta Fund in cooperation with the Economic Research Service, Little Rock, AR: Pioneer Press. Hays, S.P. (1959), Conservation and the Gospel of Efficiency, Cambridge, MA: Harvard University Press. Hays, S.P. (1987), Beauty, Health and Permanence: Environmental Politics in the United States, 1955–1985, Cambridge: Cambridge University Press. Hynning, C.J. (1939), State Conservation of Resources, Washington, DC: US Government Printing Office, National Resources Committee. International Union for Conservation and Natural Resources (IUCN) (1980), World

184

The evolution of water resource planning and decision making

Conservation Strategy: Living Resource Conservation for Sustainable Development, Gland, Switzerland: International Union for Conservation and Natural Resources, United Nations Environmental Program and World Wildlife Fund. Karr, J.R. (1981), ‘Assessment of biotic integrity using fish communities’, Fisheries, 6 (6), 21–7. Karr, J.R., K.D. Fausch, P.L. Angermeier, P.R. Yant and I.J. Schlosser (1986), Assessment of Biological Integrity in Running Water: A Method and its Rationale, Illinois Natural History Survey special publication 5, Champaign, IL: American Society of Civil Engineers. Kempton, W., J.S. Boster and J.A. Hartley (1995), Environmental Values in American Culture, Cambridge, MA: MIT Press. Kirby, J., P. O’Keefe and L. Timberlake (eds) (1995), Sustainable Development, London: Earthscan Publications. Loucks, D.P. and J.R. da Costa (eds) (1991), Decision Support Systems: Water Resources Planning, North Atlantic Treaty Organization, Advanced Studies Institute Series, Berlin, Germany: Springer-Verlag. Maass, A., M.M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr, S.A. Marglin and G.M. Fair (1962), Design of Water Resources Systems, Cambridge, MA: Harvard University Press. Martin, L.R. and E. Stakhiv (1999), Sustainable Development: Concepts, Goals and Relevance to the Civil Works Program, report 99-PS-1, Washington, DC: US Army Corps of Engineers, Institute for Water Resources. McCutcheon, S.C. (1989), Water Quality Modeling, Boca Raton, FL: CRC Press. McKee, J.E. and H.W. Wolf (1963), Water Quality Criteria, 2nd edn, Sacramento, CA: California State Water Quality Control Board. Mehan, III, G.T. (2004), ‘Better monitoring for better water management’, Water Environment Research, 76 (1), 3–4. Metcalf and Eddy, Inc., University of Florida and Water Resources Engineers, Inc. (1971), Storm Water Management Model for the Environmental Protection Agency, 11024DPC07/71-10/71, Washington, DC: US Environmental Protection Agency. National Research Council (NRC) (1991), Opportunities in the Hydrologic Sciences, Washington, DC: National Academy Press. National Resources Committee (1939), Water Pollution in the United States, Washington, DC: US Government Printing Office. Office of Management and Budget (OMB) (2003), ‘Informing regulatory decisions: 2003 report to Congress on the costs and benefits of Federal regulations and unfunded mandates on state, local and tribal entities’, accessed September 2003 at www.whitehouse.gov/omb/inforeg/regpd-reports_congress.html. Orlob, G.T. (ed.) (1983), Mathematical Modeling of Water Quality: Streams, Lakes and Reservoirs, Chichester: John Wiley and Sons, Inc. Palmer, R.N., A.M. Keys and S. Fisher (1993), Empowering Stakeholders Through Simulation in Water Resources Planning, Proceedings, 20th Conference on Water Resources Planning and Management Division, New York: American Society of Civil Engineers. Palmer, R.N., A. Hamlet, J. Trungale, S. Haddadin and D. Mekkers (1996), A History of Shared Vision Modeling in the ACT-ACF Comprehensive Study, September, Alexandria, VA: US Army Corps of Engineers, Institute for Water Resources.

Environmental issues and options

185

Park, R.A., J.S. Clough and M.C. Wellman (2004), AQUATOX (Release 2) Modeling Environmental Fate and Ecological Effects in Aquatic Ecosystems, Volumes I and II, EPA-823-R-04-001 and EPA-823-R-002, Washington, DC: US Environmental Protection Agency, accessed 9 January, 2009 at www.epa. gov/water science/wqm/. Platt, R.H. (1996), Land Use and Society: Geography, Law and Public Policy, Washington, DC: Island Press. President’s Council on Sustainable Development (PCSD) (1996), Sustainable America: New Consensus for Prosperity, Opportunity and a Healthy Environment for the Future, Washington, DC: US Government Printing Office. Raskin, P., J. Sieber and A. Huber-Lee (2001), Water Evaluation and Planning System: User Guide for WEAP21, Boston, MA: Tellus Institute. Richter, B.D., J.V. Bumgartner, R. Wiginton and D.P. Braun (1997), ‘How much water does a river need?’, Freshwater Biology, 37, 231–49. Richter, B.D., R. Mathews, D.L. Harrison and R. Wiginton (2003), ‘Ecologically sustainable water management: managing river flows for ecological integrity’, Ecological Applications, 13 (1), 226–34. Rouse, H. and S. Ince (1957), History of Hydraulics, Iowa City, IA: University of Iowa Press. Schnoor, J.L. (1996), Environmental Modeling, Fate and Transport of Pollutants in Water, Air and Soil, New York, NY: John Wiley and Sons. Sierra Club (2003), ‘Sierra Club history timeline’, accessed 12 January, 2009 at www.sierraclub.org/history/timeline.asp Smith, R.A., G.E. Schwarz and R.B. Alexander (1997), ‘Regional interpretation of water-quality monitoring data’, Water Resources Research, 33 (12), 2781–98. Stakhiv, E., R. Cole, P. Scodari and L. Martin (2003), Improving Environmental Benefits Analysis in Ecosystem Restoration Planning, report 03-PS-3, Alexandria, VA: US Army Corps of Engineers, Institute for Water Resources. Stalnaker, C., B.L. Lamb, J. Henriksen, K. Bovee and J. Bartholow (March 1995), The Instream Flow Incremental Methodology: A Primer for IFIM, monograph, Washington, DC: National Biological Service. Stanford, J.A. (1994), ‘Instream flows to assist the recovery of endangered fishes of the Upper Colorado Basin’, biological report no. 24, US Fish and Wildlife Service. Streeter, H.W. and E.B. Phelps (1925), ‘A study of the pollution and natural purification of the Ohio River’, public health bulletin 146, US Public Health Service. Tarr, J., J. McCurley and T. Yosie (1980), ‘The development and impact of urban wastewater technology: changing concepts of water quality control, 1850–1930’, in M.V. Melosi (ed.), Pollution and Reform in American Cities, 1870–1930, Austin, TX: University of Texas Press, pp. 60–81. Thomann, R.V. and J.A. Mueller (1987), Principles of Surface Water Quality Modeling and Control, New York, NY: Harper and Row. US Army Corps of Engineers and South Florida Water Management District (USACE and SFWMD) (1999), Central and Southern Florida Project: Comprehensive Review Study – Final Integrated Feasibility Report and Programmatic Environmental Impact Statement, Jacksonville, FL: US Army Corps of Engineers. US Army Corps of Engineers (2000), Planning Guidance Notebook, chapter 2 “Planning principles”, engineering regulation 1105-2-100, p. 2–1.

186

The evolution of water resource planning and decision making

US Bureau of the Census (2002), Statistical Abstract of the United States, mini historical statistics Table HS25, Washington DC: US Government Printing Office. US Bureau of Land Management (USBLM) (January 2003), ‘Disposition of the public domain’, accessed 9 January, 2009 at www.blm.gov/natacq/pls02/. US Environmental Protection Agency (EPA) (1991a), The Watershed Approach: An Overview, EPA 503/9-92/002, Washington, DC: US Environmental Protection Agency. US Environmental Protection Agency (EPA) (1991b), The Watershed Protection Approach Framework Document, Office of Wetlands, Oceans and Watersheds, Washington, DC: US Environmental Protection Agency. US Environmental Protection Agency (EPA) (2000), Progress in Water Quality: An Evaluation of the National Investment in Municipal Wastewater Treatment, EPA-832-R-00-008, Washington, DC: US Environmental Protection Agency. US Environmental Protection Agency (EPA) (2004), ‘Linking water quality and aquatic life’, accessed 12 January, 2009 at www.epa.gov/waterscience/models/ aquatox. US Environmental Protection Agency (EPA) (2007), ‘Superfund accomplishment figures, summary fiscal year 2003’, www.epa.gov/superfund/action/process/ numbers.htm, 19 March 2004. US Fish and Wildlife Service (USFWS) (1980), Water Resource Planning Under the Fish and Wildlife Coordination Act, FWS/OBS-80/44, Washington, DC: US Fish and Wildlife Service. US Fish and Wildlife Service (USFWS) (2007a), ‘America’s national wildlife refuge system’, accessed 9 January, 2009 at www.refuges.fws.gov/centennial/ pelicanisland.html. US Fish and Wildlife Service (USFWS) (2007b), ‘Migratory bird conservation commission: history’, accessed 9 January, 2009 at www.realty.fws.gov/mbcc.html. US Government Accountability Office (GAO) (1991), Wetlands Overview: Federal and State Policies, Legislation and Programs, Washington, DC: US Government Accountability Office. US Interagency Committee on Water Resources (USIACWR) (1950), Proposed Practices for Economic Analysis of River Basin Projects, The Green Book, revised 1958, Washington, DC: US Government Printing Office. US Senate (1962), Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources, Senate Document 97, 87th Congress, 2nd Session, Washington, DC: US Government Printing Office. US Water Resources Council (WRC) (1973), ‘Establishment of principles and standards for planning water and related land resources’, Federal Register, 38 (174), 24778. US Water Resources Council (WRC) (1980), ‘Proposed rules: principles, standards and procedures for planning water and related land resources’, Federal Register, 45 (73), 25329–46. US Water Resources Council (WRC) (1983), Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, Washington, DC: US Government Printing Office. Water Science and Technology Board (WSTB) (2004), Confronting the Nation’s Water Problems: The Role of Research, Washington, DC: The National Academies Press.

Environmental issues and options

187

Werick, W.J., R.N. Palmer, J. Trungale, A. Hamlet and W. Rowden (1996a), ‘Using shared vision models in the ACT-ACF study’, Proceedings of the Hydrologic Engineering Center’s Symposium on Water Resources Management, January, Santa Barbara, CA: US Army Corps of Engineers. Werick, W.J., W. Whipple, Jr and J. Lund (1996b), ACT-ACF Basinwide Study, Mobile, AL: US Army Corps of Engineers, Mobile District. Weston Solutions, Inc. (2004), Modeling Framework Design: Modeling Study of PCB Contamination in the Housatonic River, report prepared for the US Army Corps of Engineers, New England District, Concord, MA and US Environmental Protection Agency, New England Region, Boston, MA, by Weston Solutions, Inc., West Chester, PA. World Commission on Environment and Development (WCED) (1987), Our Common Future, Oxford: Oxford University Press.

5.

On the collaboration of ecologists and economists Clifford S. Russell and Mark Sagoff

INTRODUCTION Chapters 3 and 4 of this book, on economic methods and ecological approaches to understanding the aquatic environment, underscore the importance of interdisciplinary collaboration in the analysis of water policies and projects. Economists believe their methods of attaching money values to prospective changes in water quantity and quality are central to making inferences about whether those changes are worth pursuing – worth at least what they will cost. But the changes themselves must be inferred by another sort of expert on the basis of the elements of the policy or the structure of the project. This is true whether what is being examined involves adding a new structure or removing an old one; imposing a new restriction on firms, farms or consumers, or relaxing an old one; causing predictable damage or attempting to mitigate earlier damage. Seen in this light, there seems to be a natural fit between economics and aquatic science and engineering (or, more broadly, economics and environmental science). This chapter deals with one part of this apparent fit, a part that does not often live up to expectations – the one between economists and ecologists.1 The history of attempts at collaboration between economists and ecologists is far from a happy or an encouraging one, with the efforts often ending in failure or frustration. Even when attempts have been comparatively successful, the costs in time, money and psychic energy are so large and the results apparently so dependent on contingent factors, such as the particular personalities involved, that agencies are reluctant to commission new collaborative projects. Economists and ecologists seem unable to work together even though they each have collaborated with other, related, disciplines: economists with environmental engineers and ecologists with anthropologists, sociologists and historians. Indeed, the burgeoning field of environmental history provides a testimony to the interdisciplinary affinity of ecological and historical studies. 188

The collaboration of ecologists and economists

189

Why, then, has the economist/ecologist divide proven so much more difficult to bridge? Two disagreements between ecologists and economists account for a large share of the problem. One bone of contention has to do with the concept of value or valuation. Ecologists tend to define the value of an object, for example, a species or an ecosystem, in terms of the uses or functions it supports, directly or indirectly. Thus, ecologists trace value to causal connections among objects embedded in systems. To answer the question, ‘What is the value of x?’ ecologists ask, ‘What is the function of x – what other things depend upon it – in the organization of nature?’ Economists tend to think that the value of a change in an ecological system or service is most usefully defined in terms of differences in human welfare that may be associated with that change, assuming that the rest of the system continues to function. More generally, economists think in terms of trade-offs, such as are represented by the prices of marketed goods, marginal rates of substitution in production, exchange rates in international trade and answers to contingent valuation questions. To answer the question, ‘What is the value of x?’ economists generally ask, ‘What will people give in exchange for x?’ While ecologists are likely to associate valuation with an ideal or original state of an ecosystem, economists are likely to refer to an ideal or competitive market. The second bone of contention has to do with risk and uncertainty. When is it appropriate to assume that the larger system will continue to function, more or less as before, after a proposed intervention by humanity has been undertaken? Where does the burden of proof fall to assure that changes to the natural world will not cross strategic thresholds or cause ecosystems to collapse? A clarification of these conflicts over the idea of value and over the appropriate response to uncertainty and ignorance may help to facilitate future collaborations between ecologists and economists. Following are several brief war stories from the trenches of the history of economist/ecologist collaboration. Two of these examples draw upon the personal research experience of one of the authors (Russell). The third, to which we devote more space, is drawn from accounts of participants in, and some of the available documentation flowing from, a committee exercise, organized by the US Environmental Protection Agency (EPA) and aimed at clarifying, among other things, the value of ecological benefits of the Clean Air Act (CAA). We use these stories to suggest patterns in the dialogue between the disciplines, patterns that in turn lead to our diagnosis of the problem. We then step back to place the diagnosis in a larger perspective by describing two competing world views that leave between them a philosophical gulf, out of which arise some of the differences over valuation and uncertainty we then analyse.

190

The evolution of water resource planning and decision making

Economists and ecologists may learn from each other rather than, as they often do now, confront each other, with each discipline defending its own assumptions and approaches. To the extent that ecologists and economists focus on quite different problems, they may be able to agree to disagree on the philosophical issues that divide them, but still make progress on specific cases, working together on the empirical particulars that have to be understood, rather than seeking to debunk each other at a higher level of abstraction and generality. Each discipline may succeed better if it takes a more modest view of its own ability to solve the problems both are called upon to address. Modesty is an intellectual virtue – the opposite of self-righteousness – that stands at the foundation of every science (Rorty, 1991). In contrast, disciplinary arrogance or defensiveness may lead economists and ecologists to put more energy into chastizing and reproving each other than into learning. We suggest modest steps aimed at fostering collaboration. Roughly speaking, we argue that continuous contact, in the context of empirical work aimed at particular cases, offers the best opportunity to skirt the fundamental philosophical differences separating the two disciplines, without denying the existence of those differences.

WAR STORIES The following describe three efforts to be cooperative, in which ecologists and economists had great difficulty finding a common conceptual framework within which to pursue collaborative research. Indeed, in only one of the stories below was the outcome a success when judged against the original goals. The executive summary is that the representatives of the disciplines did not even engage in parallel play, trying to accommodate each other by ignoring each other. Rather, they fought, and what they fought over helps to illuminate the underlying differences. Early Collaborative Effort (War Story 1) In the early 1970s the Quality of the Environment program at Resources for the Future (RFF) invested in an ambitious regional modeling project. The goal was to demonstrate that the connections among pollutants, as implied by the laws of conservation of mass and energy, should be taken seriously in environmental policy formulation. The region chosen for modeling was complex; it comprised the shores and the hinterland of the Delaware River Estuary, an area stretching from Trenton, New Jersey, to

The collaboration of ecologists and economists

191

the head of the Delaware Bay below Wilmington, Delaware. Both water and air quality were to be examined in the dual sense that models were to reflect both connections within discharge sources among air and water pollutants and connections between air and water in the ambient environment. The state of knowledge and skill could not support the latter effort, as it turned out, but the former effort produced large (for the time) and detailed models of petroleum refining and integrated steel production, as well as simple models of municipal wastewater treatment and fossil fuel power generation. At the outset, the team (an engineer and an economist) represented ambient water quality and its relation to pollution by a simple StreeterPhelps model (see Chapter 4 for more detail) of the dissolved oxygen (DO) deficit caused by the decay of biochemical oxygen-demanding organic material. The region’s municipal wastewater treatment plants discharged the largest part of this matter, but some came from industry. The water quality model did not take into account toxics discharged by the industrial plants and, as important, it was clear that the dimensions of quality of direct interest to politicians and lay people generally, such as algal blooms and fish populations, while related to DO levels, were not simple one-toone transformations. Even though the modeling of aquatic ecosystems in detail was still an emerging science, the directors of the RFF enterprise decided that the project team should include an ecologist who could introduce such a model to the regional model suite.2 Money was not a problem, but finding an ecologist willing to work within the structure of the project was. After the better part of a year of effort to find such a person, a newly minted ecological modeling PhD was hired. He had learned modeling heuristics and mathematical techniques and seemed interested in applying them to the Delaware River watershed. But early on it became clear that a huge gap separated his view of the purpose of the modeling exercise and of its context from that of the project framers. That difficulty was epitomized by a remark at an early team lunch. In effect, the ecologist declared that he did not see the point of building such a complicated set of control cost models and an optimization program that could find the cheapest way of meeting any feasible ambient water quality standards. The right approach was obvious to him. Pollution discharges to the river should be minimized and then the aquatic ecosystem model would tell you what that meant for algae, DO and fish. One can understand the basis of this viewpoint. Plainly, while an economist may regard pollution as an external cost of production to be optimized in relation to the costs and benefits of reducing it, the ecologist could regard pollution as a moral wrong, analogous to trespass or assault.

192

The evolution of water resource planning and decision making

If someone tosses garbage into your backyard – or toxic substances into your liver or lungs – you may call upon the polluter to cease the nuisance. To a large extent, society may follow the example of the common law of nuisance in treating pollution as a trespass or assault to be enjoined or at least minimized (as a kind of necessary evil) rather than as a social or external cost to be optimized. The analogy between pollution and trespass or assault may explain why basic environmental statutes, such as the Clean Water Act (CWA) and the CAA, explicitly limit the use of the benefit-cost test, indeed, even the consideration of costs for reducing pollution. On the other hand, the point of the research project was to compare the costs of different, non-minimal, discharge levels. Even if society agreed that pollution is morally wrong, it must still in fact compare the cost profiles of various strategies for controlling it. While moral principles are to be respected and may be applicable, trade-offs must also be considered. However society decides to regulate pollution – whether on legal, moral, economic, political or other grounds – information about costs at least has to be relevant. What to the economist seemed a perfectly rational exercise – estimating minimal attainable costs as a way of clarifying a social choice – appeared to the ecologist almost worse than a waste of time; it was a bean-counter exercise in which he preferred not to engage. To say this was a rude shock to the economist on the project is an understatement. This impasse led to perhaps six months of daily debate, which constituted a frustrating background to the work of creating the integrated model. The model was being built even as its purpose was under attack by the person charged with constructing it. In the end, the team did come together. The ecologist was persuaded (or just brow beaten) into using his skill to predict the effects of different, non-minimal levels of discharges on various ecological indicators. But, it had been a long journey from the beginning, one that the tighter funding constraints of today’s world could not support. Translating Ecological Indicators to Make Them ‘Meaningful’ to Policy Makers (War Story 2) In the early 1990s the EPA funded a large-scale ecological data gathering exercise called the Environmental Monitoring and Assessment Program (EMAP). Teams set to work gathering time-series data on hundreds of dimensions of functioning in a set of representative ecological systems, ranging from the mountains to the coasts and from the deserts to the plains and forests. The idea was that sufficient data would allow both better understanding of how the systems worked and an ability to report on the status of any particular system and the direction of changes in

The collaboration of ecologists and economists

193

its status.3 Whether as part of this effort or as a parallel one aiming to get more quickly to policy-relevant outputs, a request for proposals was issued in 1993 seeking research groups interested in trying to translate the arcana of ecosystem function indicators into words and concepts more likely to excite the interest of politicians and ordinary citizens. In response, a multidisciplinary team was assembled at Oak Ridge National Labs and Vanderbilt University. Its core group included an environmental economist, an ecologist, a psychologist with survey expertise and a sociologist. The team’s proposal won support from the EPA in the form of a cooperative agreement to tackle the challenge. Several graduate students from a variety of disciplines (including religious studies) then joined the group and additional senior ecologists participated from time to time. To make the task slightly less daunting, the group chose to focus on the forest ecosystem of the Southern Appalachians, examples of which were easily accessible from Oak Ridge. The team agreed from the beginning that the central challenge was, first, to translate the technical indicators into lay language and, second, to find a way (or several ways) to make the meaning of the resulting concepts come alive by showing what these measures, in various combinations, implied for the aesthetics and recreational uses of a forest. The ultimate goal was a large-scale survey, possibly to involve a forest video, to explore whether people could discriminate among the alternative forests implied by different values of the translated indicators. Along the way, focus groups would explore alternative wordings for the indicators and the possibilities for creating meaningful summary indicators as combinations of the original highly specific measures. The project, the accomplishments of which were modest in relation to its goals,4 regularly threatened to founder on the problem of giving operational meaning to the idea of discriminating among forests. The economist thought (and suggested) that a way to demonstrate that people could (or could not) do this was to ask them both preference and value questions relating to days of recreation in different forests as these were described and pictured. It was the word ‘value’ that caused the continuing problem. For the economist, to value meant to translate preferences into money terms, using the concept of willingness-to-pay (WTP), as in: I would be willing to pay up to $25 for a day of hiking in forest A but only $15 in forest B. If there were three or more alternative forests that could be compared two by two, a minimal test of the ability to discriminate would be to find no violation of transitivity in an individual’s preference answers and consistency between the values and the preferences. Both the ecologist and the sociologist on the team found this notion of valuation and the language used to describe it unacceptable. To equate

194

The evolution of water resource planning and decision making

discrimination among forests to differential WTP money to experience them struck these collaborators as at least crassly materialistic. They understood that one might distinguish automobiles or restaurants on the basis of WTP – or people at least do this – but one might not as easily apply this kind of measure to a non-use or non-consumption good, such as the integrity of a forest. To fathom our responsibilities to the forest, so to speak, we would have to come to some deliberative political consensus. According to the ecologists and the sociologist, this group deliberation would not be like making exchanges or trade-offs in a market. More practically, the word ‘value’ repeatedly triggered long, often intense, sometimes acrimonious, discussions contrasting two conceptions of the basis of valuation. First, value could refer to a belief or moral principle the individual ascribes to the community as a whole. For example, the Ten Commandments represent principles of this sort. The principle Thou Shalt Not Steal represents a rule we stand for as a community. What is fundamental here is that the logical subject of choice – the valuer – is not taken to be the individual but the community as a whole. As a member of the community, the individual contributes views or reasons about common goals and thus participates in the deliberative argument in which norms and principles take shape. Second, ‘value’ could refer – and in economic theory, it most often does refer – to the wants and preferences that represent what the individual believes is good for him or her. The valuer is taken to be each individual and what individuals want or prefer is to that extent supposed to increase their welfare or utility. Social valuation then becomes a matter of aggregation over individual utilities, not deliberation over views, opinions and arguments. Willingness to pay is the best measure of value in this sense. However, economists are not averse to interviewing people and conducting focus groups to determine why people prefer one kind of place or outcome to another. Economists have also devised methods, such as contingent valuation, to incorporate moral principles and aesthetic judgments in the calculus of social welfare on which policy may be based. The research team found it difficult, if not impossible, to get beyond the threshold problem of reconciling these two conceptions of value in order to discuss the mechanical details of the how – if not via the WTP questions – one can apply judgments, preferences or principles to discriminate among forest policy outcomes. The economist was baffled by the insistence of non-economists on arguing about the meaning of a word – value or valuation – that clearly had several meanings. The others seemed outraged that such an important word had been highjacked. Possibly, if the meetings had been daily instead of roughly bi-monthly, a way around the impasse might have been found. But the project ended before that was

The collaboration of ecologists and economists

195

accomplished. It is important to re-emphasize that the impasse did not arise because technical jargon interfered with understanding. Rather, the lesson seems to be that even ordinary words can become landmines when two such different views of the world try to come together to take a single research path. A Brouhaha at the Science Advisory Board (War Story 3) The CAA Amendments of 1990 require periodic analyses of the costs and benefits associated with various titles of the statute and mandate the creation of an Advisory Council, appointed by the Administrator of the EPA. This council met with members of other EPA committees in 2001 to discuss, among other things, the value of ecological benefits that might be attributed to policies promulgated under the Act. The meeting produced a standoff – a failure to find common ground – between ecologists representing the Health and Ecological Effects Subcommittee (HEES) of the Science Advisory Board (SAB) and economists on the Advisory Council. Members of the Advisory Council then prepared a draft Analytical Plan, later published, to summarize whatever agreement had been reached and to describe the areas where there were still differences. This draft plan provides much of the information we rely upon to analyse this impasse between ecologists and economists (EPA, 2001). To be fair, it must be noted that there was some agreement. Most importantly, according to the draft analysis, ecologists and economists agreed that, while in the past ecosystem service benefits had been measured by incremental changes in the ‘market values of commercially exploited natural resources, such as forest products and commercially caught fish’ (EPA, 2001, p. 26), in the future, ‘benefits in terms of the non-market services of ecosystems [should] be formally acknowledged, quantified and included in the benefitcost calculations’ (EPA, 2001, p. 27). The ecologists representing HEES, however, asserted in the strongest possible terms that the benefit-cost analysis should also recognize the value of the essential life-support services ecosystems provide to the human economy. Accordingly, measures should be generated ‘for the benefits of the CAA that can be attributed to ecological services protection’ (ibid.). Specifically, the ecologists expressed the conviction that calculations published by Costanza et al. (1997) could be adapted to provide a placeholder estimate of ecosystem service benefits (EPA, 2001, p. 28). The Costanza team attributed a value of $33 trillion to the world’s ecosystems in relation to a range of life-support services. ‘However, the authors readily acknowledged that because of the nature of the uncertainties involved, this must be considered a minimum estimate’5 (EPA, 2001, p. D-2). The economists on the Advisory Council rebuffed

196

The evolution of water resource planning and decision making

this suggestion in part because the assumptions and techniques behind the final number had been examined and found wanting as applications of sound economics.6 More fundamentally, the Council asserted that even if Costanza et al. (1997) ‘had actually succeeded in measuring the “true” total value of ecosystem services’, this number would not be useful in measuring ‘the magnitude of the decrease in ecological services that would take place without the CAA’ (EPA, 2001, p. D-3). Even if the value of ecosystems exceeded that of human health, the economists opined, ‘this unfortunately tells us nothing at all about the relevant marginal measure for ecological services benefits’ (EPA, 2001, p. D-6). Since ecosystems support all life, their value is immense, but that value would only be relevant here if, without the CAA, life as we experience it would disappear from the planet. Rather, ‘benefit estimation is . . . predicated on knowledge of the relevant damage functions and ecological science is not yet to the point where these damage functions can easily be quantified’ (EPA, 2001, p. 26). The Council economists asked the absent ecologists for ‘a rigorous estimate of the change in ecological services . . . due to the CAA’ (EPA, 2001, p. 4, emphasis added). Economists on the Advisory Council hoped to assess ecological services in terms analogous to those used for other goods in the context of optimal resource allocation and management. Following the EPA’s A Framework for the Economic Assessment of Ecological Benefits, economists took it as a premise ‘that actions affecting the state of an ecological resource . . . will result in changes to the goods and services provided by that resource’ (EPA, 2002, p. 14). A damage function for a given ecosystem would alert society to the loss of some portion of those services (for example, lower flood mitigation capacity). Absent such a connection between the CAA achievements and incremental ecological change, there would be no way to include ecosystem services in the calculation of costs and benefits for social decision making. The ecologists may have felt they could not get a hearing for their belief that stresses on ecosystems, such as carbon dioxide loadings, re-establish, at least as a possibility, the Malthusian principle that nature places physical limits on economic production and growth. (For a recent restatement of this view, see McMichael et al., 2003.) Many ecologists believe that the value of ecosystem services must be approached from a macro rather than a micro viewpoint. That is, what matters is the totality of human effects on the larger environment. Thus, declines in ecological services, for example, the ability of biospheric systems to absorb and recycle wastes, limit the scale of the human economy. By attaching a high monetary value to ecosystem services, society would acknowledge those limits. Since the ecological system contains the economic system, on this view, it possesses

The collaboration of ecologists and economists

197

a value as great as the economy itself, for which a placeholder estimate like $33 trillion may be better than no number at all. The Concept of Valuation From these war stories springs our basic observation: economists and ecologists understand value and valuation in quite different ways. These differences reflect both disagreements about the normative basis of environmental policy and differences over the appropriate response to ignorance and to uncertainty about the natural world. Ecologists tend to understand the value of a resource in terms of the role it plays in the functioning of a productive system. The principle might be stated as: If a is a necessary causal condition of b, then a is at least as valuable as b, especially if there is any chance that tinkering with a will lead to a loss of b. Ecologists also tend to think that changes humans make in natural systems – particularly as a result of economic activity, for example, pollution – are inherently suspect because nature knows best and the possibility of catastrophe always lurks behind human intervention. Economists, in contrast, tend to understand value in terms of trade-offs at the margin; that is, in relation to what people are willing to give up to obtain one unit more of a commodity or service (or to receive less of a bad). The economic notion of value does not depend on the determination of general rules, laws, goals and principles that express our will as a nation or a community. Rather, economic valuation begins with the idea that we are (almost always) talking about relatively small changes in the flows of commodities and services giving rise to incremental changes in well-being. This approach seeks to value such small or incremental changes in terms of the sacrifices people, as individuals, would make in order to obtain them (would exchange for them). In the economic approach, when commodities and services are marketed and the markets function as they should, prices are the measure of value, at least in the sense that markets function to guide resources to their most productive uses. When the goods are public, such as air quality or the functioning of an ecological system, economists still maintain that people can be thought of as holding judgments about what they would be willing to give up (pay) for more of the good, or to accept to allow less, though these judgments cannot be observed in market transactions. To the economist, then, the task of valuation involves trying to estimate what people would be willing to pay for an incremental amount of a good (or willing to accept as compensation for losing it) if faced with a market for the good in question. One can see now the gulf that separates the agendas of ecologists and economists.

198

The evolution of water resource planning and decision making

TWO COMPETING WORLD SYSTEMS Historically and philosophically, what divides many contemporary economists and ecologists is the question of whether nature represents essentially matter in flux, to which human agency imparts useful form or whether it was initially created with an organization that humans must respect. This question has been the subject of philosophical debate for at least 2000 years. On the one side, a tradition that runs from Epicurus and Lucretius to Bacon leads to contemporary political economists, such as Peter Drucker and Robert Solow, as well as to contemporary scientists and biotechnologists, who regard nature as a source of raw materials (including information) and as a sink for wastes. Human ingenuity can continually mold, manipulate and transform nature to serve human preference and desire. In this view the limits to knowledge are the only limits to economic growth. In the period following the discovery and exploration of the New World, Europeans such as Bacon, Hobbes and Locke found it plausible to think of the value of nature as largely potential; they believed that if nature on balance benefits humanity, this is due to the application of human ingenuity and labor (for example, the axe and the plow). Thus Locke (with the New World in mind) famously wrote: ‘Land which is wholly left to Nature, that hath no improvement of Pasturage, Tillage or Planting, is called, as indeed it is, waste; and we shall find the benefit of it to amount to little more than nothing’ (Locke, 1963, p. 315). Karl Marx (1972, p. 73) commented, ‘Nature becomes purely an object for men, something merely useful and is no longer recognized as a power working for itself.’ As ecological economist Herman Daly (1996, p. 63) summarizes this view, natural resources ‘are totally passive recipients of form (value) added by labor and capital’ so that ‘value added by labor and capital is by definition the source of all value produced and consequently of all value consumed’. The necessary organizing principle for production, according to this tradition, is found not in nature but in the market – in the action of the invisible hand that brings together raw materials with labor and technology in response to price signals. Adam Smith wrote, ‘Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarianism, but peace, easy taxes and a tolerable administration of justice; all the rest being brought about by the natural course of things’ (Smith, 1991 [1776]). As historian Robert Heilbroner (1961, p. 50) summarizes: ‘Smith has constructed for society a giant endless chain. As regularly and as inevitably as a series of interlocked mathematical propositions, society is started on an upward march.’

The collaboration of ecologists and economists

199

On the other side, a tradition that runs from Plato and Plotinus, through the Physiocrats to ecologists and ecological economists today (such as Paul Ehrlich and Herman Daly) sees the human manipulation of nature as often counterproductive because it depletes or destroys the organization already formed in nature (thus adding to entropy) and disrupts natural systems on which all life depends. As important, the endless satisfaction of preferences, many of which must themselves be manufactured along with the goods that satisfy them, is not correlated with any conception of well-being nor trivially defined in terms of it, once basic needs are met. To rein in consumption – to minimize the flow of energy and materials from nature as resource and back to nature as sink – is both to protect essential ecosystems and to increase human well-being in a substantive and meaningful sense. Less is more, in this view. This belief draws on the writing of classical macroeconomic theorists from Quesnay and the Physiocrats, through Malthus and Ricardo, to Jevons and Marshall. These economists argued that the fixity of natural resources (for example, the land available for the production of food) sets a physical limit on the scale of economic activity and, in particular, population. In 1890 Alfred Marshall summed up this position by emphasizing a distinction between human-made capital and ‘natural agents . . . taken to include all free gifts of nature, such as mines, fisheries, etc’. Land, in which Marshall included natural resources, constitutes a ‘permanent and fixed stock while appliances made by man . . . are a flow capable of being increased or diminished’ (Marshall, 1920, Appendix G, p. 28).7 Ecologists and maverick economists associated with the discipline of ecological economics regard large-scale pollution problems, such as ozone depletion, climate change and acid rain, as the modern analogs of Malthusian population growth. They believe that global problems such as these are not susceptible to easy technical, regulatory or market solutions. In 1991 Daly indicated ‘when growth pushes scale beyond the optimum, we begin to experience generalized pervasive externalities, such as the greenhouse effect, ozone layer depletion and acid rain, which are not correctable by internalization of localized external costs into a specific price’ (Daly, 1991, p. 245). The intellectual chasm that yawns between ecologists and economists, when described in terms of long-opposed philosophical traditions, may seem so deep that no attempt at collaboration can bridge it. Our position, on the contrary, is that economists and ecologists can finesse their differences on fundamental philosophical principles in order to make common recommendations in the context of specific policy proposals. For the ecologist, the problem is to reduce the impact of human activity on the natural world or at least to limit the human assault on significant ecosystems.

200

The evolution of water resource planning and decision making

For the economist, the problem is to maximize the present value of the consumption of goods and services, primarily by relying on market prices to guide management and investment decisions. Both goals are consistent with our character, history and laws as a nation. We are confident that ecologists and economists can collaborate in showing political authorities how to balance these goals even if fundamental philosophical differences separate the two disciplines. In particular, the disciplines may finesse some of the philosophical differences that separate them if they agree to disagree about the concept of valuation and look for policy options that seek to maximize social wealth while restricting environmental impacts to some agreed upon – for example, politically determined – level. Policies that involve trading pollution allowances under a cap – where the cap is determined on ecological or other scientific grounds – illustrate this approach.

DISCIPLINARY ARROGANCE: A HINDRANCE TO GETTING ON WITH THE TASK The discussions and disputes described previously did not, of course, take place between and among pure, objective intellects seeking only paths around an impasse, or at least a better understanding of that impasse. An inevitable obstacle to progress is the effect of disciplinary socialization on flesh and blood, insecure and historically situated individuals. Thus, the ecologist in war story 1 came to the table having learned from his elders and academic betters to think of mainstream economists as so involved with marginal thinking that they had lost sight of the larger picture – the sustainability of an economy within its ecological setting. The ecologist positioned economists as technocrats who could not deal with problems of scale (that is, who simply could not or would not understand that, at the scale to which economic activity had expanded, human-produced stress on the environment had become undesirable to the extent it was avoidable). In this view, economists fail to recognize that the ecosystem includes the economic system as a subsystem – not the other way around. To the ecologist, ecosystem services and other goods are not to be considered as economic beans to be counted; rather they must be respected as the basic conditions of life. The economist, on the other hand, may see the ecologist as a mechanic who is supposed to understand how an ecosystem functions and who can relate stipulated human inputs, such as stressors, to ecological outputs. In other words, the economist expects the ecologist to present ecological relationships in economic terms, for example, to regard the ecosystem as a sort of firm, with inputs and outputs that could be entered into benefit-cost

The collaboration of ecologists and economists

201

analysis. The ecologist is expected to provide a basis for a damage function and thus to help represent ecosystems properties in economic terms. Rather than respond, as it were, on the merits to the moral principles, aesthetic judgments and overall views of the integrity of ecosystems, which ecologists bring to the table, economists may try to cast these in terms of costs and benefits only as ‘valuable’ as there is the WTP for them. As natural places disappear the economist may feel the pain of the ecologist – and offer to price it. More broadly, the graduate training regime, because it stresses the beauty, power and completeness of each discipline, tends to produce a similar level of self-righteousness, even arrogance, in many of its products. Rewards within each discipline go to those who master its structure and assumptions and apply them to new problems. There is hardly time, and little encouragement, to look for flaws or weak points in the conceptual structure of one’s own science. Indeed, there is less time every decade, since four or five years is the norm toward which PhD programs aim, but each year the mountain of material to master grows higher and mathematical methodologies make the slopes ever more slippery. It is no great leap from gaining one’s academic credentials to the notion that the discipline you enter with your hooding has grasped the world correctly in (nearly) all respects; after all, one has not spent much time discussing where the basic framework may be shaky or even flawed. For some, this acceptance leads to arrogance that is always near the surface. And nothing is more destructive of dialogue than arrogance expressed. Therefore, it may be salutary to review briefly some of the reasons both economists and ecologists have for practicing humility in their interactions with each other and with other disciplines as well. In this enterprise we shall confine ourselves to matters directly relevant to the problems raised by normative concepts in research in valuation. In particular, we have in mind the situations, such as those described previously, involving value judgments about changes in an environmental stressor, such as pollution. The term ‘pollution’ itself can be seen as normative – as ecologists may, indeed, regard it – connoting corruption, trespass, assault, filth and the like. On the other hand, it could be treated, as economists are likely to do, in the neutral sense of an external cost of production, acceptable insofar as it is balanced by benefits. Problems for Economists: Valuing Changes in Ecosystem Service Flows In this section we shall assume with economists that the stressors in question are not obviously of catastrophic potential, so that the relevant questions are: (1) what changes in the ecosystem’s service flows actually

202

The evolution of water resource planning and decision making

result from the proposed human action and (2) how do humans feel about (value) those changes? Consider, for example, changes in ecosystem service flows traceable to tighter control of the precursors of urban ozone formation (that is, smog). Let us say smog tends to drift downwind from the urban area over rural and natural areas, causing damage directly or indirectly to plants, animals and watercourses. We shall also assume that ecologists can produce functions relating direct and indirect physical damage to measures of exposure to ozone (extent of the cloud and concentrations within it). This is roughly what the economists on the EPA/SAB committee were seeking, for their tool kit contains the conceptual basis for valuing the decrease in damages (the benefits) attributed to CAA policy; and economists have a good deal of practical experience doing just such valuation in real situations where real money is at stake. On the question of valuation, economists would say: find out what the people concerned are willing to sacrifice (pay) in order to obtain the reduction in damage predicted by the ecological models.8 Behind this answer lie many assumptions. First, one must assume away the idea that smog, along with other forms of pollution, represents an evil to be minimized rather than a cost to be optimized or balanced against benefits. In other words, one must already assume that an efficiency norm, rather than, say, a property right applies in regulating pollution. (A property right entitles a person to injunctive relief against pollution in very serious cases or to a damage award more commonly.) An economist is likely to assume that pollution should be controlled according to an efficiency standard (that is, just to the point at which the cost of reducing the next unit equals the benefit). This is to accept an analysis of pollution as a social cost to be internalized into the prices of goods produced. However, it is not clear that anyone but economists – or those trained by them – accept this principle as opposed to a propertyright or injunctive-relief approach, at least as a place to start the conversation. Second, economists must assume that each person (or family) possesses a marginal willingness-to-pay (MWTP) function defined over the dimensions of change for any environmental problem.9 It nearly goes without saying that even if MWTP constructs exist in the brains of the affected individuals, evidence of their shapes will not be seen directly because there are no transactions that would analogize to market purchases of private goods. Indeed, the prices people pay for ordinary goods result from an interplay of supply and demand and thus do not necessarily represent the maximum a person is willing to pay for the next unit of a good. The price charged may be, and often is, much lower if the good is inexpensive to produce. For example, people who finish a marathon or end a religious

The collaboration of ecologists and economists

203

fast may be much thirstier or hungrier than others, yet they pay the same prices for food or drink at the supermarket or restaurant. Accordingly, their MWTPs may be represented by the minimum amount they have to pay – not the maximum price they might otherwise have paid – for the good in question. Over the past 25 years or so, economists have developed techniques for asking people about their WTP for described changes in the provision of public goods. The majority of economists has accepted these methods, labeled as contingent valuation and contingent choice, at least in principle.10 They have become the methods of choice in many applied environmental situations, including, just as one example, the justification of environmental project loan requests to the Inter-American Development Bank. Why and how this has happened is itself a fitting subject for analysis, but in the context of this discussion, two advantages of contingent valuation and contingent choice methods stand out: ●

●

They are flexible, in that the analyst can directly ask about the public good of interest. With the older, so-called indirect, methods whether changes in environmental service flows could be valued in an even roughly credible way depended on whether links to actual markets could be hypothesized and whether appropriate data from those markets were accessible.11 The methods in principle produce benefit estimates that reflect both use and non-use benefit accruals.

Nonetheless, there remain concerns about the robustness of the contingent methods and these seem especially serious in the contexts we are discussing here. Fundamentally, there is reason to doubt that expressed WTP measures a prospective change in welfare. Economic theory takes it as a foundational premise that preferences are to count in policy – preferences taken as they come and ranked on a WTP basis. However, economists have not explained why preferences should count – why they should be satisfied on this as-they-come basis. The connection between money (the ability to satisfy preferences) and happiness, after basic needs are met, is at best tenuous. In fact the hypothesis that people are not generally happier when they have more income and thus can obtain more of the things they have to pay for is one of the best established results of social science research.12 Thus, the connection between WTP and welfare may be at best a tautological or stipulated one. Absent a connection between preference-satisfaction and any conception of welfare not defined in terms of it, why should society or the government seek to satisfy any and every preference, rather than just those related to need (health, poverty and so

204

The evolution of water resource planning and decision making

on), merit (education, science, art, environmental quality) or some socially recognized good? Moreover, on a practical level there is both empirical evidence and a priori argument to suggest that people generally do not have any idea what they are willing to pay for changes in the natural world that are unfamiliar, possibly quite subtle and difficult to describe in easy-to-grasp ways – at least they have no idea before the process of tackling questions on a contingent valuation instrument. The a priori argument contends that people have neither time nor incentive to expend the effort to develop such self-knowledge in the abstract. The more unfamiliar and obscure the question, the less likely they are to have thought about it at all. When asked a question about environmental policy outcomes, people are more likely to think in terms of the principles relevant to policy (the right to pollute, the requirements of law, the ethical context and so on) than in terms of effects of that policy on their own welfare. Thus, people are likely to think in terms of general questions about the basis of policy to which economists have their own answers. Technical Problems for Contingent Valuation Studies In the absence of predetermined utility functions for the good in question, how seriously should we take the answers to contingent valuation studies? Those answers might reflect little more than the respondents’ grasps at the straws offered by the survey, the content of the questions and possibly personal rules of thumb based on previous environmental involvement, such as making a contribution to an environmental advocacy group. Additionally, over the survey interaction hangs the desire, apparently widely shared, to be thought of as a good person.13 Artifacts of survey method and design discovered in the decades of research into contingent valuation methods tend to confirm the suspicion that respondents can do little more than grasp at straws. Examples include: ●

●

●

The embedding effect, in which stated WTP does not seem to vary in reasonable ways with the scale of the problem described to the respondent (Boyle et al., 1994). Yea saying, in which the tendency is to agree with whatever is suggested by the question, such as a possible amount you might be willing to pay (Harris et al., 1989; Desvousges et al., 1993; and even NOAA, (1993). The tendency for the estimated WTP for the same hypothesized change in service flow to be higher when based on data from yes/

The collaboration of ecologists and economists

205

no (dichotomous choice) questions than from open-ended versions (Ready et al., 1996). Generally, Peter Bohm, who did the first experiments revealing no tendency to lie about the WTP for a public good – a tendency predicted by Samuelson and naturally expected by economists – long maintained that one cannot take the answers to the purely hypothetical questions of the typical contingent value study seriously exactly because of their hypothetical character. There is no reason for respondents to rack their brains for the right answer when no consequences will likely flow from whatever answers they provide (Bohm, 1994). Another difficulty arises when respondents are asked how much they are willing to accept in order to allow a given environmental change for the worse. The respondents may feel that they are placed in the role of extortionists selling a good they do not own. Thus, while the WTA compensation to offset the change is often conceptually the correct amount to seek and while this amount is expected to be greater than the WTP for a similar magnitude of change going in the opposite direction, efforts to obtain the WTA responses at all or to obtain responses that seem to pass a reasonableness test, have not generally been successful. Whether the reason for this failure is moral objection to even hypothetical bribes to give something up that may be seen as a birthright or that the nature of the WTA question frees the respondent from even a vague (and hypothetical) need to consider income limitations or, something else entirely, the contingent techniques do not seem to allow economists to value damage imposition, as opposed to damage mitigation (Knetsch and Sinden, 1984; Hanemann, 1991; Knetsch, 1994). A further difficulty for the interpretation of expressions of WTP from survey methods is the apparent importance of ethical principles or moral beliefs in the answers provided by individuals. Indeed, it is remarkable how consistently researchers have found that the WTP for such effects is based on disinterested moral or cultural beliefs (Schkade and Payne, 1994; Blamey et al., 1995). In a representative study researchers found that existence value was ‘almost entirely driven by ethical considerations precisely because it is a disinterested value’ (Barbier et al., 1995, p. 836). Two aspects to this observation are relevant here. One is that the ethical basis for the answers may not be a simple version of other-regarding altruism but rather something along the lines of Sen’s commitment to a principle or ideal (Sen, 1977). The individual may express their view not of their own economic utility but of the principle or goal we should apply as a society. Views about policy conflict logically in the sense that they may contradict each other, not economically in the sense that resources are not

206

The evolution of water resource planning and decision making

adequate to satisfy them. This difference can complicate the interpretation and aggregation of the expressed WTP (Johansson-Stenman, 1999). If people favor an outcome for principled reasons rather than for any benefit they may gain, it would be odd to say that the outcome they favor benefits them. Should a commitment to other goals or values beside personal welfare be ignored? There is widespread recognition that the WTP questions tend to produce a selfish focus in respondents, a focus that sits awkwardly at best with the inclination to consult a moral compass (Stern and Dietz, 1994; Stern et al., 1993). It may be hard for the respondent to think in terms of what is good for or benefits them in a context – or about a decision – that they would usually cast in the context of what is morally right or good for society as a whole. Finally, a purely technical, but also not so far resolvable, challenge to the use of WTP estimates arises when the yes/no (referendum, dichotomous choice) technique is used in elicitation.14 In essence, the challenge is rooted in the fact that with this technique no one reveals their WTP directly. Instead each respondent reveals only whether their WTP is greater or less than the bid they are presented, so that estimating either the mean or the median WTP for the sample of respondents and, thus for the population of interest, cannot be done simply by arraying or adding up stated WTP numbers. Rather, the analyst is left with a task of inference and it turns out there are at least a dozen suggested methods to perform that task. None of these may be dismissed on technical grounds and unfortunately they do not produce estimates that agree. Indeed, it is possible to find that the range of methods produces a range of answers that differ widely enough to cast doubt on any resulting benefit-cost analysis (Vaughan et al., 1999, 2000). Taken together, the previously stated problems seem to provide economists with ample grounds for humility in approaching ecological valuation problems. Even though the techniques for estimating a population’s WTP for a change in the flow of environmental services have improved immensely over the past several decades, largely through the efforts of environmental economists, there are still enough philosophical, practical and technical challenges to make it clear there is much more to be done. Problems for Ecologists: Defining What is to be Valued Ignorance and disagreement about the structure and functions of ecosystems, how to define and delimit them – indeed, about how to reidentify a place as possessing the same ecosystem through time and change – confound attempts by ecologists to provide in any general sense the damage function economists seek. For example, the Millennium Ecosystem

The collaboration of ecologists and economists

207

Assessment defines an ecosystem as a dynamic complex of plant, animal and microorganism communities and the non-living environment interacting as a functional unit (Millennium Ecosystem Assessment, 2003, p. 15). This definition includes practically anything one can imagine (for example, a rotting carcass, a sewer system, a toxic waste lagoon, a kitchen sink, a yeast infection and a college dorm room). All of these are functional units in one sense or another. Such definitions build into the ecosystem concept the very property (for example, self-organization, autocatalysis and complex adaptiveness) that is then predicated of it. Defining the concept of an ecosystem then becomes a project of analysing terms like ‘self-organization’ – an effort that often depends less on empirical observation than on the derivation of the consequences of one’s arbitrary mathematical assumptions. It is easiest to apply the concept of a system – including terms like ‘structure’ or ‘function’ – to objects designed for a purpose. The structure and function of a kidney, for example, can be understood in relation to the purpose of cleansing the blood. Similarly, organisms are organized by evolutionary forces to enjoy relative reproductive success. If ecosystems were organisms (that is, units of selection) or if they had a purpose (if God created them for the benefit and support of humanity), one could identify the properties of design, organization and function by which they serve an end. Absent evidence that ecosystems are organized either by natural or supernatural selection, however, it is not clear that ecosystems constitute systems rather than just contingent and idiosyncratic collections. Whether plants and animals found at a site constitute a system of any kind, indeed, is a question much debated among ecologists. Thus, Gilbert and Owen (1990, p. 33) wrote that their observations of nature provide no evidence of ‘an ontological emergence of a community level of biotic organization’. Any suggestion of pattern or structure in ecological phenomena is a ‘biological epiphenomenon, a statistical abstraction, a descriptive convention without true emergent properties but only collective ones, wholly referable in its properties to those of its constituent species, populations and individuals.’ In this view, nature presents a blooming, buzzing confusion of contingency that defies prediction and, indeed, theoretical understanding. At best, ecologists can identify the particular causes of particular events and, somewhat more generally, the empirical processes most significant with respect to a phenomenon of interest. Ecologist William Drury (1998, p. 23) inveighed against the ‘strong tendency to accept the existence of self-organizing principles as inherent in natural systems’. He wrote, ‘I feel that ecosystems are largely extemporaneous and that most species (in what we often call a community) are superfluous to the operation of those sets of species between which we can clearly identify important interactions . . . Once seen, most of the interactions are simple

208

The evolution of water resource planning and decision making

and direct. Complexity seems to be a figment of our imaginations driven by taking the “holistic” view’ (p. 32). In the absence of a consensus about how to define the concept ecosystem or even whether systems of the sort exist in nature, ecologists are likely to approach the identification of ecosystem services on a case-by-case basis. This makes sense. One does not need to define the concept ecosystem or say anything general or abstract about its structure or function to understand how in particular cases nature directly benefits humanity. For example, wild or naturally occurring insects often pollinate crops; when they do not, farmers often contract with beekeepers for commercial pollination services. Changes to ecosystems that threaten the population of wild pollinators – one thinks of pesticides, for example – would threaten the pollination services they provide. The assumption that ecosystems or natural environments provide valuable services follows from the view that nature comprises everything – or at least everything not identified with human artifice. Yet, by the same token, nature is also the source of many disservices, such as earthquakes, floods, droughts, plagues, pests and all kinds of miseries and destructions, including universal death. Accordingly, while some changes to ecosystems lessen ecological services, others may prevent or mitigate ecological disservices and some changes may do both. Some balancing of nature’s services with its disservices may be necessary to understand the value of natural environments. And there is little reason to believe that nature in an original state is on balance more supportive of than hostile to human well-being. An insistence on the value of ecosystem services is surely helpful in those instances in which one can identify ecological processes that produce goods that markets can price. Obvious examples can be found in huntergatherer goods such as fish or trees captured from the wild. It would be feasible to value the natural system by comparing the price it might charge for its output relative to that of a competing industrial product. Indeed, wild and farmed salmon, for example, are often sold competitively in the same markets with the wild product fetching a premium.15 But where, as is common, the assertion is that system survival is at stake, demonstration of a more comprehensive understanding of how ecosystems function seems critical. And yet there is no consensus among ecologists about how to define an ecosystem, delimit it or even whether the concept is a useful one (O’Neill, 2002). This is where the dialogue can become sticky for the non-ecologist. Ecologists may argue that society should defer to their expertise as scientists, as much because of what ecological science does not know as what it does understand about complex systems. David Takacs (1996, p. 92)

The collaboration of ecologists and economists

209

comments that ecologists ‘tell us how little we know about the vanishing natural world and how severely we might pay for how little we know. They urge us to proceed with caution . . . therefore, we must preserve as much of the natural world as we can.’ Takacs concludes that ecologists ‘are thus masters of ignorance since what they do not know can hurt us and we ignore their ignorance at our peril’. This observation brings us squarely back to the enormously important matter of prescriptions for dealing with profound ignorance and the resulting uncertainty about what any particular environmental action (or inaction) will produce by way of results in the natural world. As Samuel Hays (1985, p. 253) points out in his history of environmentalism, ecological science admittedly cannot provide even a small part of the information policy makers demand or need: ‘Every advance in knowledge seemed to expand what was not known even more rapidly than it did what was known; society seemed to be faced with escalating ignorance.’

THE SAFE MINIMUM STANDARD: A BASIS FOR DIALOGUE? To deal with risks or uncertainties associated with the possible collapse of ecosystems, ecologists and economists have discussed, separately and together, the possibility of establishing safe minimum standards (SMS) for environmental assets (that is, standards that would constrain or even supplant benefit-cost analysis when decisions involved sufficiently widespread or irreversible environmental effects).16 The SMS concept, suggested by Ciriacy-Wantrup (1963), primarily concerns limits on the exploitation of the kinds of renewable resources that exhibit critical thresholds. Thus, emissions can overwhelm the capacity of sinks to absorb and recycle wastes. Species require minimum populations to survive. There may well be thresholds in the global climate system at which major changes in ocean currents, for example, could be triggered by modest additions to global average temperatures. The appeal to SMS moves the burden of proof from those who would preserve resources to those who would exploit or develop them (Randall and Farmer, 1995). Given the depth and extent of our ignorance about the way ecosystems work – they are more complex than we can understand – ecologists argue we should err on the side of caution by allowing only those changes to natural systems that can be shown to be completely necessary. As ecologist Reed Noss (1991, p. 329) wrote, ‘One key principle is prudence. In other words, we should err on the side of preservation when science is unable to provide clear answers.’ The ‘discipline of environmental

210

The evolution of water resource planning and decision making

science is fairly new,’ opines historian of science Robert Nadeau, ‘but with sufficient funding ecologists may one day be able to predict the behavior of complex systems’. Nadeau indicates that ‘Minimizing negative environmental impacts of global activities is not a great price to pay in exchange for the opportunity to acquire knowledge that could allow our children and grandchildren to live out their lives on a hospitable planet’ (Nadeau, 2003, pp. 146, 147). Everyone is in favor of allowing future generations to live on a hospitable planet. However, it is knowledge, not ignorance that allows us to do this. Lord Jevons thought that his generation should save coal for the use of future generations – but this turned out to be unnecessary. We need to know what ecosystem services we should protect and what qualities or components are important to that protection. To save everything, in contrast, might require us to stop investing and thus giving form to new technologies. History suggests that this extreme measure might well do the opposite of conferring a benefit on future generations. Consider the more or less ubiquitous problem of dealing with endangered species. Extinction is, for all currently practical purposes, irreversible. Since there are tens of millions of species – and given that genetic engineering may create millions more – which ones should we protect? The mere possibility that an endangered frog or frond harbors a valuable chemical is simply too slight to provide an incentive to any pharmaceutical company to bother to find out. Pharmaceutical companies develop ‘drugs based on molecules that scientists can create for themselves in the laboratory, using new combinatorial chemistry techniques’ (Macilwain, 1998, p. 535; Eisner, 2003). No industry sees any advantage in bioprospecting.17 How, then, can we fashion an argument for saving endangered species on the basis of their instrumental value to future generations? Ignorance provides only a shaky basis for preservation. Whether or not ignorance makes preservation the risk-averse strategy depends on what we are ignorant about when we have to decide. Thus, Ready and Bishop (1991) contrast two games played against nature. In one of these, when the decision must be made either to preserve the species or to develop its habitat and thus drive it to extinction, we know that the creature holds the cure to a dreaded disease, but we do not know whether the disease will actually become a human threat. In the other game we know that the disease will be a threat but not whether the species in question will hold a cure. Ready and Bishop show that in the first game preservation is the risk-averse (minimax loss) solution. But in the second ignorance at the time of the decision makes development and thus extinction the risk-averse choice. We cannot, in that game, penalize the development option for the loss of a cure that we do not know even exists. If this

The collaboration of ecologists and economists

211

makes us uncomfortable, the obvious alternative, though not necessarily a realistic one, is to prevent all extinctions until we know all about each of tens or even hundreds of millions of species – at a significant research cost per species. We are back where we started with widespread and absolute prohibitions on development trumping the advance of technology that has so far improved the human lot. Technological advance may make our great grandchildren much better off than we – as it has made us better off than the pioneers who battled nature. Shall we act out of fear or hope? A second problem involves what we must do to prevent extinction. Is preservation in zoological or botanical gardens sufficient? If not, how much of a host ecosystem must be protected? Of what must the protection consist? Can any human activity in the neighborhood be allowed? What sort and how much? For nearly every taxon in nearly every place – only a few tiny islands are exceptions – invasive or non-native species have vastly increased the available biodiversity, more than doubling the flora on large islands like New Zealand and Hawaii.18 If the number and variety of plants and animals continues rapidly to increase in most ecosystems owing to invasions and if genetic engineering can produce nearly infinite amounts of additional genetic variety, if required, where are scarcities likely to arise? In short, since ignorance means, in most of the major decision settings for which the SMS is advocated, inability to know when a standard produces safety, let alone what it is the minimally intrusive or costly way to achieve safety, the SMS concept may simply shift the terms of the ongoing discussion about cooperation, rather than producing agreement on how to cooperate. Would it not be preferable if, chastened by ignorance and uncertainty, ecologists and economists did not increase their reliance on their assumptions but questioned even whether what they know is true? Then they might work together in a framework of common sense and respect – honoring intellectual virtues such as clarity, openness to the opinions of others, the avoidance of righteousness and the recognition that one may be wrong.

RECOMMENDATIONS FOR BRIDGING THE GAP After this diagnosis the question remains: what is the treatment plan? What, if anything, can be done to foster the ardently desired collaboration between ecologists and economists in the applied settings that could make so much difference to public policy dealing with the environment? Here are several suggestions, the first negative, the others positive.

212

The evolution of water resource planning and decision making

Regulatory agencies should not expect blue ribbon committees to resolve philosophical problems that stand in the way of collaboration. While it is flattering to be chosen to participate in committees of ‘the great and the good’ and while the participants may actually learn something from the discussions, the chance that an ad hoc group will produce a consensus report that represents a breakthrough seems vanishingly small. Bromides, nostrums, invocations of the obvious and pabulum are more likely to emerge as committees find ways to pack squared circles into banalities and though these may trump a complete breakdown in communications, at least in expected value terms, the actual results are not likely to be much different in most experiments. And panels of interdisciplinary experts compete with other ways to spend limited budgets that seem more promising. An alternative strategy for agencies is to bring together teams of practitioners/ researchers whose interests and experience are more applied than theoretical, with the understanding that each team will stay together for a significant period of time, several years at least, and will, during that time, be expected to provide useful input to actual decisions – input that reflects real collaboration, not one chapter of ecological truth followed by another of economic truth.19 Parallel play cannot be the standard for interdisciplinary research. The agency should not specify in advance the approach or methodology to be taken, but there would be an explicit expectation that state-of-the-art predictive models, where these exist, would be applied where appropriate. And, given that benefit-cost analysis is unlikely to disappear from the government rulebook (unless the Obama administration issues an Executive Order on Regulatory Review that abandons it), techniques that produce summary measures in some units analogous to prices may be used. These techniques might be as familiar as benefit-cost and cost-effectiveness analysis or as challenging as multi-attribute utility analysis. Whatever is used, there would be no pretence that it represents the one true way to value ecosystem services. When seeking to value or price ecosystem services, agencies should look as much at the cost as at the benefit side of the analysis. Economists and ecologists may agree on ways to describe (if not to value) damage to the environment and on ways to limit or minimize the costs involved in avoiding or mitigating that damage.20 Collaborative efforts can also succeed if directed to cost-effective methods for analysing alternatives. For example, it would be useful to consider how such methods as complementary analysis for designing species survival strategies and habitat and wetland evaluation approaches (for example, Habitat Evaluation Procedure (HEP), Habitat Evaluation System (HES) and Wetlands Evaluation Techniques (WET)) can meaningfully be costed and used in predictive modeling settings to answer questions such as, ‘What is the cheapest way to get a specified wildlife population effect?’

The collaboration of ecologists and economists

213

At a somewhat more abstract level, it would be interesting to see if sustained effort could put some empirical meat on the bones of the SMS idea. In particular, it should be possible to apply the SMS idea where there exist at least some working predictive ecological models. Could one show in a case study or two what would be given up in return for varying levels of safety (inevitably in probabilistic terms) in view of the prevailing levels of ignorance about model parameters and functional forms? At a still greater level of generality, agencies might support explicitly cross-disciplinary research aimed at developing tools and techniques acceptable to both ecologists and economists. It would be arrogant to specify what these might look like or from what traditions they might spring, but there seems to be no lack of candidate ideas to examine in the world of decision analysis.21 Finally, recognizing that committees bringing together ecologists and economists to study environmental policy will continue to be created, they are bound to continue to confront the demand for ecological damage or production functions. While economists may acknowledge the infinite value of nature as a whole, decisions have to be made at the margin at least in the sense of the particular policy or project. Whether or not the natural world is worth at least $33 trillion because of its life-support functions will not make it any less important to operate in a way that attempts to do the best with what we have, including knowledge of that natural world as well as knowledge of human-created technologies. For the long haul, perhaps the best we can hope for is that the focus of discussion in such committees will slowly shift toward more ways to distinguish situations in which extreme risk aversion is the mind set of choice from situations in which we can, as an engineer might say, uncouple the parts of the system and deal with the one directly affected by whatever proposal is under discussion.

ACKNOWLEDGMENTS We are grateful to Charles Howe and Duane Baumann for comments on an early outline version of this chapter and to A. Myrick Freeman, Charles Howe, Peter Loucks, Larry MacDonnell and V. Kerry Smith for extensive comments on a full draft. None of them, needless to say, bear any responsibility for this product. We also appreciate and have tried to reflect the comments obtained from assembled members of the Institute for Water Resources (IWR) during an authors’ meeting at Fort Belvoir in June 2004.

214

The evolution of water resource planning and decision making

NOTES 1.

2. 3.

4.

5. 6.

7.

8.

9. 10. 11.

12.

Judging by reactions to earlier versions of this chapter, it is important to emphasize here that this statement is not meant to sweep up all ecologists or all economists. It ignores not only variations across individuals but also across subdisciplines. In particular, it has been suggested that for the label ecologists we should substitute conservation biologists, as being more likely to capture what our label implies. But the experiences that triggered our interest in this problem involved people labeled as ecologists and we shall continue to use that broader name. For a nearly contemporaneous look at the field of aquatic ecosystem modeling, see Russell (1975). Status is here fudge for health. Some participants explicitly said that the goal was to be able to produce indices of ecosystem health analogous to the daily reports of the status of air quality routinely found in newspapers. Suter, however, then at ORNL had recently (1993) persuasively argued that this analogy to human health is neither meaningful nor helpful. To anticipate the end of the story on the accomplishment dimension, the EPA went through a change of research leadership after about one-third of the project time and money had been expended. The new Assistant Administrator killed the project, leaving both groups high and dry with only a few focus group exercises as outputs. Nonetheless, an enterprising graduate student never gave up on publication and managed to place a multi-author paper in Conservation Ecology; Schiller et al. (2001). Economists agreed with this characterization. Michael Toman, then at RFF, allowed that it amounted to a serious underestimate of infinity. For example, Freeman wrote notes criticizing such gaffes as the use of gross landing values from fisheries instead of the net value or profit, the latter in many or perhaps most cases of open-access fisheries being zero or even negative. (personal communication; Freeman, 2003). Marshall (1920) continues: ‘Now, if the nation as a whole finds its stock of planing machines or ploughs inappropriately large or inappropriately small, it can redistribute its resources. It can obtain more of that in which it is deficient, while gradually lessening its stock of such things as are superabundant: but it cannot do that in regard to land; it can cultivate its land more intensively but it cannot get more . . . [F]rom the economic and from the ethical point of view, land must everywhere and always be classed as a thing by itself’ (Appendix G, p. 28). For a good discussion of the views of Marshall with respect to land as a factor in production, see El Serafy (1991, pp. 168–75, esp. p. 169). This statement glosses over a non-trivial problem: identifying the people concerned or, said a different way, the people whose preferences are to count in valuing the policy. As so-called non-use benefits or damages have become more respectable as components of analyses this question has loomed even larger than it was when Whittington and McRae raised it for the profession in their 1986 paper (Whittington and McRae, 1986). It is necessary practically that the technical outputs of the ecological damage functions be translated into terms, indeed probably into pictures or images of some sort, to which lay people can relate. See the brief discussion of such an effort previously in war story 2. The biggest breakthrough was almost certainly the acceptance of these methods, with some qualifications and cautions, by the National Oceanic and Atmospheric Administration (NOAA) Blue Ribbon Panel of Nobel Laureates (see NOAA 1993). For anyone who wants to learn more about the indirect methods, there is no better place to begin than with Freeman (2003). Similarly, though it is somewhat more dated, an excellent initial source on the contingent or direct methods is Mitchell and Carson (1989). For example, see Diener (1984), Erskine (1964), Guring (1960), Griffin (1986), Lane (1991, 1993), Diener et al. (1985), Argyle (1986) and Brickman et al. (1978). People in wealthier societies may be happier than those in impoverished ones, but this suggests

The collaboration of ecologists and economists

13. 14. 15.

16. 17.

18.

19. 20. 21.

215

nothing about the relation between income or preference-satisfaction and happiness. In wealthier societies basic needs are more likely to be met; people have employment and health care, which do contribute to well-being. For an excellent discussion of this major difficulty, as well as suggestions for improving matters, see Harris et al. (1989). Also highly relevant are the thoughts of Fischhoff (1991) and Slovic (1995). It is important to note that this technique is the one recommended by the highly influential NOAA panel already mentioned. John Krutilla’s influential 1967 paper, ‘Conservation reconsidered’, made the case that naturalness or wildness of places would be of increasing value as the exploitation of the natural world for both marketed goods and mass recreation services grew in importance, the latter because of increasing population enjoying higher incomes and more leisure time, all the while learning by doing (Krutilla, 1967). See, for example, Toman (1994), Ready and Bishop (1991) and Perrings and Pearce (1994). When, in 1991, drug maker Merck responded to pleas of environmentalists by investing about $1 million – less than one-tenth of 1 per cent of its annual research budget – in taxonomic research in Costa Rica, it reaped a public relations bonanza because environmentalists never wearied of citing and celebrating the project as vindicating the economic value of wild rainforest species. Merck ‘terminated its landmark bioprospecting contract with Costa Rica in 1999 after producing no commercially viable products’ (Foreman, 2001, p. C1). Other efforts at bioprospecting in beautiful places have been similarly fruitless. Shaman Pharmaceuticals, which followed clues in ethnomedicine, filed for bankruptcy protection in 2001. Experts in drug discovery caution, ‘The idea of exploiting the rain forests to find wonderful drugs is, quite frankly, not credible’ (David Galas, President of Darwin Molecular, quoted in Macilwain, 1998, p. 537). Drug discoveries have been made (as by Merck) in toxic waste dumps and similarly disgusting and hazardous places where creatures evolve, for example, resistance to toxins. The toxic waste lagoons of Rahway, New Jersey might be preserved for bioprospecting more plausibly than the rainforests of the Amazon. Sax et al. (2002, p. 774) have observed a ‘highly consistent, approximately twofold, increase in the species richness of plants on oceanic islands’ owing to plant introductions and invasions. Historically about 2000 plant species existed in the wild in New Zealand; fewer than ten are known to have become extinct. An additional 2000 exotic species have migrated to New Zealand, doubling plant biodiversity on that island (Sax et al., 2002, p. 768). Likewise, in Hawaii ‘the native flora consists of about 1100 species – and an additional 4,600 exotic plants have been identified there . . .’ (Vitousek, 1990, p. 8). We have been told that such teams operate successfully within the water resources operations of the US Army Corps of Engineers. An excellent study by Barnthouse et al. (1988) on the effect of cooling towers on fish recruitment, for example, finessed the problem of valuation by proposing an inexpensive and effective method of mitigation. Since the late 1990s, the US Department of Energy, Office of Research has been supporting such work on a modest scale. For a product of one such collaboration, organized around ecosystem valuation in the face of uncertainty about catastrophic thresholds in ecosystem behavior, see Batabyal et al. (2003).

REFERENCES Argyle, M. (1986), The Psychology of Happiness, New York, NY: Methuen and Co. Ltd.

216

The evolution of water resource planning and decision making

Barbier, E.B., G.M. Brown, Jr, S. Dalmazzone, C. Folke, M. Gadgil, N. Hanley, C.S. Holling, W.H. Lesser, K.G. Mäler, P. Mason, T. Panayotou, C. Perrings, K. Turner and M. Wells (1995), ‘The economic value of biodiversity’, in H. Heywood (ed.), Global Biodiversity Assessment, Cambridge: Cambridge University Press, pp. 823–914. Barnthouse, L.W., R.J. Klauda, D.S. Vaughan and R.L. Kendall (eds) (1988), Science, Law and Hudson River Power Plants: A Case Study in Environmental Impact Assessment, monograph no. 4, Bethesda, MD: American Fisheries Society. Batabyal, A.A., J.R. Kahn and R.V. O’Neill (2003), ‘On the scarcity value of ecosystem services’, Journal of Environmental Economics and Management, 46 (2) (September), 334–52. Blamey, R., M. Common and J. Quiggin (1995), ‘Respondents to contingent valuation surveys: consumers or citizens’, Australian Journal of Agricultural Economics, 39 (1), 263–85. Bohm, P. (1994), ‘CVM spells responses to hypothetical questions’, Natural Resources Journal, 34 (1), 37–50. Boyle, K.J., W. Desvousges, F.R. Johnson, R.W. Durnford and S.P. Huntington (1994), ‘An investigation of part-whole bias in contingent valuation studies’, Journal of Environmental Economics and Management, 27 (1) (July), 64–83. Brickman P.D., D. Coates and R. Janoff-Bulman (1978), ‘Lottery winners and accident victims: is happiness relative?’, Journal of Personality and Social Psychology, 36 (8), 917–27. Ciriacy-Wantrup, S. (1963), Resource Conservation: Economics and Policies, Berkeley, CA: University of California. Costanza, R., R. d’Arge, R. de Groot, S. Farber, M. Grasso, B. Hannon, S. Naem, K. Limburg, J. Paruelo, R. O’Neill, R. Raskin, P. Sutton and M. van den Belt (1997), ‘The value of the world’s ecosystem services and natural capital’, Nature, 387, 253–60. Daly, H.E. (1991), Steady-state Economics, 2nd edn with new essays, Washington, DC: Island Press. Daly, H.E. (1996), Beyond Growth: The Economics of Sustainable Development, Boston, MA: Beacon Press. Desvousges, W., A. Gable, R. Dunford and S. Hudson (1993), ‘Contingent valuation: the wrong tool to measure passive use values’, Choices, 8, 9–11. Diener, E. (1984), ‘Subjective well-being’, Psychological Bulletin, 95, 542–75. Diener, E., J. Horwitz and R.A. Emmons (1985), ‘Happiness of the very wealthy’, Social Indicators Research, 16, 263–74. Drury, W. (1998), Chance and Change, Berkeley, CA: University of California Press. Eisner, T. (2003), ‘Hard times for chemical prospecting’, Issues in Science and Technology, 19 (4), 47–8. El Serafy, S. (1991), ‘The environment as capital’, in R. Costanza (ed.), Ecological Economics: The Science and Management of Sustainability, New York: Columbia University Press, pp. 168–75. Erskine, H. (1964), ‘The polls: some thoughts about life and people’, Public Opinion Quarterly, 28, 517–28. Fischhoff, B. (1991), ‘Value elicitation: is there anything there?’, American Psychologist, 46, 835–47. Foreman, J. (2001), ‘Drug hunters can’t see the rainforest for the medicines’, Boston Globe, 27 March, p. C1.

The collaboration of ecologists and economists

217

Freeman, A.M. (2003), The Measurement of Environmental and Resource Values: Theory and Methods, Washington, DC: Resources for the Future. Gilbert, F.S. and J. Owen (1990), ‘Size, shape, competition and community structure in hoverflies’, Journal of Animal Ecology, 59, 21–39. Griffin, J. (1986), Well-Being, Oxford: Oxford University Press. Guring, G. (1960), Americans View their Mental Health. New York: Basic Books. Hanemann, W.M. (1991), ‘Willingness to pay and willingness to accept: how much can they differ?’, American Economic Review, 81, 635–47. Harris, C.C., B.L. Driver and W.L. McLaughlin (1989), ‘Improving the contingent valuation method: a psychological perspective’, Journal of Environmental Economics and Management, 17 (3), 213–29. Hays, S.P. (1985), Beauty, Health and Permanence: Environmental Politics in the U.S. 1955–1985, Cambridge, MA: Cambridge University Press. Heilbroner, R.L. (1961), The Worldly Philosophers, New York: Simon and Schuster. Johansson-Stenman, O. (1999), ‘Environmental regulation in the presence of interdependent and context-dependent preferences and social norms’, unpublished manuscript, Department of Economics, Göteborg University. Knetsch, J.L. (1994), ‘Environmental valuation: some problems of wrong questions and misleading answers’, Environmental Values, 3, 351–68. Knetsch, J.L. and J.A. Sinden (1984), ‘Willingness to pay and compensation demanded: experimental evidence of an unexpected disparity in measures of value’, Quarterly Journal of Economics, 99, 507–21. Krutilla, J.V. (1967), ‘Conservation reconsidered’, American Economic Review, LVII (4), 777–86. Lane, R.E. (1991), The Market Experience, New York: Cambridge University Press, Chapter 26. Lane, R.E. (1993), ‘Does money buy happiness?’, The Public Interest, 113, 56–65. Locke, J. (1963), ‘Second treatise of government’, in P. Laslett (ed.), Locke’s Two Treatises of Government, Cambridge: Cambridge University Press. Macilwain, C. (1998), ‘When rhetoric hits reality in debate on bioprospecting’, Nature, 392, 535–40. Marshall, A. (1920), Principles of Economics, 8th edn, London: Macmillan, Chapter 4. Marx, K. (1972), ‘Grundrisse zur kritik der politischen okonomie’, quoted in W. Leiss, The Domination of Nature, New York: Braziller. McMichael, A.J., C.D. Butler and C. Folke (2003), ‘New visions for addressing sustainability’, Science, 302, 1919–20. Millennium Ecosystem Assessment (2003), Ecosystem and Human Well-being: A Framework for Assessment, Washington, DC: Island Press. Mitchell, R.C. and R.C. Carson (1989), Using Surveys to Value Public Goods, Washington, DC: Resources for the Future. Nadeau, R.L. (2003), The Wealth of Nature: How Mainstream Economics has Failed the Environment, New York: Columbia University Press. National Oceanic and Atmospheric Administration (NOAA) (1993), ‘Natural resource damage assessments under the Oil Pollution Act of 1990’, Federal Register, 58 (10), 4601–14. Noss, R.F. (1991), ‘From endangered species to biodiversity’, in K.A. Kolm (ed.), Balancing on the Brink of Extinction, Washington, DC: Island Press, pp. 227–46.

218

The evolution of water resource planning and decision making

O’Neill, R.V. (2002), ‘Is it time to bury the ecosystem concept? (with full military honors, of course!)’, Ecology, 82 (12), 3275–84. Perrings, C. and D.W. Pearce (1994), ‘Threshold effects and incentives for the conservation of biodiversity’, Environmental and Resource Economics, 4 (1), 13–28. Randall, A. and M.C. Farmer (1995), ‘Benefits, costs and the safe minimum standard of conservation’, in D.W. Bromley (ed.), Handbook of Environmental Economics, Oxford and Cambridge: Basil Blackwell Ltd., pp. 26–44. Ready, R.C. and R.C. Bishop (1991), ‘Endangered species’, American Journal of Agricultural Economics, 73 (2), 309–12. Ready, R.C., J.C. Buzby and D. Hu (1996), ‘Differences between continuous and discrete contingent value estimates’, Land Economics, 72, 397–411. Rorty, R. (1991), ‘Science as solidarity’, in R. Rorty (ed.), Objectivity, Relativism and Truth, Cambridge: Cambridge University Press, pp. 35–45. Russell, C.S. (ed.) (1975), Ecological Modeling in a Resource Management Framework, Washington, DC: Resources for the Future. Sax, D.F., S.D. Gaines and J.H. Brown (2002), ‘Species invasions exceed extinctions on islands worldwide: a comparative study of plants and birds’, American Naturalist, 160, 766–83. Schiller, A., C. Hunsaker, V. Dale, C. Russell, M. Kane, G. Suter, G. Pion, M. Jensen and V. Konar (2001), ‘Communicating ecological indicators to decision makers and the public’, Conservation Ecology, 5, 1. Schkade, D.A. and J.W. Payne (1994), ‘How people respond to contingent valuation questions: a verbal protocol analysis of willingness to pay for environmental regulation’, Journal of Environmental Economics and Management, 26, 88–109. Sen, A. (1977), ‘Rational fools: a critique of the behavioral foundations of economic theory’, Philosophy and Public Affairs, 6, 317–44. Slovic, P. (1995), ‘The construction of preferences’, American Psychologist, 50, 364–71. Smith, A. (1991), An Enquiry into the Nature and Causes of the Wealth of Nations, first published 1776, Oxford: Oxford University Press. Stern, P.C. and T. Dietz (1994), ‘The value basis of environmental concern’, Journal of Social Issues, 50, 65–84. Stern, P.C., T. Dietz and L. Kalof (1993), ‘Value orientations, gender and environmental concern’, Environment and Behavior, 25, 322–48. Suter, II., G.W. (1993), ‘A critique of ecosystem health concepts and indexes’, Environmental Toxicology and Chemistry, 12, 1533–9. Takacs, D. (1996), The Idea of Biodiversity, Baltimore, MD: Johns Hopkins University Press. Toman, M. (1994), ‘Economics and “sustainability”: balancing trade-offs and imperatives’, Land Economics, 70 (4), 399–413. US Environmental Protection Agency (EPA) (2001), ‘Review of the draft analytical plan for EPAs Second Prospective Analysis – benefits and costs of the Clean Air Act, 1990–2020’, Science Advisory Board EPA-SAB-Council-ADV-01-004, Environmental Board (1400A) September, an advisory by a special panel of the Advisory Council on Clean Air Act Compliance Analysis, accessed 23 January, 2009 at www.epa.gov/science1/pdf/councila01004.pdf. US Environmental Protection Agency (EPA) (2002), ‘A framework for the economic assessment of ecological benefits’, Science Policy Council, Social Science Discussion Workgroup, accessed at www.epa.gov/osa/spc/pdfs/feaeb3.pdf. Vaughan, W.J., C.S. Russell, D.J. Rodriguez and A.C. Darling (1999), ‘Willingness

The collaboration of ecologists and economists

219

to pay: referendum contingent valuation and uncertain project benefits’, InterAmerican Development Bank working paper ENV-130, Washington, DC. Vaughan, W.J., C.S. Russell, D.J. Rodriguez and A.C. Darling (2000), ‘Costbenefit analysis based on referendum CV: dealing with uncertainty’, Journal of Water Resources Planning and Management, 126, 351–7. Vitousek, P.M. (1990), ‘Biological invasions and ecosystem processes; towards an integration of population biology and ecosystem studies’, Oikos, 57, 7–13. Whittington, D. and D. MacRae (1986), ‘The issue of standing in cost/benefit analysis’, Journal of Policy Analysis and Management, 5, 665–82.

6.

Political decision making: real decisions in real political contexts Peter Rogers, Lawrence MacDonnell and Peter Lydon

INTRODUCTION The problems posed by having to make explicit choices about the environment, something governments now have to do, have pointed up the weakness of modern government. So long as the problems faced by governments could be defined as technical problems, then they could be passed along to experts and the solutions arrived at by a nonpolitical or covertly political process. But environmental problems quickly became value judgment problems. Moreover, they obviously require governmental action. (Haefele, 1973, p. 15)

There seems to be great misunderstanding of what the concept of governance encompasses. In the eyes of many technical persons (engineers, economists and development planners, for example) governance is just about laws, regulations and institutions, typically exogenously given. The common belief is that there is an ideal set of laws, regulations and institutions that will result in good governance of water resources regardless of what else is happening in the country. Practical experiences, however, are quite different. In many settings apparently rational laws and regulations and appropriate institutional frameworks are in place, but the actual performance is nonetheless not good. Practical observers will note that unless textbook laws, institutions and regulations are based on a working political system, they cannot function as intended. In particular, one cannot consider a system of resource governance independent of the political system that is its framework, source and operating context. For an understanding of water governance, then, what is needed is an examination of the full interaction among politics, laws, regulations, institutions, civil society, water service producers and providers and the consumer-voter. The aim of this chapter is to take some initial steps down that road by: ●

Broadening the set of political ‘models’ considered beyond the familiar, specifically by introducing the ‘Polis’ Model attributed to Stone (2002); and 220

Political decision making ●

221

Exploring the complex history of the interstate sharing and management of the Colorado River in the light of alternative models of the political process.

The modest goal is to compare insights and thoughts about the future – both likely and desirable actions and outcomes in the light of the contrasting theories. Political decision making for water has many levels of geographic scale and temporal sequencing. Often different levels, either spatial or chronological, overlap or are simultaneously in play, giving rise to subtle but real conflicts and incoherencies. For instance, in the case of scale, the need for an articulated federal water policy or for a national level water policy body can only be resolved at the highest political levels of government – leadership is required from the White House and, depending on the details of the arrangements contemplated, direct action by both houses of Congress may be necessary. In fact, the US Constitution is remarkably silent on water management. It implies by its silence that water management is a state subject only to be taken up at the national level when there is a compelling federal interest. Most water issues were then and still are local and can best be resolved at that level. But the federal government has become involved both in specific issue areas and in specific geographic contexts, in response to evolving concerns of interest groups and of the public more broadly, as has been described previously in Chapters 2 and 4 especially. The actual individuals involved in deliberations in Washington come to the capital from particular states, valleys and counties and are involved in their home districts’ or states’ very local projects, which will be heavily influenced by any changes in the current federal arrangements. The time dimension has its own subtle rigidities that affect the political process and its sequencing. For example, often certain determinations or decisions, usually broad overarching ones, must be made before other actions can be taken. So the Carey Act of 1894 and the Reclamation Act of 1902 had to be formulated and in place before many consequential decisions for investments in western irrigated agriculture could be made. However, passage of even one such piece of legislation is the outcome of a major political struggle that cannot be undertaken lightly or repeated every year. Hence, huge inertia works against changing policies once they are in place and thus some flexibility and responsiveness are quickly lost from each new water management innovation. In addition to the inability of Congress to fight more than a limited number of serious battles in a given period, the major federal agencies involved do not wish to have their own programs disrupted by large policy changes and display a

222

The evolution of water resource planning and decision making

strong bureaucratic resistance to change. Finally, at any given moment, water stakeholders and interest groups have built their positions and developed their sources of political power by adapting to the status quo and they too can be relied upon to demonstrate large resistance to change. All of these inertial problems reside in any area of governance, such as energy or even military affairs, where there is always a powerful desire to fight the last war rather than change methods. Is inertia particularly oppressive in the water area? Is there something special in the nature of water or its provenance that makes its governance especially liable to the type of political rigidities and frictions just described? Given the difficulties described below experienced by federal agencies in achieving desired outcomes in the Colorado setting, the answer might seem to be yes. But it is perhaps more realistic, if less dramatic, to remain skeptical of such a claim. Sagoff (personal communication, 2004) points out by way of background that: In the nineteenth century, Congress encouraged settlers to migrate to the West. The Homestead Act of 1862 and the land acts that followed sought to build a Jeffersonian democracy of small freeholders throughout the arid West. These landowners were supposed to form associations patterned on town meetings to settle controversies that might arise among them. In refusing to allow public rangeland to be fenced, for example, Congress in 1885 perpetuated the hope that settlers could collaborate to manage common resources. The idea was not that Congress should deal with water and other resources – but that the people in those places would manage them. What happened, of course, was mayhem. By the end of the nineteenth century, timber, cattle, railroad and mining barons, after concentrating their economic and political hold on Western land and water, plundered places and ravaged resources that Congress had hoped associations of farmers, tradesmen and other small landowners would protect. Theodore Roosevelt spoke for the conservation movement by demanding that corporations ‘be so supervised and regulated that they shall act for the interest of the community as a whole’. The sparse citizenry and the inchoate local government of the West, however, could hardly challenge mining, timbering and grazing barons. There had to be some form of governance – but no polity existed to take up the political reins. The result was that Congress asserted its power over Western resources basically to keep the robber barons from usurping them. Bureaucracies justified their power by appealing to expertise – the Progressive era faith that science could replace politics by identifying the public interest objectively. However, as the West became populated and the states gained power – and local interests became more diverse – layer upon layer of authority formed – leading to, gridlock, paralysis and a never-ending policy loop.

Nonetheless, under cover of apparent stasis, roles can change subtly – even if the final effect is to reinforce a status quo. Bonnor (2002), in recounting Buffalo Bill’s important involvement with irrigation in

Political decision making

223

Wyoming at the turn of the twentieth century, describes the Reclamation Service’s new professionals of that time as dedicated idealists who stood up for the public interest in opposing the local special interests. Compare this with Espelande’s (1998) history of blocking the construction of the Orme Dam in the 1990s. Here the US Bureau of Reclamation (USBR), an ‘Old Guard’ of traditional engineering elites loyal to traditional interest groups, confronted a ‘New Guard’ of young experts who viewed their professional expertise to be ‘rationality and planning, a commitment to commensuration and to making the bureaucracy more democratic’ (p. 136). The New Guard aligned itself with a non-traditional interest group – the Yavapai Apaches – in stopping the dam and saving the Yavapai reservation. Over a long period of time we can expect, then, to see ebbs and flows of public interest behavior on the part of even the most hardened engineering agencies. In this example the USBR flipped from public interest idealism to rigid interest politics and then back to a more centered public interest posture. Even for federal actions within the existing water non-policy, there is major resistance to any change in implementation. The political system has already adjusted to the status quo and each component knows how best to achieve its goals under the familiar circumstances. This makes the case of the Colorado River Basin, which we consider below, of particular salience because the federal government has played such an important role in promoting water development and, more recently, in facilitating needed changes. The federal role itself boils down to a set of water allocation and reallocation decisions smoothed by financial payoffs to some of the agricultural interests. What to most participants looks like a set of small decisions at the micro level, in reality could not have happened without strong action at the Congressional level. There is a further long-term line of development we want to watch. The historical tradition is one of local interests in water for economic development, traditionally supported and argued over at the national level, but now we see a strong national interest in environmental protection beginning to assert itself at the local level. In the middle are all the beneficiaries of the traditional system. (See Chapters 2 and 4 for more on this theme.) Politics is the arena in which changing values of water are fought. Water as a public resource is especially susceptible to political influences. Substantial individual and public entity rights to sue over water act as a brake on change, but this brake is eased a bit by the need for redefinition of rights to claim water. Such redefined rights must reflect the core private benefits which water rights carry, while separating out and preserving their public good dimensions. The tension between these divergent paths leads directly to political immobilization.

224

The evolution of water resource planning and decision making

THE PRINCIPLES UNDERLYING WATER GOVERNANCE The need for collective action, and hence the organization of government, stems from the realization that without collective enforcement of institutions, such as property rights, the anarchy which would likely result would only serve to render human life nasty, brutish and, ultimately, short. In a world inhabited by imperfect people, collective organization is required to prevent bad people from doing harm as much as enabling good people to do good (noting, of course, that the good and bad people may be the same people). The principles underlying water governance are based upon theories of collective behavior. Unfortunately, no one, simple theory explains every situation and few universal rules exist. But under almost every circumstance in our day, the state plays an important role in defining property rights regimes, a major foundation of every society’s collective behavior. Different property regimes, with their associated rights and obligations, include: ●

●

●

●

Open access property – There is no defined group of users or owners and the benefits of the resource are available to anyone. Individuals have both privilege (the ability to act without regard to the interests of others) and no right (no capacity to affect the actions of others) with respect to use rates and maintenance of the asset. This applies particularly where the shared resource is so plentiful that the distributive and management issues of scarcity have not arisen. Common pool property – The management group (the owners) has a right to exclude non-members and non-members have a duty to abide by the exclusion. Individual members of the management group have both rights and duties with respect to use rates and maintenance of the property. Private property – Individuals have the right to undertake socially acceptable uses and a duty to refrain from socially unacceptable uses. Others (non-owners) have a duty to allow socially acceptable uses and a right to expect that only socially acceptable uses will occur. State (governmental) property – Individuals have a duty to observe use and access rules determined by the controlling agency of the state. The agency has the right to determine the access and use rules.

In most countries water is the ‘property’ of the state (i.e. the government),1 but a typical history of water property rights follows a path starting as open access, which is appropriated by a group and becomes common pool property. The state ultimately appropriates these rights from the common pool resource ownership group, usually acknowledging

Political decision making

225

existing uses, to create state property. The state is then faced with deciding how to deploy the unallocated resource to the national advantage. In various countries the state decided this can be best achieved by devolving licenses or property rights to some individuals and groups in civil society. How that can be done fairly and equitably without reducing incentives for efficient use of the resource is the central issue in governance in many nations at the beginning of the twenty-first century. The USA is one of a handful of countries allowing private ownership of water rights, but even for the USA, most of the resource is still handled under state or common pool property relationships. That is, the uncaptured water is held in common subject to individual rights to make certain uses. The problems with water resources governance are due not only to the problems of water rights, but also to the unusual, contradictory nature of water itself. Water is a fugitive resource – it has public good dimensions, its supply engenders natural monopolies and its use both causes and suffers from major externalities.

MODELS OF GOVERNANCE Traditional views of national water governance in the USA appear to be based upon a set of assumptions about how the federal system works. Those assumptions may no longer be relevant. The rational, top-down approach whereby laws and regulations are promulgated by Congress and implemented by the federal agencies in concert with the state and local authorities and with the concurrence of stakeholders and interest groups is only a sketch of what really happens. Nevertheless, there are several versions of that sketch. Here are three: ●

●

Rational I The bureaucratic politics and process model – This model is based on political-bureaucratic bargaining in a federal system. Its focus is typically the Executive Branch, with the elected legislature hardly in the picture. Classic cases are drawn from US foreign policy problems, such as the 1962 Cuban missile crisis in which Congress was not a major player (Allison, 1971); but this is the opposite of the situation in water, where the Executive Branch until recently was largely excluded by Congress.2 Rational II The Congressional behavior model – A second federal model concentrates on the elected Congress, where the explanatory principle for Congressional behavior is that Congressional representatives are single-minded seekers of re-election. It follows from this that representatives’ goals are to improve the welfare

226

●

The evolution of water resource planning and decision making

of their constituents in the shortest possible time frame. The realities of information processing are also important in describing Congressional behavior. With humanly limited capacities to absorb and judge, legislators are so overloaded with information that they have to be extremely selective in committing their attention. Legislators deal with this by specializing in a particular and limited subject area. In other areas they take cues from sources (colleagues, outside groups, committee reports) that they trust. Rational III The interest group model – When national legislators think about the constituency that elected them, they rarely, if ever, see an undifferentiated mass of individual voters. They instead see categories of interests; in some cases, only a few dominant interests. But there are literally thousands of active interest groups – environmental, agricultural, industrial, professional and academic, just to name some of the more obvious players – involved with water policy (734 000 public interest groups of all types were registered with the Internal Revenue Service in 1998 (Bornstein, 2004)). These groups often have overlapping concerns and overlapping memberships. They constitute vital channels for particular publics to participate in the federal governmental process. Pork barrel projects are the fodder for the well-known iron triangles (McCool, 1987) of legislators, bureaucrats and active interest groups that develop in specific issue fields. (The term ‘pork barrel’ was first used to describe the exchange of benefits in successive US Rivers and Harbors Acts.)

Useful developments of interest group theory are found in Dahl’s (1961) regime theory and in Buchanan and Tullock’s (1962) public choice theory. They attempt to predict which pattern of decision making will prevail based upon the concentration or diffusion of costs and benefits of public choices. For example, the problem with water governance in the USA is the tendency to privatize (concentrate) the benefits and socialize (diffuse) the costs. This refers to situations such as federally financed irrigation, where the benefits are concentrated in the hands of a few farmers and the costs are widely dispersed over society. This may be an acceptable situation, since regimes which distribute both benefits and costs widely tend to lead to inertia and underinvestment.

THE POLITICS OF WATER GOVERNANCE The driving force in any area of governance is politics. As already noted, the conventional view of the relationship of politics to governance is based

Political decision making

227

on one or another version of a rational model, in which actors at all levels of government and in the public at large seek to satisfy private desires through the use of government mechanisms. This is seldom a neat and tidy process and in 1936 Harold Lasswell may have said it best in the title of his book: Politics: Who Gets What, When and How? Governance is not seen as a simple linear process, but a discursive and a highly complex set of interactions between laws and institutions, and personal and group interests as well as the general interest. We shall look shortly at the new and expansive analysis of Deborah Stone (2002, p. 261) who brings in further non-ideal elements and says ‘policy is more like an endless game of Monopoly than a bicycle repair’. Approaches to Political Decision Making The literature on politics and political theory and its implications for effective water governance in the USA contains two contrasting models of politics and public decision making. The first, which has come to be called ‘public choice or rational choice’ can be traced to Downs (1957), who attacked an earlier, naive economic theory of politics (ETP) by objecting to the notion that politicians were motivated to try to maximize something called a social welfare function. He hypothesized instead that political parties act in order to obtain income, prestige and power and that politicians are motivated by a vote-maximization objective rather than by altruistic or ideological objectives. Downs concluded that parties formulate policies in order to be elected rather than win elections to get the chance to formulate policies. The second model may be seen as growing out of earlier, institutional analysis such as that found in Maass (1951) who used it in his analysis of the relationship between Congress and the US Army Corps of Engineers (USACE) and in Maass et al. (1962). This approach examines the evolution, development and erosion of popular democratic institutions and sees subtle shifts away from popular democracy, which depends on group political mobilization in forms such as labor unions and fraternal associations, towards personal democracy, which involves increasing atomization of the electorate, with individuals and small groups exerting political influence through contributions of money, leaving the overtly political aspects to paid political professionals. This model is very much in keeping with the ‘bowling alone’ view of institutions of Putnam (2000). More recently, Crenson and Ginsberg (2002) presented a particularly pessimistic view of the general health of democratic institutions and democracy in the USA. They see citizens becoming customers of the government, not its controllers. For this phenomenon, they adduce many reasons, including the size of the population, the lack of direct taxation

228

The evolution of water resource planning and decision making

specifically to fund government’s war-making ability and the role played by television and media in converting citizens to passive consumers. The evolved version of this model replaces the highly rational version of policy analysis by Stone’s (2002) insights, articulated in what she calls the Polis Model. By way of summary contrast, she characterizes the Rational Model taught in schools of public policy as: ● ● ● ● ●

Identify objectives. Identify alternative courses of action for achieving the objectives. Predict the possible consequences of each alternative. Evaluate the possible consequences of each alternative. Select the alternative that maximizes the attainment of objectives.

These steps can be recognized as constituting most of what we do, or attempt to do, in our professional and intellectual lives. They are the foundation of documents like the US Water Resources Council’s (WRC) Principles and Guidelines (P&G) of 1983 (WRC, 1983). So what could possibly be wrong with such an approach? Stone’s response is that it misses the point of politics: A model of political reasoning ought to account for the possibilities of changing one’s objectives, of pursuing contradictory objectives simultaneously, of winning by appearing to lose and turning loss into victory and, most unusual, of attaining objectives by portraying oneself as having attained them . . . Political reasoning is reasoning by metaphor and analogy. Stone, 2002, p. 9

In a series of tables Stone compares and contrasts the rational behavior models of politics with her Polis Model. For example, in the table reproduced here as Table 6.1 the comparison considers: what are the units of analysis, sources of conflicts, sources of ideas and nature of collective action. From this table, two radically different perceptions emerge on the nature of society. The unit of analysis shifts from the individual to the community. Self-interest is extended to include public interest. The conflicts now change from conflicts between self-interests to between selfinterests and the public interest. The nature of collective activity moves from competition to a mixture of cooperation and competition. Most importantly, the criteria for decision making change from maximizing self-interest to the promotion of the public interest and loyalty to people and places. The nature of the information used tends to move from objective to ambiguous, interpretive, incomplete and strategically manipulated. Ultimately, what matters under the Polis Model are ideas, the pursuit of power and the maintenance of alliances.

Political decision making

Table 6.1

229

Comparison of Rational Model with Polis Model

Concepts of Society

Rational Behavior Model

Polis Model

Unit of analysis Motivations

Individual Self-interest

Community Public interest (as well as selfinterest), preserve community, develop alliances

Chief conflict

Self-interest vs public interest

Self-interest vs public interest (commons problems)

Source of people’s ideas and preferences

Self-generation within the individual

Influences from outside

Nature of collective activity

Competition

Cooperation and competition

Criteria for individual decision making

Maximizing fulfillment of self-interest, minimizing cost

Loyalty (to people, places, organizations, products), maximizing self-interest, while promoting public interest

Building blocks of social action

Individuals

Groups and organizations

Nature of information

Accurate, complete, fully available

Ambiguous, interpretive, incomplete, strategically manipulated

How things work

Laws of matter (e.g. material resources are finite and diminish with use)

Laws of passion (e.g. human resources are renewable and expand with use)

Sources of change

Material exchange

Ideas, persuasion, alliances, pursuit of power, pursuit of own welfare, pursuit of public interest

Quest to maximize own welfare

In a similar fashion, Stone examines each of the concepts of equity, efficiency, needs, liberty, interests, good rules and rights and shows why and how the Rational Model usually does not capture the complexity seen by the Polis Model. Stone essentially argues that, given what is known about political decision making, the questions need to be framed in a different way. To analyse water policy from Stone’s point of view is a challenge to our conventional ways of thinking about water politics.

230

The evolution of water resource planning and decision making

THE COLORADO RIVER BASIN: A CASE STUDY IN WATER GOVERNANCE In this section we use the example of the Colorado River Basin to explore the nature of water governance. The water of the Colorado River and its tributaries is shared among seven states, 30 Native American tribes and two nations (MacDonnell, 2006). There are two interstate compacts and a US Supreme Court decision that apportion uses of the water among the states. There is a treaty fixing Mexico’s share of the basin’s water. With funding from Congress, the USBR has constructed and now operates major dams on the Colorado’s main stream and several of its larger tributaries. There are large-scale, water-based environmental issues in the basin. In short, virtually the entire panoply of water issues requiring some form of governance exist in the basin. Much has been written about the Colorado River Basin.3 The following discussion is organized into three periods (pre-1929, 1929 to 1968 and 1969 to present) and is intended to highlight the development and use of governance mechanisms to address evolving basin concerns. Our purpose is to identify some of the major water-related issues that have arisen in the basin during the last century, to describe the primary institutional and governance responses and to consider the nature of these governance approaches. Pre-1929: The Beginnings The importance of the Colorado River is best understood not in terms of its length, the volume of its water, its utility as a highway of commerce or the fertility of its adjacent lands but in the remoteness and aridity of its setting. Modest in attributes when compared to other large US rivers, such as the Columbia, the Ohio or the Mississippi, the Colorado nevertheless stands out as the major river of the seven US and two Mexican states through which it or its tributaries pass. As a major source of water in a water-limited region, it has long been a focus of attention among competing interests. Governance of water in the American West begins with the prior appropriation doctrine, state-level property rules for determining rights to use water that accord priority to the first to physically capture water and put it to beneficial use. It is a user-initiated system, under state supervision and following state requirements. Beneficial use vests the user with a property right that, among other things, ensures later users cannot interfere with previous users. Once the right is established, its owner is the primary decision maker respecting its use. All of the states with lands within the

Political decision making

231

Colorado River Basin follow some version of the rules of prior appropriation. State prior appropriation rules, however, only govern uses within that state, leaving unresolved the matter of how to share use of interstate waters such as the Colorado River. To establish such interstate agreement, the basin states, with express Congressional authorization formed the Colorado River Commission in 1922. The Commission’s purpose was to negotiate an interstate compact among the states to apportion use of the basin’s water. The US Constitution authorizes states to enter into compacts, essentially contractual agreements that, once ratified by the state legislatures and Congress, take on the force of national law. Such compacts had been used to resolve interstate disputes such as boundary lines but never for apportionment of interstate rivers. The Commission held 29 formal sessions over the course of the year 1922, as well as public hearings and field trips, in its ultimately successful quest for agreement. Unable to agree on specific state shares, the commissioners instead divided the basin into two parts and made apportionments to each sub-basin, Upper and Lower, divided at a point called Lee’s Ferry in the canyons of northern Arizona. Users in each sub-basin were to have the right to consumptively use 7.5 million acre-feet annually of basin water. The faster growing Lower Basin states of Arizona, California and Nevada were authorized to consume an additional 1 million acre-feet before the states were to meet again and apportion the remaining unallocated water.4 In addition, the Compact committed the Upper Basin states of Colorado, New Mexico, Utah and Wyoming to ensure delivery at Lee’s Ferry of at least 75 million acre-feet of water in running ten year periods. Use of the interstate compact authority was an innovative approach. The process brought the seven basin states together for the first time in direct negotiations respecting uses of the basin’s water. It assured the slower growing states in the Upper portion of the basin that there would be water still available for their use whenever demanded by their economies. This assurance, in turn, enabled these states to go along with Congressional funding for federally constructed projects that would benefit California first. Apportionment of water to groups of states left open the question of individual state shares, however. Irrigation interests in the fertile but desert-like Imperial Valley of California desperately needed Congressional funding to build a canal totally within the boundaries of the USA to replace the original system located largely in Mexico. The USBR had determined that a dam constructed in the vicinity of Boulder Canyon near Las Vegas would provide full regulation of this portion of the river, reduce the risk of downstream flooding, provide storage water that could be delivered to downstream

232

The evolution of water resource planning and decision making

users when needed and enable generation of hydroelectricity that could be sold to pay for project costs. And the basin states needed Congress to approve the Compact so it could go into effect. These interests finally converged in the 1928 Boulder Canyon Project Act. This legislation authorized and funded construction of what became known as the Hoover Dam as well as the All American Canal. Storage water was to be provided to downstream users, under contract with the Secretary of the Interior. Because Arizona had refused to sign the 1922 Compact, Congress provided the Compact could go into effect with the ratification of only six states. Herbert Hoover, now president but previously the federal representative to the Colorado River Commission and its chair, declared the six-state Compact in effect in 1929. With this Act, Congress expanded its vision of the Reclamation program well beyond modest projects to provide water for unsettled farm lands, putting the USBR into the business of large-scale, multi-purpose river development. The basin states got important experience in the use of Congress to help accomplish multiple interests in development of an interstate river. And water and power interests in California got access to resources needed for their growth without having to finance their enormous costs. The ‘iron triangle’ found success at a scale well beyond anything it had previously attempted. 1929 to 1968: The Era of Development During this second period, Congress funded and the USBR constructed, six dams on the main Colorado, including Hoover and Glen Canyon, and three on major tributaries in the Upper Basin, as well as the All American Canal. In all, the federally constructed dams provided approximately 60 million acre-feet of water storage – four times the annual average flow of the river and its tributaries from the Upper Basin. It was an extraordinary period, in which the federal government took center stage in development of the Colorado River. Initially, California was the major beneficiary. Arizona, still refusing to sign the Compact, took its fight to the US Supreme Court three times in the 1930s, with little to show. In 1944 Arizona yielded to the inevitable and signed the Compact. In that same year, the USA and Mexico entered into a treaty committing 1.5 million acre-feet of Colorado River water to Mexico annually. Even though no specific provision had been made for water deliveries to Mexico in the Colorado River Compact, this treaty obligation now superseded in priority all uses under that agreement. Water development interests in the Upper Basin states grew increasingly uneasy as California moved steadily towards diversion and use of the 5.3

Political decision making

233

million acre-feet its users had under contract with the USA. With Arizona now signaling its intention to go after its unused share of Colorado River water by seeking Congressional funding for a Central Arizona Project (CAP) and with 1.5 million acre-feet committed to Mexico, it seemed time for the Upper Basin states to act. Upon a ‘request’ from Upper Basin Congressmen, the USBR took the initiative. In 1946 it completed a report describing the potential for water development in the Upper Basin and identifying the best locations for large-scale water storage projects (USBR, 1946). The report emphasized the need for the Upper Basin states to clarify individual state consumptive-use entitlements prior to moving ahead with additional federal water development. Upper Basin state representatives came together in 1948 and negotiated the Upper Colorado River Basin Compact, providing for percentage allocations to each of the states. Recognizing the need to clarify its share of the Lower Basin Compact apportionment, Arizona filed suit against California in the US Supreme Court in 1952. More than ten years later, the Court held that Congress had already made a division of this apportionment in the Boulder Canyon Project Act: 4.4 million acre-feet to California, 2.8 million acre-feet to Arizona and 300 000 acre-feet to Nevada – all to come from the Colorado River main stream (Arizona vs California, 373 U.S. 546 [1963]). The Court placed the Secretary of the Interior in charge of allocating surpluses and shortages among the Lower Basin states. In addition, the Court ruled that reservations of Indian and federal lands along the main stream had rights to water under the Reserved Rights Doctrine.5 In 1956 Congress rewarded the Upper Basin states with the Colorado River Storage Project Act. Central to this bill was authorization of Glen Canyon Dam on the main stream just upstream of Lee’s Ferry. Capable of storing 27 million acre-feet of water in its reservoir, Lake Powell, Glen Canyon provided assurance that the Lower Basin would receive at least its 7.5 million acre-feet annually while allowing upstream storage and use of water. Revenues from hydroelectric power generated at the dam would pay the bills. This act also authorized and funded Flaming Gorge Dam and Reservoir on the Green River (benefiting Wyoming and Utah), Navajo Dam on the San Juan (benefiting New Mexico) and the Aspinall Unit on the Gunnison (benefiting Colorado) – a wonderful example of distributive politics in action. Arizona finally got the CAP, a complex system of facilities that would take Arizona’s remaining unused entitlement of 1.4 million acre-feet of Colorado River water to Phoenix, Tucson and points between, with the 1968 Colorado River Basin Project Act. To get California’s support, Arizona had to agree to subordinate its project rights to those of California.

234

The evolution of water resource planning and decision making

Colorado, whose Congressman Wayne Aspinall chaired the critical House Interior and Insular Affairs committee, received authorization for five new projects, while Utah received authorization for the Central Utah Project that would enable movement of Colorado River water out of the basin and into the most populated portion of the state. This was a period of extraordinary water and power development in the basin. Perhaps nowhere in the west was the role of the USBR more important. Its success in building the remarkable Hoover Dam vaulted the USBR to the forefront of government construction agencies. Its expansion during this period was a model for how to grow an agency. Basin state members of Congress could point to the federal funds they had successfully directed toward developing their local economies. The considerable hydroelectric power revenues from the ‘cash register’ dams satisfied most other members of Congress that federal funds would be returned to the USA and states were happy with access to cheap hydroelectric power and essentially free water. Yet, as projects constructed by the USBR made more and more water available for human use, the number of claimants for that water grew even faster. Southern California continued its growth, boosted by an economy intensely stimulated by World War II. Indeed all of the basin states played important roles in support of the war economy and, following the war, continued to boom. Although the presumed need for additional irrigation water continued to drive river development, irrigation demand had peaked by the end of this period. Urban and industrial demands started playing increasingly important roles in motivating additional water development. Perhaps most unsettling to those local interests watching closely over the basin’s water matters in the 1960s was the uncertain extent of Indian claims to water. Tribal water claims had been acknowledged but left unresolved during the 1922 Compact negotiations. Arizona vs California not only reaffirmed tribal reserved rights, it established a standard for quantification far more expansive than previously imagined. It was not hard to create a scenario in which much or even all of the annual supply of Colorado River Basin water would be controlled by the tribes with reservations in the basin. 1969 to Present: The Emergence of Environmental Concerns and the Beginnings of Scarcity Political support for federally directed river basin development peaked in the 1960s with the convergence of an Executive Branch strongly favoring an activist national government and a Congress still greatly enamored of getting federal funds to support local economies. Tellingly, however,

Political decision making

235

no new water storage projects have been authorized in the basin since the 1968 Colorado River Project Act and not all the projects authorized were built. A combination of changing national politics and changes in the basin converged in this period, presenting new challenges and raising different problems of governance. In the 1960s the US Fish and Wildlife Service (USFWS) listed two fish species found only in the Colorado River Basin as in danger of extinction – the humpback chub and the Colorado squawfish (now ‘Colorado’ pikeminnow). Barely noticed at the time, this action took on significance with passage of the Endangered Species Act (ESA) in 1973. One piece of an outpouring of Congressional legislation in the 1960s and 1970s aimed at providing nationwide protection for the environmental values of air, water, wildlife and land, the ESA prohibits federal agency actions likely to ‘jeopardize’ the continued existence of listed species. In the review process for proposed new Reclamation dams in the Upper Basin in the late 1970s, the USFWS determined that additional depletions of water made possible by these dams would jeopardize the continued existence of the two listed species of fish. As a ‘reasonable and prudent alternative’ to the projects as proposed, the USFWS recommended altering project plans to provide for replacement of associated water depletions (for example, by dedicating a share of storage water to stream flow management) as well as providing funding support for the research to determine what was necessary to restore the fish populations to sustainable levels. For private projects subject to some federal permission, the USFWS proposed payment of a ‘depletion charge’ – a one-time payment assessed against expected water depletions, with the funds used for research and recovery activities. After many years of negotiations involving Upper Basin states, water users, electric power users and environmental organizations, a large-scale program was implemented, with actions intended to improve habitat conditions and increase fish populations to sustainable numbers (USFWS, 2003). A comparable program but covering more species has been put in place in the Lower Basin (Lower Colorado River Multi-Species Conservation Program, 2004). The effect of these programs is to allow continued water development so long as progress towards the recovery of the fish is made. Both of these programs depend on substantial federal funding, but the states and the water users make important contributions as well. Salinity emerged as a significant new concern in the basin in the 1960s. Some geologic formations in the basin contain high concentrations of salts reflecting their origin as sediments in vast inland seas. Natural drainage from these formations carries salinity to the river. Irrigation return flows passing through saline soils add to this salinity (Miller et al., 1986).

236

The evolution of water resource planning and decision making

The salinity content in the river’s water increases measurably as it moves downstream. Expanded irrigation in the 1960s at a Reclamation project near Yuma, Arizona produced a sharp spike in the levels of salinity in water passing into Mexico (Friedkin, 1988). In 1972, at the insistence of Mexican President Echeverria, the USA committed itself to fix the salinity problem. The basin states made it clear they considered this a federal, not a state, problem and demanded the solution not interfere with their consumptive uses. By Minute 242 to the 1944 Treaty the two nations agreed the salinity of water delivered to Mexico would be approximately the same as the salinity of water diverted into the All American Canal, the last diversion point on the river within the USA. In 1974 Congress passed the Colorado River Basin Salinity Control Act, authorizing the USBR to construct and operate a desalting plant near Yuma. The plant would be capable of treating 145 000 acre-feet of water annually prior to release into the Colorado for delivery to Mexico. In addition, Congress authorized the USBR to construct salinity control projects that would reduce loadings of salinity at locations upstream. Under the new Federal Water Pollution Control Act (FWPCA) Amendments, the US Environmental Protection Agency (EPA) agreed to establish only a single salinity water quality standard for the basin, at the diversion for the All American Canal. The basin states established the Colorado River Salinity Control Forum, the first and only truly basin-wide institution, to work with the USBR and EPA to implement the salinity control program. By the 1980s, still another new problem had emerged: insufficient water to meet growing urban demands in Nevada and California. California users had exceeded that state’s basic entitlement sometime in the 1950s. Expanding urban demands depended on using water legally allocated to other states but not yet used. Booming growth in Las Vegas promised to soon exhaust Nevada’s modest 300 000 acre-foot entitlement from the Colorado. New federal projects for Arizona and the Upper Basin states meant that much of the unused water soon would be taken. The fast-growing city of San Diego started looking for ways to acquire rights to unused Upper Basin water. The Metropolitan Water District (MWD) of Southern California did the same. Las Vegas announced it would buy water from any source, at the right price. In response, several schemes for interbasin water marketing emerged. The Upper Basin states, however, resisted these efforts, arguing they were illegal under the so-called Law of the River and especially the 1922 Compact.6 These states held fast to the deal made in 1922 by which they would some day be able to consumptively use up to 7.5 million acre-feet of basin water despite the fact that, after 80 years, they were only consuming about half that amount.

Political decision making

237

Perhaps now increasingly aware of growing Lower Basin dependence on the Upper Basin’s unused apportionment, Upper Basin states asked the Secretary of the Interior in 1990 not to declare the availability of ‘surplus’ water for that year. Under Arizona vs California, the Secretary is authorized to deliver surplus water to users in the Lower Basin holding contracts. It was this water upon which many urban users in California depended. The Secretary declined to act without California’s agreement and urged the states, including California, to come up with a common proposal respecting the availability of surplus water. Ultimately successful, the process required 12 years to complete (Lochhead, 2003). From the standpoint of basin governance, this process is especially interesting. It was initiated by representatives of the basin states and included all seven states. Each state relied on trusted experts, either inside or outside state government, to carry on the negotiations. At times it included tribal representatives. The ultimate decision maker, of course, was the Secretary of the Interior. Twelve years is a long time, but the stakes were high. To the Upper Basin states it was a test of the strength of the Law of the River. Was California truly limited to its basic entitlement? Or had decades of use beyond this amount established a new level of right? Was it now possible for California users to find a way to reduce uses of Colorado River water from roughly 5.2 million acre-feet to 4.4 million acre-feet? The best option appeared to be to shift a portion of the large volume of water going to irrigated agriculture in the state to the urban users who would otherwise face large cutbacks. The first such water transfer involved lining portions of the All American Canal, paid for by MWD, with the saved water shifting from the Imperial Irrigation District (IID) to the MWD. Next, the MWD worked out a ‘fallowing’ program with the Palo Verde Irrigation District (PVID) by which water temporarily not diverted by PVID for irrigation use would be available to the MWD. In addition, San Diego negotiated a transfer agreement with IID primarily based on system and field efficiency improvements paid for by San Diego. Now assured it could meet demands within its basic entitlement, California signed on to a plan under which it would gradually reduce its reliance on surplus water. With minor modifications, the Secretary adopted the seven-state plan in 2002. Just as agreement was finally reached about when to make available surplus water, however, the basin went into a multi-year drought. Now the Secretary was faced for the first time with what to do in the Lower Basin in the event of shortages. The Upper Basin states faced more clearly than ever the likelihood their users would never be able to consume 7.5 million acre-feet. And Colorado began discussing how it would reduce existing

238

The evolution of water resource planning and decision making

uses if necessary to meet Compact delivery obligations to the Lower Basin. To heighten uncertainty, climate change analyses indicated reliable supplies of water in the basin would decrease over time (NRC, 2007). Thus, important changes are affecting the Colorado River Basin. The era of large-scale water development is over. The federal role has changed. Relatively recent national interests in water quality and endangered species, international relations with Mexico and obligations to Native American tribes have intruded into basin affairs, often placing the USA at odds with basin states. To date, Congress has been willing to provide the funding necessary to ensure these national interests are met without diminishing consumptive uses of water in the basin. Perhaps the most fundamental challenge facing the basin at present is how to deal with overuse of its water (MacDonnell, 2005). According to the USBR’s Consumptive Uses and Losses Report (USBR, 2004), annual average depletions of water in the basin including Mexico between 1996 and 2000 were about 19 million acre-feet – considerably more than the basin yields. Yet demands continue to increase. Summarizing the Existing Governance System in the Colorado River Basin There is no single organized, integrated system of governance, such as a river basin commission (RBC), for water-related decisions in the Colorado River Basin.7 Rather there are multiple governance mechanisms, organized primarily around particular objectives, such as delivery of consumptive use rights, management of water facilities including hydroelectric power generation, salinity control, water for Mexico and endangered species protection. Many important governance issues have been addressed through processes developed specifically to reach agreement for that matter and then abandoned, leaving implementation to individual participants. Examples include the original Colorado RBC for basin water apportionment and the seven-state group for surplus and shortage water criteria. Arizona has resorted to the US Supreme Court four times in its disputes with California. Congress has been the institution through which many governance decisions have been made, a role greatly facilitated by the funding it has provided to implement the decisions. The US State Department decided how much basin water should go to Mexico. And, at times, the Secretary of the Interior has made critical decisions. At the heart of virtually all of these decisions are the states, usually operating through the governors and primarily representing the interests of their major Colorado River Basin water users. From the outside, governance in the basin appears diffuse, poorly organized and even irrational. It certainly challenges the ordinary flow-

Political decision making

239

chart model of institutional decision making. From within, it can best be understood as evolutionary, adaptive and responsive to need. It is a mirror of the multiple and changing interests competing for the benefits provided in a large and complex water system. Mechanisms emerge as interests and needs change. As we have suggested, this approach is consistent with the US preference for decentralized public and private decision making. It also reflects our federal system of government and our system of individual property rights in land and natural resources under which individual owners are the primary decision makers respecting their use, subject to governmentally imposed requirements. Governance serves to support these uses while seeking also to provide for politically determined interests that extend beyond these user-determined purposes. Holding this system together is the Law of the River. With this extended case study in hand, we turn to a consideration of the Rational and Polis Models and apply them to what we have observed in the Colorado River Basin. Comparison of the Rational and Polis Models The highly diffuse nature of the multiple benefits available from a river and its water challenges the assumption of the Rational Model that it is possible to plan for and develop rivers like any other resource. Even multiattribute analytical models have a limit on the number of considerations that can be included. Moreover, no single entity owns or controls a river. There are typically large numbers of riparian landowners who may own the underlying bed in non-navigable portions while the state likely owns the bed in navigable portions. In riparian law states, adjacent landowners hold some loosely defined legal rights to the use of the river and its water. In prior appropriation states, owners of water rights are regarded as having a property right to the use of certain water. Yet, while the water remains in the channel it is the property of no one and under the broad control of the state. Some rivers, such as the Colorado, pass through more than one state and may even pass into (or from) another country. In short, decisions respecting uses of rivers and their water are not made through a centralized, integrated process but through a large number of generally disconnected processes subject to certain national requirements (for example, regulation of pollutant discharges) but not subject to direct national control. The USA has actively experimented with more centralized decision making respecting river basin development. The conservation era of the early 1900s ushered into governmental decision making a firm

240

The evolution of water resource planning and decision making

commitment to the importance of ‘comprehensive’ river basin development (Rogers, 1993). In this view rational and coordinated decision making would produce far greater economic benefits than the kind of piecemeal development of rivers and water occurring at that time. Subjecting private hydroelectric power development to federal licensing was a step in this direction. At the same time, Congress began expanding the planning and construction authority of the USACE beyond its traditional focus on navigation. Authorization of the Hoover Dam put the USBR in the business of river basin development. Creation of the Tennessee Valley Authority (TVA) explicitly rested on the belief that centralized river basin development supported by federal funding would bring greater economic benefits than unplanned development without government support. This movement toward federally planned, funded and implemented river basin development reached its peak with the 1965 Water Resources Planning Act, which authorized the creation of RBCs for all the major river basins. The last large-scale federally funded projects for the Colorado River Basin passed Congress in 1968. It was the end of an era. It is tempting to suggest that the end of federal sponsorship of river basin development also ended our commitment to rational planning for rivers. But, in fact, it now seems clear that much of the apparently rationally based decision making respecting water development projects between 1930 and 1970 was better explained by the dynamic of the iron triangle in which politics generally trumped analysis. Whatever one’s views about the efficacy of benefit-cost analysis and the manner in which it was used, the reality was that by 1970 the national economy had moved beyond the need for more large dams, for more subsidized hydroelectric power, for more inland seaports, for more water to irrigate farmlands. The rationale for directing large amounts of federal funding to such projects no longer stood up to scrutiny and political support eventually evaporated. Conversely, rational analysis of options for altering historical uses of rivers to meet contemporary interests remains essential. In many cases that analysis now turns more on science than on economics. Events in the Colorado River Basin closely parallel this view. It suggests state water interests encouraged federal participation in river basin development to gain access to public funding that was otherwise unavailable. At the same time, settlement and development of the arid but arable lands of this region had become a national objective in 1902. The USBR’s success in ‘taming’ the Colorado became a matter of national pride, especially with the depression era construction of the towering Hoover Dam between the walls of the Black Canyon. Sales of hydroelectric power, even at the reduced rates provided to public power purchasers, still generated revenues sufficient to justify the enormous commitment of federal funds

Political decision making

241

involved. The basin states and the USBR showed great skill in obtaining Congressional support for a wide array of projects. The decline of political interest at the national level for support of Reclamation projects after 1968 short-circuited several authorized but unbuilt projects in the Upper Basin. President Carter’s famous ‘hit list’ met an angry response from these states, still hoping for federal funding. It is illustrative that the last Reclamation project Congress funded in the basin, the Animas La-Plata, is primarily intended to resolve tribal reserved right claims. On the other hand, Congress has continued to provide significant funding for projects to reduce salinity problems in the basin and, more recently, has provided the bulk of the funding needed to protect endangered species of fish so basin water use can continue essentially unimpaired. National political priorities have shifted. It is perhaps more useful to understand that decisions about the uses of rivers and their water, as primarily publicly managed resources, are inherently political and that those who are most effective in convincing decision makers that their preferred use of the water best serves the interests most important to the decision makers will always drive political decisions. Traditionally, economic interests have been most effective at making their case for water development even while those interests have shifted over time. Indeed, some of these interests were even able to get public support to pay the costs of water development. As the nation has urbanized, urban water suppliers have become increasingly important in decisions respecting water. Such suppliers, with their taxing, bonding and rate charging authority, are fully capable of paying the costs of water development. More recently, recreation and environmental interests have begun to have more influence. Public funding related to water has accordingly shifted somewhat in the direction of river restoration. Water as an input to the production of market goods has declined in relative importance, while water for direct human use and for environmental purposes has become more important. The highly rational quest for centralized river basin authorities that would be able to integrate all interests into a single, objectively based decision-making framework continues. That it has only found limited success in the USA and then primarily because federal funds were used to pay the costs, is not surprising in view of US culture and institutions. Yet there is something inherently integrative about rivers. Their uses are and, must be, shared. Upstream uses affect downstream uses. Private uses affect public uses. Human uses affect natural river functions. The Colorado Basin study illustrates the inevitable need for communication among interests respecting uses of this shared resource. While no single forum exists for such communications and no single

242

Table 6.2

The evolution of water resource planning and decision making

Major interest groups in Colorado River governance

Constitutionally required interest groups The seven states and their agencies The federal government and its agencies The Native American tribes The government of Mexico Water user ad hoc groups Irrigated farmers Power producers Municipalities (water and wastewater) Industry Tourism Recreation groups Colorado River Water Users Association Other user groups Environmental and sustainability groups Sierra Club American Rivers Environmental Defense Fund Pacific Institute Other NGOs

decision-making authority exists to resolve conflicts, there are a variety of integrating mechanisms at work. They are messy in appearance but appear to work. In discussing the pursuit of political action, it is imperative to identify every interest group and its aspirations and goals. In the case of Colorado River governance, the major interest groups are numerous, but can be broadly characterized as shown in Table 6.2. How each of these groups and agencies will position themselves on the ongoing governance issues is hard to know precisely, but they each have fairly well-known core approaches and interests. For the sake of argument let us assume that the further regulation of water uses in the Colorado River Basin would divide the interest groups according to an intuitively plausible pattern. On one side would be the federal governments of the USA and Mexico aligned with the environment and sustainability groups; on the other side would be all the others (including the state governments). This gross assumption makes for lots of strange bedfellows, but may help advance our understanding of what political outcomes might be expected. In Table 6.3 we compare the Polis perspective to the Rational Model with regard to the next stages of political decision making in the Colorado River Basin.

Political decision making

243

Table 6.3 demonstrates that, even for a well-managed river basin, there are defensible alternate explanations likely to be useful in interpreting political maneuvering in the aid of favorable outcomes. The models implicit or explicit in these interpretations can conflict with the widely accepted Rational Model and demonstrate that there can be more than Table 6.3

Comparison of the Rational and Polis Models

Rational Model Context of the issues Social welfare is defined as the efficient national economic development (NED) goal, taken roughly to mean maximizing regional income to the citizens in the basin, constrained by environmental and ecosystem sustainability requirements and other social objectives, such as income distribution and fulfillment of treaties with the tribes and Mexico. Supporters of more and better governance in this framework tend to stress sustainability, protection of endangered species, economic efficiency and the public interest.

Polis Model Powerful symbols have been invoked in the water conflicts in the Colorado River Basin. States’ rights, public interest, autonomy for the tribes, environmental sustainability, extinction of species, freedom from government interference, saving the family farm, protecting a way of life, economic efficiency and water for the poor have all been widely advanced. Proponents stress freedom from federal interference and saving the family farm. The Colorado River Basin is rich in explanatory and persuasive stories. The lone farmer struggling against the aridity to settle the land produces crops and ultimately develops an independent and resilient society; settlers struggling against all odds to make a living in a hard and unforgiving landscape. We are all aware of the cowboy culture followed by the ‘Chinatown’ stories of exploitation by city slickers; also stories of noble savages, wise land management and a landscape managed for millennia. The issues boil down to the rights of individuals and states to decide upon their own local environments. The fight goes on through the courts and, hence, the need to find sympathetic plaintiffs (for example, small family farmers damaged by federal reduction in water supplies) and other controversial issues with federal laws, such as the ESA favoring animals rather than people.

244

Table 6.3

The evolution of water resource planning and decision making

(continued)

Rational Model Defining the problem The problem is largely a technical problem of making sure that the wise use of resources is achieved by careful assessment and calculations of all the benefits and costs. The role of a paternalistic father restraining headlong and irresponsible children from despoiling the patrimony is a strong story line. Finding an allocation of water that maximizes a measure of national economic welfare within constraints implied by environmental rules, redistributive goals and international treaty obligations. Defining the goals The goals are to develop an equitable, efficient and environmentally sustainable management system for the basin. Straightforward application of the P&G would help articulate the goals. In the management of river basins efficiency has always been one of the beacons urging rational planning to produce the maximum national economic benefits. The Rational Model has the whole weight of traditional economic policy behind it here. Finding the solutions The proponents of the Rational Model feel they have the full weight of federal and state laws, responsibilities and rights on their side. They believe they are the true protectors of the public interest against special interests.

Polis Model Finding an acceptable water allocation taking into account the complex interaction of many elements: states’ rights, tribal rights, inadequate water measured against potential demands, existence of threatened and endangered species. Powerful symbols are employed portraying a frontier society fighting for its way of life in a changing world.

In any political struggle the goals need to be carefully articulated for each of the contending interest groups because the goals will certainly not be congruent among groups. Even within the coalitions that we have assumed for the Colorado Basin, there will be major disagreements on goals. The Polis Model’s goals stress development of governance systems that emphasize local economic development and social controls. The Polis Model sees efficiency in terms of interests of the political players and these will largely be regional economic activities.

As Stone says, ‘The best way to fight against a proposed rule is to show that it will not work to accomplish a commonly held goal’ (Stone, 2002, p. 405). Hence, the Polis Model emphasizes that the governance rules promulgated by the Rational Model will not necessarily lead to the desired outcomes. They will point

Political decision making

Table 6.3

245

(continued)

Rational Model

Polis Model

There is an attempt to apply federal rules to override local interests that impede overall goals. Incentives are aimed at making people change their behavior. In the Colorado River Basin no one single rational incentive will have greater impact than the free trading of water and water rights among users. The introduction of a variety of economic incentives including water trading will make the implementation of governance much easier. Incentives are part and parcel of the Rational Model. Use modern analytical methods, including: models of river hydrology, agricultural production and ecosystem functioning to examine alternative allocations that are feasible and to identify the allocation that maximizes national economic benefits minus costs.

to the problems that come with federal management in other river basins – for example, the conflicts between federal agencies’ practices and the ESA in the Mississippi-Missouri. They will claim that local control will lead to better local and national outcomes. These attempt to reframe the issue not as a conflict between federal/ public interest issues and local control, but rather as the search for the best set of rules for wise management of the river. The Polis Model will strenuously insist on maintaining the use and the users of water being kept as separate issues. Moreover, the allocation mechanisms are state or local issues not to be usurped by mechanistic federal rules or even worse the vagaries of the marketplace. The issue is reframed as a decentralized search for a consensus solution agreed to at the local and state levels. The courts are used to oppose federal government attempts to impose solutions.

Implementing solutions Clearly the federal interest will benefit more people rather than purely local concerns. The river basin is a national resource and should provide benefits to nonlocal as well as local people, particularly given the magnitude of federal tax monies spent in the past and in the present to maintain the system. Use decentralized incentives to encourage rational use at farm, factory or household level, including marginal cost pricing of water and the establishment of markets in water allocations.

In any policy dispute the actual magnitudes and the numbers of people benefiting from the proposed action are of major significance. The federal interest will benefit more people rather than purely local concerns, but the relative per capita magnitudes involved for the local people may be many times greater than the federally received, or perceived, benefits spread out over the entire US population. This leads to a mobilization of strong local economic interest groups. The ‘continuous Monopoly game’ cannot and should not be avoided by leaving important decisions in federal agency hands. Constant vigilance and interaction of interests will be required and the courts will continue to play a role as stages on which disputes are settled as they arise.

246

The evolution of water resource planning and decision making

one way of understanding what has happened in the past and thus ultimately what is likely to happen in the future. While we are not necessarily advocating the wholehearted acceptance of the Polis Model, we do believe that it leads to a richer understanding of the ‘game’ being played over many decades by those interested in the use of Colorado River water. A synthesis of the approaches seems to be the next logical step in the development of our understanding.

SUMMARY AND CONCLUSIONS We set out to understand political decision making about water development and management in the USA, in particular, the federal role and its relationship, if any, to achieving wise and sustainable use of the resource for the public interest. To this end the chapter explored two contrasting hypotheses in a fairly general way: ●

●

That the process and outcomes of water decisions are controlled by considerations of rationality applied to the administration of the resource by the federal system paying attention to states’ and citizens’ rights and also to the needs and demands of stakeholders and interest groups. That the outcomes are the results of the contention and struggles among a wide variety of stakeholders and interest groups, only lightly controlled by the federal institutions except when egregious situations arise demanding federal intervention.

Our findings are not simple to characterize in terms of these two hypotheses. The first seems a sound approach and appears to be the one most dearly held by the federal agencies. However, the model of Congressional debate, approval of laws, the drafting of regulations for implementing the laws and implementation does not hold up when placed under examination. It turns out, for starters, that there are many conflicting definitions of rationality that depend upon one’s point of view. For example, a federal official could look to the economically efficient use of investment dollars as the rational goal, but a Congressional representative could equally well look to maximizing the expenditure in their district and still claim a rational best decision. Or the USACE may believe that the economic goal of increasing (energy efficient) inland waterway traffic is a better and more sustainable one than the wetland restoration that environmental groups believe to be more efficient (because of wetlands’ myriad life-support benefits) and sustainable. What we find in the literature and in the experience

Political decision making

247

of practical people is that group decision making is bedeviled by such inconsistent preferences. And Arrow’s Impossibility Theorem shows that a community of rational people may not be able to behave ‘rationally’ when the choice to be made is a collective one.8 In examining the long and rich history of the Colorado River Basin, we see during the extended period of river development a classic convergence of federal, state and local interests. Despite the famous fights between Arizona and California, all basin interests wanted the same thing: economic development. Coordinated river basin development suited these circumstances reasonably well. In recent decades, however, we see a splintering of interests at all levels, greatly complicating the decision-making process and placing an increased premium on negotiation and compromise. As interests narrow, alliances occur at smaller scales. Moreover, these interests are apt to align in different ways dependent on the particular issue. We are no longer in a world well represented by the Rational Model. In going from the Rational to the Polis Model, the Laws of Nature are replaced by Laws of Passion and the currency of exchange is seen to be ideas, persuasion and alliances rather than material exchanges (traditional log rolling trading of economic benefits). It is difficult to find in the literature a framework that functions at all levels and spheres in which water management decisions are made. For some sets of decisions, regime theory predicting outcomes according to whether costs and outcomes are concentrated or diffused, gives good insights. These predictions are more likely to be valid when the issue is investing tax dollars for economic returns, rather than allocating a mixed bag of quantitative (usually monetary) and qualitative goods, such as sustainability, water independence or high water quality. The latter situation is one of apples and oranges, in which comparing outcomes is difficult and the simple interest group model, or its regime variant, is not of great help. Observing conflicting interest groups through the lens of the Polis Model is slightly more reassuring. Looking at a particular water issue in this way will encourage us to explore and apply different and broader concepts. If the federal agencies charged with defending the public interest can move to this more supple and responsive method of analysis, they may well judge that the process of discovery is more people-based than the mechanistic concepts used by other modeling approaches. Arrow tells us that group decision making can never be guaranteed to be rational where preferences for outcomes are not consistent. Stone tells us not to worry because rationality is only a small part of political decision making anyway. Under both hypotheses the protection of a broad national public

248

The evolution of water resource planning and decision making

interest is viewed as the almost exclusive domain of the federal agencies. It is found, however, that all levels of government and all types of governance systems have concern for a public interest – albeit for smaller publics. Also, major unresolved conflicts remain among the leading federal agencies charged with stewardship of the water resources. The agencies have different mandates, different assessment methodologies, different regulations, different regional emphases and their own special publics. All of these add up to multiple and divergent conceptions of the public interest among federal officials and to less than entirely coherent behavior within the federal government itself. Coordination of the different federal policies essentially went out of the window with the demise of the WRC. Looking at the current state of affairs of water management in the USA, one would have to conclude that no one in the federal government is truly looking out for a distilled and integrated national public interest. There are instead guardians of separate ‘national’ interests that involve the manner in which water is used. The interests historically were promotion of commerce and economic development utilizing river resources. Today such interests are more fractionalized and are pursued by a mix of federal agencies. This is not to say that all is lost. On the contrary, many progressive and strong governance systems in place today address the needs of many of the citizens. The short-lived RBCs mentioned earlier are good examples of conceptual models of regional water governance, administered through the states that should have led to protection of the public interests from overexploitation by private interests. However, they proved to be classic examples of the application of the Rational Model that simply do not appear to work in the real world and were subsequently discarded. These and other sub-national scale institutions need political and financial support if they are to continue to be relevant and useful. Comparing the very tenuous Apalachicola-Chattahoochee-Flint (ACF) and the Alabama-Coosa-Tallapoosa (ACT) River Basin Commission agreements among Georgia, Alabama and Florida with the more successful Colorado Compact points out the benefits of having the states come together (a bottom-up approach) and the insufficiencies of the federal initiative embodied in the southeastern case (a top-down approach). Of course, the Colorado Compact has been in existence since 1929 compared to a four or five year attempt in the ACT-ACF River Basins. Even so, there is little reason to expect the latter to ever be viewed as anything other than a federally imposed institution. After giving the case history of the Colorado River Compact since its ratification in 1929, in Table 6.2 we analysed and compared what we loosely call the Rational Model with the Polis Model. We see how

Political decision making

249

different the Polis Model is from the Rational Model. Powerful political symbols are manipulated to mobilize political support and bring its force to bear on decision makers. By and large, most people would like to believe they support goals larger than themselves. Therefore, big resonant issues more easily motivate citizens and interest groups than divvying up economic windfalls, even though contestants are willing to be hard-nosed about money. These themes repeat themselves throughout the table. Under the category of looking for solutions via incentives, the Rational Model says that: no single rational incentive will have greater impact than the free trading of water rights (evidently a way to advocate integrated river basin management). The Polis Model says: allocation mechanisms are a state and local issue not to be usurped by mechanistic federal rules or even worse the vagaries of the marketplace (evidently a claim to keep decision making closer to the benefited interests so they can (fight to) control the process). There seems to us little doubt that most readers of this chapter will be ardent supporters of the Rational Model statement, whereas it seems to us the contemporary world found in the Colorado River Basin can better be explained by the Polis Model. At least it helps those of us wedded to the Rational Model to broaden our perceptions of what rationality is all about and suggests unfamiliar, but potentially valuable, approaches. Overtly using specifically political models of water governance, as suggested in this chapter, rather than clinging only to rational methods could have major implications for how the federal government does business in the water arena. Since it emerges that most of the control and protection of the public interest comes at all levels down the chain from federal to state to river basin to county, to city, two questions naturally arise: first, whether the federal bureaucracy currently employed is too often at cross purposes to its supposed missions; and, second, whether it is the right size. If the analysis presented in this chapter is sound, then the role of federal bureaucracies in implementing water policy should be seriously reconsidered. Does this imply a need for a serious reduction in manpower at the federal level with the resources then reapplied at the state and local levels? It would certainly imply that staff re-education on a large scale, at all levels, be instituted by the agencies. This would force the professional staffs of the agencies to confront politics directly in their attempts to pursue water policy. Too often one hears the agency professionals complaining that they got a particular policy (or even project) right only to be subverted by political considerations. These political considerations should be central concerns in their attempts to guide policy.

250

The evolution of water resource planning and decision making

NOTES 1. The legal fiction of governmental ‘ownership’ of water provides the basis for governmentally established rules governing its allocation and use. 2. Jimmy Carter ran into serious political problems with Congress after he vetoed a series of water projects in the 1978 Rivers and Harbors Omnibus bill based upon their poor benefit-cost ratios. Ronald Reagan made changes in federal water policy when he intervened in 1983 to enforce the cost sharing provisions for federal water resources expenditures. 3. The reader is referred to Hundley (1975), Fradkin (1968), Waters (1946), Reisner (1986), Weatherford and Brown (1986), Martin (1989), Pontius (1997), Meyers (1966), Getches (1985), Lochhead (2001) and MacDonnell (2006). 4. The USBR and the US Geological Survey (USGS) had been measuring flows of water in the river below Yuma, Arizona since the late 1800s. Based on these measurements, it was believed the basin produced an average yield of about 17.4 million acre-feet annually (not including already existing depletions both natural and man-made). Thus, the commissioners believed there would be additional water available for allocation at some time in the future. As it turned out, they were badly mistaken. 5. For an explanation of this doctrine see Appendix 6.1. 6. The Law of the River, includes the compacts, treaty, acts of Congress, US Supreme Court decisions, contracts, regulations and other agreements that collectively form the rules under which everything is supposed to operate. Few can claim to have a working knowledge of all these pieces. Most are able to function just within those pieces that directly affect their activities. Despite claims of its immutability, the Law of the River is far from clear, coherent and consistent. Yet, despite its complexity or, perhaps because of it, it has also been adaptable when necessary. 7. For a thoughtful argument for better-integrated basin-level decision making, see Getches (1997). 8. Arrow (1951). A common teaching example of the Arrow Paradox is where the participants have double-peaked (or ‘inconsistent’) preferences and try to decide among three alternatives using majority voting.

REFERENCES Allison, G.T. (1971), Essence of Decision: Explaining the Cuban Missile Crisis, Boston, MA: Little Brown. Arrow, K.E. (1951), Social Choice and Individual Values, New York: Wiley. Bonnor, R.E. (2002), ‘Buffalo Bill Cody and Wyoming water politics’, The Western Historical Quarterly, 33 (4) 433–51. Bornstein, D. (2004), How to Change the World: Social Entrepreneurs and the Power of New Ideas, Oxford: Oxford University Press. Buchanan, J. and G. Tullock (1962), Calculus of Consent: Logical Foundations of a Constitutional Democracy, Ann Arbor, MI: University of Michigan Press. Crenson, M.A. and B. Ginsberg (2002), Downsizing Democracy: How America Sidelined its Citizens and Privatized its Public, Baltimore, MD: Johns Hopkins University Press. Dahl, R.A. (1961), Who Governs?, New Haven, CT: Yale University Press. Downs, A. (1957), An Economic Theory of Democracy, New York: Harper and Row. Espelande, W.N. (1998), The Struggle for Water: Politics, Rationality and Identity in the American Southwest, Chicago, IL: University of Chicago Press.

Political decision making

251

Fradkin, P.L. (1968), A River No More: The Colorado River and the West, Tucson, AZ: University of Arizona Press. Friedkin, J.F. (1988), ‘The international problem with Mexico over the salinity of the Lower Colorado River’, in D.H. Getches (ed.), Water and the American West, Boulder, CO: Natural Resources Law Center, pp. 31–52. Getches, D.H. (1985), ‘Competing demands for the Colorado River’, University of Colorado Law Review, 56, 413–79. Getches, D.H. (1997), ‘Colorado River governance: sharing federal authorities as an incentive to create a new institution’, University of Colorado Law Review, 68, 573–658. Haefele, E. (1973), Representative Government and Environmental Management, Baltimore, MD: Johns Hopkins University Press. Hundley, Jr, N. (1975), Water and the West: The Colorado River Compact and the Politics of Water in the American West, Berkeley, CA: University of California Press. Lasswell, H.D. (1936), Politics: Who Gets What, When and How?, New York: McGraw-Hill. Lochhead, J.S. (2001), ‘An upper basin perspective on California’s claims to water from the Colorado River, Part I: the law of the river’, Water Law Review, 4, 290–330. Lochhead, J.S. (2003), ‘Part II: the development, implementation and collapse of California’s plan to live within its basic apportionment’, Water Law Review, 6, 318–410. Loucks, P. (2003), ‘Managing America’s rivers: who’s doing it?’, International Journal of River Basin Management, 1 (1), 21–31. Lower Colorado River Multi-Species Conservation Program (2004), Colorado River Multi-Species Conservation Program, Volume II: Habitat Conservation Plan, J&S 00450.00, 17 December, Sacramento, CA: US Bureau of Reclamation. Maass, A. (1951), Muddy Waters: The Army Engineers and the Nation’s Rivers, Cambridge, MA: Harvard University Press. Maass, A., M.M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr, S.A. Marglin and G.M. Fair (1962), The Design of Water-Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning, Cambridge, MA: Harvard University Press. MacDonnell, L.J. (2005), ‘The Colorado River: has it run out of water?’, The Water Report, 16, 1–6. MacDonnell, L.J. (2006), ‘Colorado River Basin’, Waters and Water Rights, 7, 3–62. Martin, R. (1989), A Story that Stands Like a Dam: Glen Canyon and the Struggle for the Soul of the West, New York: Holt. McCool, D. (1987), Command of the Waters: Iron Triangles, Federal Water Development and Indian Water, Berkeley, CA: University of California Press. Meyers, C.J. (1966), ‘The Colorado River’, Stanford Law Review, 19, 1–75. Miller, T.O., G.D. Weatherford and J.E. Thorson (1986), The Salty Colorado, Washington, DC: The Conservation Foundation. National Research Council (NRC) (2007), Colorado River Basin Water Management: Evaluating and Adjusting to Hydroclimatic Variability, Washington, DC: National Academies Press. Pontius, D. (1997), ‘Colorado River Basin study’, report to the Western Water Policy Review Advisory Commission, Denver, CO.

252

The evolution of water resource planning and decision making

Putnam, R.D. (2000), Bowling Alone: The Collapse and Revival of American Community, New York: Simon and Schuster. Reisner, M. (1986), Cadillac Desert: The American West and its Disappearing Water, New York: Penguin Books. Rogers, P. (1993), America’s Water: Federal Roles and Responsibilities, Cambridge, MA: MIT Press. Stone, D.A. (2002), Policy Paradox: The Art of Political Decision Making, revised edn, New York: Norton. US Bureau of Reclamation (USBR) (1946), The Colorado River: A Comprehensive Departmental Report on the Development of the Water Resources of the Colorado River Basin for Review Prior to Submission to Congress, Washington, DC: Department of Interior. US Bureau of Reclamation, Upper Colorado Region, Lower Colorado Region and Denver Office (USBR) (2004), Colorado River System Consumptive Uses and Losses Report 1996–2000, Denver, CO: US Bureau of Reclamation, Technical Service Center. US Fish and Wildlife Service (USFWS) (2003), Section 7 Consultation, Sufficient Progress, and Historic Projects Agreement and Recovery Implementation Program Recovery Action Plan (RIPRAP), Lakewood, CO: Upper Colorado River Recovery Program. US Water Resources Council (WRC) (1983), Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, Washington, DC: US Government Printing Office. Waters, F. (1946), The Colorado, New York: Rinehart and Co. Weatherford, G.D. and F.L. Brown (eds) (1986), New Courses for the Colorado River: Major Issues for the Next Century, Albuquerque, NM: University of New Mexico Press.

Political decision making

APPENDIX 6.1

253

OVERVIEW OF AMERICAN LAW FOR ALLOCATION OF WATER

Water, like other natural resources, is considered a form of property under American law and its use is governed primarily by state law. Because water is in motion and its benefits are widely shared, it is not readily susceptible to private ownership. Thus, state laws generally regard water as owned by the public or the state and establish rules providing for both its public and private use. Rights of use, which may themselves be treated as property rights or may be allocated by permit, are regarded as enabling enjoyment of the benefits of water and providing certain legal protections for those uses. English law separated waterways that were navigable from those that were not. Non-navigable waterways were regarded as under the exclusive control of the riparian landowners and rights to the use of water were simply an extension of the rights of ownership of land. Riparian land ownership also carried rights to the use of water in navigable waterways, but public access for certain public uses such as travel, trade or fishing was to remain open. English law respecting use of groundwater similarly treated this resource as an extension of the ownership of land. Water extracted from underneath one’s property was treated as owned in the same manner as any other physical aspect of one’s property. Riparian law principles were imported to the American colonies as part of English common law. Such principles worked reasonably well in this relatively humid part of the country in which coastal rivers were important primarily for travel and trade, there was adequate rainfall to support growing crops and direct human needs for drinking and other household uses could be readily met from streams and wells without interference with the uses of others. Settlement of lands west of the 100th meridian raised new challenges. Here, rainfall is generally less than the amount necessary to grow crops. Rivers and streams are relatively few and largely unsuited for navigation. In this region a different approach for establishing rights to the use of water emerged, one based on taking physical possession of water and putting it to use. This approach came to be called prior appropriation. Under rules of prior appropriation, ownership of riparian land carries no special rights to the use of adjacent water. The principles of prior appropriation for use of surface water eventually became firmly embedded in the laws of all western states. This appendix provides an introduction to the basic elements of riparian and prior appropriation law as systems for the allocation of rights to use surface water. It also includes a short introduction to the

254

The evolution of water resource planning and decision making

approaches states have taken to the use of groundwater. Finally, it briefly summarizes ways in which Federal laws affect allocation and use of water.1 Riparian Law Originally a product of common law in which judges sought to define principles to sort out disputes between specific competing human uses of waterways and their water, the riparian doctrine seeks to accommodate the broad and varied range of interests implied by shared use. It provides special status to those who own lands immediately adjacent to a waterway, according such riparians undefined rights to the use and enjoyment of the waterway and its water. Among such riparians, it establishes a rough equality of right. As initially articulated in England and then in America, riparian water uses were to occur ‘without diminishment in the quantity or quality of the water’. Under this view, riparian landowners could only use water on their lands, could not divert water away from other riparian landowners, could not take water out of the watershed and could not add pollution in amounts that would impair downstream uses. This strict rule of non-diminishment yielded inevitably in the 1800s, in the face of the realities of population increase and economic growth to one of ‘reasonable’ use. Under this rule, a court would assess the relative benefits of a use against the harm it caused to other riparians. In general, riparian principles seek an accommodation among competing uses of water along a shared waterway. Regulated Riparian Systems In recent years as out-of-stream uses of water have dramatically increased, most riparian law states have developed statutory systems governing allocation and use of water. Under such systems, removal of water from its source requires a permit issued by a state agency. Many states now also have special procedures applying to proposed uses of water out of the watershed in which the water originates. The right to obtain such a permit is not limited to those who own land riparian to the water source, but established riparian uses are protected from impairment by new uses. Permits are typically for a term of years. The amount of water that may be withdrawn is specified, as is the purpose and place of use. Conditions may be imposed, such as a requirement that withdrawals must be reduced in times of drought or that some minimum stream flow must be maintained. Permits may potentially be renewed as long as the use continues.

Political decision making

255

Prior Appropriation Originally, rights to the use of water in states adopting the prior appropriation doctrine followed a rule of capture. The act of physically removing water from a stream and applying it to a use established the legal right. Beginning in the late 1800s, states moved to establish permit systems under which those wishing to make use of water must first apply to a state agency. Prior appropriation follows a first-in-time, first-in right rule. The use established by the earliest appropriators (seniors) of water from a stream is protected from impairment by subsequent appropriators (juniors). Thus, for example, new diversions upstream from existing users cannot take water relied on by these users. In periods of high flows there may be enough water for all users. But, in low flow periods junior appropriators may have to stop diverting water to protect senior users. There is no sharing of shortages under this system. The quantity of water that may be appropriated is limited to the amount that is beneficially used – that is, the amount reasonably necessary to accomplish the intended purpose of the use. Diversion of water in excess of that beneficially used is regarded as waste. The water right does not protect the diversion of wasted water. Prior appropriation water rights are perpetual, so long as the use continues. Rights are fixed to a particular point of diversion, a maximum rate of diversion, a general type of use (such as irrigation or municipal) and a place of use. To change any of these elements of use requires a governmental review process to ensure there will be no injury to other water users. In most states water rights may be sold or otherwise transferred separate from the land on which they are used. Groundwater Use Groundwater law developed more slowly than the law for surface water. English law had allowed landowners essentially unlimited rights to withdraw water from underneath their land. Initially, American courts followed suit. With increasing evidence of the impacts of unlimited groundwater withdrawals, a reasonable use rule, similar to that for riparian users, emerged. In some states use of groundwater off the property from under which it was withdrawn is regarded as unreasonable. Conversely, any amount of use on the property is considered reasonable. There is a trend, however, toward seeking an accommodation of competing uses in recognition of the shared use of the resource. Certainly the effect of falling water elevations on other users can be a consideration.

256

The evolution of water resource planning and decision making

Many western states follow the rules of prior appropriation for uses of groundwater. Rights of use thus are based on actual use, not on ownership of overlying land. Early rights enjoy certain protections against the effects of later uses. Most states in which groundwater is heavily used have developed some kind of special management areas in which groundwater development is subject to public regulation. There may be spacing requirements to minimize well-to-well interference. There may be limits on pumping to regulate the drawdown of groundwater in a given aquifer (groundwater mining). There may be requirements to protect against pollution of the aquifer. Traditionally, groundwater rules did not account for effects of groundwater withdrawals on surface water resources. In virtually all states the legal systems governing groundwater use developed separate from those governing surface water use. Increasingly, states are faced with the question of how to integrate competing groundwater and surface water uses. There is a clear trend toward regulating groundwater withdrawals to reduce adverse effects on surface water uses. Effects of Federal Law on Water Allocation and Use While state law governs the fundamental allocation of water uses, federal law plays an important role as well. The exercise of federal authority is based on powers found in the US Constitution. When the national government exercises constitutionally-derived authority, conflicting state laws must give way. The primary areas in which the USA has acted to affect the use of water are for protection of navigation and water quality, for the regulation of hydroelectric power generation, for water required for tribal and public land reservations and for uses of interstate rivers generally. Navigation The exclusive authority given to the US government to regulate matters of interstate commerce has been interpreted to give the USA power to protect the navigational uses of waterways. Thus, the USA, through the USACE, regulates actions of states or riparian landowners that might impede navigational uses. Congress also directs the USACE to implement projects improving navigational uses of coastal waterways and rivers, projects that now also include flood control functions. Hydroelectric power generation In 1920 Congress required any non-federal entity desiring to construct a dam for the purpose of generating hydroelectric power to obtain permission (embodied in a license) from a new federal agency, the Federal Power

Political decision making

257

Commission (FPC, now the Federal Energy Regulatory Commission). The primary motivation was to ensure that hydroelectric facilities were constructed in a manner that promoted comprehensive development of the river’s economic values. In 1986 Congress included environmental considerations directly into licensing decisions. Water quality In 1972 Congress put in place a national program regulating the disposal of pollutants into the waters of the USA. Pollutant discharges into water are prohibited, except with a permit. Permit conditions set limits on allowable discharges of specific pollutants. The objective is to achieve and maintain water quality according to standards established to protect designated uses of water. Discharges of dredge and fill materials into waters of the USA are regulated as well, a requirement that has been extended by regulation to control filling wetlands. Native American and federal reserved water rights Federal courts have recognized the existence of ‘reserved’ water rights for areas of federal lands set aside for such purposes as Indian reservations or national forests. The effect is to reserve from state allocation some portion of water available within the land area encompassed by the reservation. Judicial recognition of such reserved rights originated with the 1908 US Supreme Court decision, Winters vs U.S. As subsequently extended and defined, reserved rights exist only as necessary to accomplish the primary purposes for which the reservation was established. Purposes are ascertained by reference to the treaty, Act of Congress or Executive Order establishing the reservation. To fit these rights into state law prior appropriation rules, reserved rights are given a priority as of the date the reservation was established. In contrast to prior appropriation, a reserved right need not have been used to exist. Federal law authorizes inclusion of federal claims to water, including reserved water rights, within state court adjudications of water rights. Interstate rivers Many waterways cross state lines. The primary mechanism for determining rights to use such rivers and their water between states is the interstate compact, authorized in the US Constitution. Compacts are negotiated by state representatives and may also include representatives of the federal government. The compact essentially serves as a contract between the parties. Congress must ratify interstate compacts and, once ratified, they are regarded as federal law. Alternatively, disputes between states respecting uses of shared rivers

258

The evolution of water resource planning and decision making

may be settled through a special form of litigation filed directly with the US Supreme Court. Typically, the Court utilizes a ‘special master’ to serve as the finder of fact and to make recommendations respecting the law. The Court has developed the concept of ‘equitable apportionment’ to help guide its decisions, intended to fairly apportion uses on the basis of demonstrated need. Note 1. For a succinct summary of basic American water law principles, see Getches (1997). A more complete treatment of water law is available in the one-volume treatise, Tarlock (1986) (with updates). For a multi-volume presentation, see Beck (1991) (with updates).

References Beck, R.E. (1991), Waters and Water Rights, Charlottesville, VA: Michie. Getches, D.H. (1997), Water Law in a Nutshell, 3rd edn, St Paul, MN: West Publishing Co. Tarlock, A.D. (1988), Law of Water Rights and Resources, New York: C. Boardman.

7.

Making the transition: moving water resources planning and management into the twenty-first century Gerald E. Galloway

INTRODUCTION The previous chapters discussed various aspects of water resources planning and management as they have evolved over roughly the last halfcentury and offered lessons learned, conclusions and recommendations for dealing with current or forecast problems. The purposes here are to provide a brief summary of these chapters, identify the significant issues now facing the nation in water resources planning and management, suggest future directions for the field in light of the challenges identified and offer recommendations for research that would support and complement efforts to deal with the challenges ahead.

WHERE HAVE WE BEEN? In 1902, with passage of the Reclamation Act, the nation established a social and economic goal of drawing people to the more arid West by providing them with the water they would need to live and to support themselves by practicing irrigated agriculture. Hydropower, a major interest of conservationists seeking basin approaches to water planning during Teddy Roosevelt’s presidency, became a regulatory mission of the federal government in the 1920s. During the Depression of the 1930s, the Administration of President Franklin Roosevelt took actions to prime the economic pump, including building large water projects, such as dams on the Missouri River and its tributaries. It also established the Tennessee Valley Authority (TVA) to bring economic development to that valley, while managing the river system as a system. Following on a series of legislative actions begun early in the century and designed to deal with regional 259

260

The evolution of water resource planning and decision making

flooding issues, in 1936 Congress passed legislation that made flood damage reduction a national program, proclaiming that floods ‘constitute a menace to national welfare [and that] . . . it is the sense of Congress that flood control is a proper activity of the Federal government’. Further, the Act famously stated that the ‘Federal government should improve or participate in improvements . . . for flood control purposes if the benefits to whomsoever they accrue are in excess of the estimated costs’ (Flood Control Act of 1936, Section 1). In the second half of the 1940s a desire to provide jobs for servicemen returning from World War II led to more development for flood control, irrigation (reclamation), navigation and recreation. In short, the first half of the century was focused on development of water resources and protecting the populace from floods. Over the next 50 years, as the nation became aware of the full impacts, physical and fiscal, of the developments of the previous decades, values shifted. The environment assumed a larger role in public policy and the public itself became more involved in decision making. The following sections are intended as a reminder for the reader of some of the landmarks in the world of water resources of the past five plus decades. Seeing the Environment in a Different Light Up to the 1950s, the task of water resources planners was to solve problems by designing projects. Little consideration had to be given to potential collateral impacts of the projects. Indeed, few recognized the need for such consideration. Multi-objective planning focused on bringing together the standard project purposes – water supply, hydropower, recreation, flood control and navigation – and few saw a need to deal with the environment, either social or ecological, that contained and surrounded the project. The shift in values and the public’s increase in willingness to become involved began in the late 1950s with the civil rights movement, broadened and accelerated with the Vietnam War protests and took on something of a green hue after the publication of Rachel Carson’s Silent Spring (Carson, 1962). By the end of the 1960s it was clear the environment had to be given a place at the water resources development table, and President Nixon’s signing of the National Environmental Policy Act (NEPA) on 1 January 1970 served as a statement that this had happened. Over the next four years, legislation protecting water and air, ensuring consideration of historic and archeological resources and protecting endangered and threatened flora and fauna were added or enhanced. Each law reflected a felt need to address a specific problem, but there existed no grand strategy for environmental protection. During the 1970s, federal rule making and court cases, primarily involving implementation of NEPA, ensured

Transition to the twenty-first century

261

that federal actions, voluntarily or involuntarily, would attempt to take into consideration protection of the environment. Over the following two decades, engineers and economists, working with biologists, ecologists and other natural resources scientists, attempted to develop approaches that would permit water resources development to continue, albeit in a different fashion, with the natural environment protected and sometimes even enhanced. Recognizing a Need to Cleanup a Legacy of Past Activity Over the past four decades, billions of dollars have been spent in cleanup of toxic material and in addressing habitat and species issues. While progress has been made, there is still much to be accomplished. However, federal support of funding for cleanup is in decline (US Environmental Protection Agency (EPA), 2004a). For example, in 1987 in the Great Lakes the government identified 36 toxic hot spots for remediation. As this is written, work has not been completed at any of these locations but, as disturbing, because of the large number of separate but related programs, it is even difficult to determine how much has been spent or what the results of the partial remediations have been (International Joint Commission (IJC), 2003). More generally, there has been little effort to conduct formal ex post evaluations of these programs so the benefits cannot be accurately estimated. On the ecosystem restoration front, the $7.8 billion Everglades Restoration Project represents the first of several multi-billion dollar efforts that the federal government is being asked to fund, in whole or part. Standing in the wings are Louisiana Coastal Restoration; restoration of the mainstem Missouri, Upper Mississippi and Illinois Rivers; and many smaller projects. In fact, new water projects today typically include some aspect of restoration or mitigation. Unfortunately, while funds for the projects are appropriated in a manner that permits the construction and operation of the project, funding of mitigation frequently lags the construction by many years. These are deliberate choices made by either Congress or the Administration in establishing priorities for the budget year. Moving the Center of Gravity of Politics and Public Interest Federal funding for water projects has declined since the 1960s. Though there was a spike to support water and wastewater treatment facilities in the 1970s and 1980s, the spike has gone, and the current funding slope is downward. Certainly few large dams or other high cost projects have been started in the last two decades. Part of this decline stems from the obvious

262

The evolution of water resource planning and decision making

shift in societal values just discussed, but part also comes from increased involvement and decreased enthusiasm of the public where water projects are concerned. Cost sharing caused many who previously advocated water projects to back off once their money became a part of the solution. Buoyed by the report of the World Commission on Dams (2000), in the USA (as well as abroad), people are positing that the opportunity for big water projects has passed – that there is neither geographic opportunity nor political support for efforts that could cause environmental and social disruption. Federal budgeting has become more competitive, with tax cuts shrinking revenues, the specter of growing social security and medicare entitlements and the appearance of new claimants such as the Global War on Terrorism and homeland security pushing other needs aside. Decisions to rotate committee chairs in the House of Representatives reflect that even Congress is changing. Changing the Guideposts for Water Planning and Management The early 1960s saw considerable attention to the economics and engineering of water management. The Harvard Water Program (Maass et al., 1962) sparked a more sophisticated approach to planning water projects. President John Kennedy’s interest in ensuring consideration of more than engineering and economics in project development and the publication of Senate Document 97 (US Senate, 1962) launched water planning in a new direction. The passage in 1965 of the Water Resources Planning Act codified a movement already underway and by the 1970s there was a Water Resources Council (WRC); seven basin planning commissions; the report of a National Water Commission (NWC) with its emphasis on a carefully coordinated and broad-based water program for the nation; legislative support for clean water and species protection; and a National Flood Insurance Program (NFIP) that proposed involving flood plain communities in controlling flood plain development and thereby reducing future flood damages. Perhaps the late 1970s represented the crest of this wave of attention to water planning and the establishment of broadly based guideposts for program execution. Actions in the early 1980s to: eliminate basin commissions; zero fund the WRC while leaving it in existence on paper; shift from Principles and Standards (P&S) (WRC, 1973) to Principles and Guidelines (P&G) (WRC, 1983); reduce money for water treatment, water monitoring and water projects; and institute federal– local cost sharing marked a dramatic shift in the importance of water on the national scene and began to reduce the utility of the guideposts. As Congressional committees and subcommittees reorganized to more closely align with where the money was going, formerly water-focused committees

Transition to the twenty-first century

263

took on multiple responsibilities. Both the US Army Corps of Engineers (USACE) and the US Bureau of Reclamation (USBR) saw operations and maintenance becoming more critical elements in their portfolios and felt growing pressure to turn operations functions over to private contractors. The Great Mississippi Flood of 1993 and the 2002 drought that affected nearly half of the conterminous 48 states returned some attention to water resources issues and highlighted both the lack of coordination of federal programs and the problems with lack of harmony among the guideposts established earlier (US Executive Office of President (USEOP), 1994). As the twenty-first century began, the water programs of the federal government operated independently of each other and created problems for those at state and local levels. Environmental programs were organized along media-specific lines (see Chapter 4). Guideposts for planning activity were neither comprehensive nor inclusive. The accumulated laws, regulations and policies of successive Congresses and Administrations produced conflicts that threw new projects and operations into the courts or committed them to never ending analysis. Much of water resources planning has moved from a federally led, comprehensive approach towards a locally based, narrower, almost single purpose, focus. Exploiting New Technology In 1957, after the Soviet Union launched Sputnik, the USA went into high gear to improve its scientific base and 12 years later an American walked on the moon. The leaps in capabilities of information technology that accompanied the space race allowed scientists and engineers to acquire massive amounts of data about the natural and human environment, process and analyse these data, prepare more comprehensive and detailed plans for water programs and projects and operate them with a level of sophistication not considered possible only a few decades earlier. The pace in technical advance increased throughout the last half of the century and is expected to continue at a high level well into the current one. Today, remote sensing platforms produce high quality imagery across a spectrum of wavelengths and provide highly accurate and timely information about all parts of the world, including bathymetric and topographic data and identification of even slight distinctions among land features, human made and natural. Global positioning systems now permit the identification of geographic location with an accuracy of less than a meter and along with massive computing power allow the development of Geospatial Information Systems (GIS) that permit the display and, more importantly, the analysis of a vast array of information in map format. This same computing power has allowed the development of hydrologic

264

The evolution of water resource planning and decision making

and hydraulic, climate and other water-related models whose complexity and realism exceed anything dreamed of a half-century earlier. The combination of GIS, mobile and advanced communication systems and miniaturization permit the almost real-time monitoring and assessment of data gathered from across the globe. A continuing challenge remains the ability to provide the resources required to fully exploit the capabilities of these technologies, to acquire and operate more sophisticated systems and to effectively use the data gathered by them.

CURRENT ISSUES In the first decade of the twenty-first century the nation is already facing a number of significant conflicts over use of water. Major court cases have arisen over regulation of the flows of the Missouri River system by USACE; provision of minimum flows on the Rio Grande in New Mexico and in the Klamath Basin in Oregon; and allocation of the waters of the Apalachicola, Chattahoochee and Flint (ACF) Rivers in the Southeast USA and the Colorado River in the West. Public debate is underway over initiation of new lock construction on the Upper Mississippi River, over diversion of hydropower waters to provide flows to support salmon on the Columbia River, and even over the continued existence of dams that interfere with anadromous fish runs on both the east and west coasts. Much remains to be learned about how to deal with these challenges. Implementing Adaptive Management C.S. (Buzz) Holling and his colleague C.J. Walters brought adaptive management to the ecology scene in the 1980s (Walters and Holling, 1990). Defined as an approach that ‘emphasizes the use of carefully designed and monitored experiments, based on input from scientists, managers and citizens, as opportunities to maintain or restore ecological resilience and to learn more about ecosystems’ (National Research Council (NRC), 2002a, p. 5), it rapidly became an approach of choice for those engaged in the restoration of natural systems affected by development or the establishment of new habitat, such as in the development of new wetlands. Key components are choice of goals and objectives, creation of a plan, design of experiments that test the plan and strong stakeholder involvement not only in setting goals and objectives but also in vetting progress in achieving the goals and objectives. Adaptive management has been touted as a central component of projects such as the restoration of the Everglades and return to more natural flows on the Colorado River below Glen Canyon

Transition to the twenty-first century

265

Dam. It is being initiated in restoration efforts on the Missouri and Upper Mississippi systems. Going beyond ecology, USACE has even proposed its use in management of the decades-long effort to improve navigation on the Upper Mississippi. In this application it would involve not ecological intervention but modifying the construction schedule for a series of locks based on observed changes in demand for use of the navigation system. While there is strong support for the concept in the ecology world, adaptive management is not without its critics. Those pressing for immediate action to deal with environmental issues, such as flow restoration, argue that the adaptive management framework does nothing more than delay execution of programs they know need to be done. Some would argue there is a need for more science behind the label to provide a better understanding of what adaptive management really means and how it can be carried out in a manner that will allow for appropriate fiscal controls. Indeed, politicians and program managers are starting to see approval of adaptive management as writing blank checks. When Congress authorized $7.8 billion for the Everglades restoration, it was supporting adaptive management. But Congress and the Administration, now being asked to consider the same sort of arrangement for other major projects such as Louisiana Coastal restoration ($12–$20 billion) and Upper Mississippi River restoration ($5 billion), are balking at granting approval for a series of high cost projects that will be defined over time. Broadening Benefit-Cost Analysis As indicated in previous chapters, especially Chapter 3, benefit-cost analysis has been part of the water resources project approval process for over 50 years. Only a few water projects leave USACE or other federal agencies without a favorable benefit-cost ratio and, to many, the higher the ratio, the better the project. But, in a 2004 report, a committee of the National Research Council reviewing USACE analytical methods and approaches recommended that ‘benefit-cost analysis should not be used as the lone decision criterion in judging whether a proposed planning or management alternative in a USACE planning study should be approved’ (NRC, 2004b, p. 6.) The committee further noted that reliance on a strict benefitcost criterion fails as a decision rule for ranking investments because: ●

●

Maximizing the difference between total benefits and total costs does not address equity considerations in the distribution of costs and benefits. There are likely to be significant uncertainties involved in development of the benefit and cost estimates.

266

The evolution of water resource planning and decision making

In addition, all relevant costs and benefits may not be measurable in monetary terms. Certainly such aspects as changes in biodiversity and ethical concerns are not easily monetized (NRC, 2004b). As the authors of Chapter 3 noted, ‘many project effects will never be monetized and some seem unlikely to be even quantified. The benefit-cost analysis must evolve to incorporate and to give appropriate weight to all project effects.’ In 2006 a House of Representatives Committee asked USACE to engage the National Academy of Public Administration (NAPA) in an evaluation of the USACE’s budget process. In its report NAPA noted a ‘current overemphasis on economic benefits’ and a need to ‘broaden the factors considered in selecting project alternatives . . .’ and ‘. . . incorporate social equity considerations into the fundamental planning process’ (NAPA, 2007, pp. 139, 140). Understanding Ecological Restoration Over the past 20 years, there has been a growing effort to restore ecosystems. Federally funded work, on both large and small scales, is underway across the USA. Some of the degradation targeted has been caused by activities such as farming and urban development; some has resulted directly from federal, state and local projects. But regardless of cause, a very large fraction of the problems being addressed involve water bodies or wetlands. To have an effective, let alone an efficient restoration program or project, however, it is necessary to tie down the meaning of the word itself. The first and, in many ways, the hardest question is: restore to what condition? That inferred as existing prior to human occupancy? At a specific date, such as 1850? How do the restorers allow for or deal with human influences on the ecosystem that most likely will remain? For example, the nature of the run-off component of the hydrologic cycle has been profoundly altered by the uses to which we have put much of the landscape. Most of this will not change. Further, while we are considering removal of many small dams and other structures, many more are destined to remain and will continue to influence river ecosystems. The levees along the Mississippi River that allow millions to live and produce are almost certain to remain in place, even though we recognize that their presence has altered both the river’s and the Gulf of Mexico’s ecosystem. Finally, as noted in Chapter 5, assessing the benefits and costs of ecological restoration will require economists and ecologists to learn to communicate and to develop tools and techniques acceptable to both groups.

Transition to the twenty-first century

267

Taking Climate Change into Account The report, Climate Change Impacts on the United States (National Assessment Synthesis Team (NAST), 2000, p. 10), asserted that, with projected growth in greenhouse gas emissions, temperatures in the USA will likely rise 5 to 9 °F in the next 100 years and that the effects on water resources are likely to become issues in every region of the country. In February 2007 the Intergovernmental Panel on Climate Change (IPCC), established by the World Meteorological Organization (WMO) and the United Nations Environmental Program to assess scientific, technical and socioeconomic information relevant for the understanding of climate change, published Climate Change 2007. The Physical Science Basis: Summary for Policymakers (IPCC, 2007), indicating that: ●

●

●

‘Global atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased markedly as a result of human activities since 1750 and now far exceed pre-industrial values determined from ice cores spanning many thousands of years.’ (p. 2). ‘Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level’ (p. 5). ‘At continental, regional and ocean basin scales, numerous longterm changes in climate have been observed. These include changes in Arctic temperatures and ice, widespread changes in precipitation amounts, ocean salinity, wind patterns and aspects of extreme weather including droughts, heavy precipitation, heat waves and the intensity of tropical cyclones’ (p. 8).

The Summary (p. 9) highlighted that these recent ‘. . . trends, assessment of human influence on the trends and projections for extreme weather events for which there is an observed late Twentieth Century trend . . .’ indicate that it is ‘likely’ that there will be increased incidence of extreme high sea levels, intense tropical cyclone activity and areas affected by droughts and that it is ‘very likely’ that there will be increases in heavy precipitation events (proportion of total rainfall from heavy falls) over most areas. The NAST wrote in 2000: Today, while a political debate rages over the usefulness of the various climate change predictions, few, if any, planning efforts for water-resources projects and programs, even take into account the possible impacts of climate change. Neither Congress nor the Administration requires agencies to consider it. As

268

The evolution of water resource planning and decision making

a result, projects and actions are being undertaken today, with project lives extending over decades that may not be able to cope with tomorrow’s conditions. What actions can and should be taken to mitigate the potential impacts of climate change? (NAST, 2000, p. 10)

Defining the Role of the Public Stakeholders – local officials, project sponsors, non-governmental groups and the public at large – have always been involved in public decision making, but the nature of that involvement has evolved over the years (Galloway, 2003; Cortner, 1993). In the not-so-distant past, the government simply informed the public about a plan. Under pressure of environmental laws and lawsuits, the process was extended to include listening to feedback. The initiation of project cost sharing under the 1986 Water Resources Development Act (WRDA) further increased involvement by locals but also created tensions between the interests of local sponsors in pursuing a set of sponsor-favored alternatives and the federal need to address the broader public or national interest (NRC, 1999, 2004b). At the level expected today, public involvement programs are expensive and time consuming both for federal officials and the public. But, even the best planned project can be delayed or stopped by a failure to involve stakeholders in its early stages (Schkade et al., 1996). Much of the credit for the successful launch of the Everglades project belongs to the early development of a state-driven collaborative planning process in which 1600 stakeholders representing the competing users of the Everglades came together to develop a consensus on goals and objectives. Use of such a process requires the federal or state government to surrender some control and to accept the attendant challenges and the questions raised. What is the proper amount of local input and how is this to be balanced against the federal or broader public interest? Extending Planning Objectives and Measuring Results Planners today face a variety of technical challenges as they develop programs and projects. Factors only lightly considered in the past are moving to the forefront. For example, the Brundtland concept of sustainable development – meeting the needs of the present without compromising the ability of future generations to meet their own needs – is in effect a requirement for intergenerational equity (World Commission on Environment and Development (WCED), 1987) but offers little assistance in determining how this can be achieved. Contemporary social justice concerns are requiring planners not only to estimate the aggregate costs and benefits of

Transition to the twenty-first century

269

projects but also the distribution of these costs and benefits among social classes and ethnic and racial groups. Under the heading of measuring results the Government Performance and Results Act (GPRA) of 1993 requires government officials to develop metrics that permit the performance of programs to be assessed. Is water quality improving as predicted? Is the projected traffic on the waterway occurring? Is the ecosystem being restored? The GPRA also requires backward looks at projects and programs already completed though ex post audits of completed projects are seldom accomplished both because funds are generally not available and because there is a tendency to avoid reopening issues that seemingly have been settled. Yet, it will be difficult to fully comply with the GPRA, deal with the nuances of adaptive management and learn from past mistakes without a viable ex post audit program (NRC, 2004b). Addressing Basin and Watershed Planning The past decade has seen increased attention to watershed planning. In 1998 the US Department of Agriculture (USDA) and the EPA submitted to the White House a Clean Water Action Plan (CWAP) that included ‘a new cooperative approach to watershed protection in which state, tribal, Federal and local governments and the public . . . work together to focus resources and implement effective strategies to solve [the most critical water quality] problems’ (Browner and Glickman, 1998, one page letter). The Action Plan called on all federal agencies to participate in this process and sparked renewed efforts across the government to deal with water issues in a system or watershed context and, in 2003, the Secretary of the Interior issued Water 2025 with just such a focus (US Department of Interior (USDOI), 2003). In its Civil Works Strategic Plan (USACE, 2004, p. vii), USACE indicates that it intends to operate with an approach that emphasizes ‘a holistic focus on water problems and opportunities; attention to the watershed as a logical geographic area for managing water resources; a systems approach for analyzing problems and solutions . . .’. Loucks (2003) argues for a collaborative intergovernmental effort to carry out integrated multi-state river basin planning and suggests that a single federal agency, the USACE, be designated to lead such efforts. Others suggest that the lead could be taken by agencies of the USDOI, the USDA or by EPA or that the lead evolve from the nature of activity in the particular basin. The 2007 NAPA report (p. 1) suggested that USACE ‘must evolve from the role of “project engineer” to “watershed steward” and become a convener of intergovernmental prioritization processes’. All of these government approaches emphasize watersheds and

270

The evolution of water resource planning and decision making

collaboration among levels of government, though each program has its own focus. Some consideration of a list of so far unanswered questions, however, suggests there may be less here than the rhetorical flourishes might promise. For example: ● ● ● ● ●

Where does the regional or basin coordination originate? Do federal or state agencies take the lead and which agency within that level of government? If the federal government is serious about this, why have the river basin commissions (RBCs) been zeroed out of the federal budget? What structure is needed to deal with multi-state basins? How does any basin plan contemplate organizing a decision process that can deal with disagreement and produce proposals that can be implemented?

One might even ask: are watersheds the proper vehicle for complex systems analysis? Today, human activity is increasingly responsive to economic influences. Growth follows the paths of highways and trade corridors. Metropolitan areas are not defined by watersheds but by the location of the population. Much of the wildlife population moves freely from watershed to watershed. Will the water planners of the twenty-first century have to deal with econosheds rather than watersheds and how will these econosheds relate to watersheds? Where implementation, if not decision making, is concerned, advances in remote sensing and monitoring, information technology and GIS permit quicker and easier sharing of information and increasing connectivity among basin and watershed participants. For large basins, such as the Mississippi, it is even becoming possible to envision operating the many components of the basin as a collective whole so that, for example, the TVA releases on the Tennessee River do not conflict with releases on the Missouri and its tributaries by USACE and the USBR. For this sort of basin-wide operation, however, the question of who is in charge will be a very difficult one. Integrating Groundwater into Planning and Management In many parts of the country groundwater is out of sight and out of mind; in others it is recognized as a critical component of the overall water resources picture. Because aquifers are only partially mapped across the nation, the full extent of the resource can only be roughly estimated and a lack of monitoring makes it difficult to assess the quality even of the known sources. While groundwater specialists have appreciated the relationship between surface and groundwater, this relationship only came

Transition to the twenty-first century

271

to the attention of water planners in the last decades. Thus, the value of wetlands as conduits for groundwater recharge was only recently considered in developing the benefits of wetland preservation. Recent studies of the Great Lakes Basin groundwater indicated that the contribution of groundwater to stream flow in the basin ranges from 79 per cent in the Lake Michigan Basin to 48 per cent in Lake Erie (Granneman et al., 2000). Over 40 million Americans rely on groundwater for their water supply and in many locations the aquifers on which they rely are being threatened. Yet, when water resources planning takes place, groundwater resources in the study areas are seldom treated in the same manner as surface water resources and integrated into the overall planning schema. Technology may offer some hope of faster and more accurate mapping and monitoring of groundwater, but progress will not be made until adequate funds are provided to carry out the needed work and groundwater is considered along with surface water in watershed planning. Reducing Flood Damages The devastating impacts of Hurricane Katrina on the MississippiLouisiana Gulf Coast refocused the nation’s attention on the destructive power of floods. Over a million people lost their homes and jobs and more than 1300 people lost their lives. Entire neighborhoods in New Orleans were destroyed and may never be rebuilt. Although some residents have returned to the city, the majority of displaced and relocated citizens are still temporarily or permanently scattered in communities throughout the USA. Even prior to Katrina, national flood losses, after correction for inflation, have continued to grow in spite of decades of structural flood damage reduction efforts by the federal government and implementation of the NFIP, designed to provide some land use control over flood plain occupancy. While, from the 1930s through the 1980s, emphasis was placed on structural approaches to solving the flood damage problem – dams, levees, floodwalls and channel work – the failures of structures in New Orleans illustrated the fragility of such systems when they are not properly maintained and monitored and the residual risk that will always exist behind or below such structures. The movement toward non-structural approaches that began in the 1950s gained ground with the increased attention to the environment but has not been fully accepted by those at risk or in laws, regulations and rules. An inherent bias against nonstructural approaches remains in the current P&G in that they establish national economic development (NED) as the objective of water project development and require projects based on non-quantifiable environmental and social benefits, typical of those found in non-structural efforts, to

272

The evolution of water resource planning and decision making

be approved on an exception-to-policy basis by the approving Federal Secretary governing development of flood damage reduction projects. Further, while current federal rules for communities participating in the NFIP permit the construction of buildings in the flood plain only as long as they do not raise the flood elevation by more than 0.1 feet, there is no required consideration of the cumulative impact of many such buildings. Similarly, the computation of the elevation of the flood with a 1 per cent chance of occurrence – the national standard for flood insurance – does not take into account future upstream conditions or climate change. The Association of State Floodplain Managers (ASFPM) argues that development in a floodway should only be permitted when it can be shown that it causes no adverse impact (ASFPM, 2004). A current evaluation of the NFIP is raising the question of the efficacy of the 1 per cent standard and the nature of the protection provided by levees and floodwalls (American Institutes for Research (AIR), 2005). Katrina also raised the issue of flood risk. A US Senate Committee constituted to examine Katrina response noted that, ‘the inspection and maintenance regime in place to ensure that the levees, flood walls and other structures existing to protect the residents of the greater New Orleans area was in no way commensurate with the risk posed to these persons and their property’ (US Senate, 2006, p. 17.) Also following Katrina, an Interagency Performance Evaluation Task Force (IPET), chartered by USACE to examine the reasons for the failures in the New Orleans Hurricane Protection System, reported that: A risk-based planning and design approach would provide a more viable capability to inform decisions on complex infrastructure such as hurricane protection systems. The traditional approach, as used for the New Orleans protection measures, is component-performance-based, uses standards to define performance and relies on factors of safety to deal with uncertainty. It is difficult to examine the integrated performance of multiple components, and standards are usually limited to past experience. Risk-based planning is systems-based, requiring that the entire system be described in consistent terms and explicitly including uncertainty. Component performance is related to system performance as well as the consequences of that performance. The risk-based approach is well suited for consideration of a variety of measures of merit. Factors such as loss of life, environmental losses and cultural consequences can be included in decision making without reducing everything to one measure such as dollars. (USACE, 2006a, pp. 1–11)

According to a subsequent report by USACE addressing post-Katrina recovery planning, A new risk-based assessment methodology is being developed for use in preparing the LACPR [Louisiana Coastal Protection and Restoration] Final

Transition to the twenty-first century

273

Technical Report. The methodology will assess alternative hurricane risk reduction plans and would produce valuation information describing the risks and consequences for various populations and assets along the coast under different planning scenarios and solution options . . . Ultimately, most risk reduction solutions are directed at altering the relative relationship between probability and consequence. This new risk assessment methodology is emerging from post-Katrina forensic efforts and is being proposed as an improved approach for future engineering work. (USACE, 2006b, p. 57)

A natural question is whether both the USACE risk-based approach and the NFIP standards-based approach should operate as official guides to flood plain decisions? Or is the cost of potential inconsistency too high? Unjumbling Federal Water Policy, Legislation and Coordination In Chapter 6 Rogers, MacDonnell and Lydon pointed out that ‘looking at the current state of affairs of water management in the USA, one would have to conclude that no one in the federal government is truly looking out for a distilled and integrated national public interest’. Several recent NRC studies highlighted the conflicts existing among federal programs and the challenges faced by the agencies dealing with conflicting legislative mandates (NRC, 2004a, 2002a, 1999; NAPA, 2007). As noted in Chapter 2 and in federal reports (USEOP, 1994), since the demise of the WRC, little if any directed coordination exists among federal agencies engaged in water resources activities. The NAPA report found that USACE’s budget process, which drives the bulk of water resources project development, ‘. . . is not completely of its own making and cannot be changed without the agreement of the Administration and Congress’ (NAPA, 2007, p. xvi). Within Congress there continues to be little coordination among the many committees with significant responsibilities for either authorizing or appropriating support of water resources. The Executive Branch’s P&G apply to the development programs of four agencies (USACE, NRCS, USBR and TVA) but not to others with significant water-related funding (EPA, Federal Emergency Management Agency (FEMA) and Department of Housing and Urban Development (HUD)). Laws pertaining to FEMA’s activity in the flood plain do not mesh with those governing the actions of the National Resources Conservation Service (NRCS) or USACE. Two recent administrations implemented programs that attempted to improve the situation. In 1991 President George H.W. Bush established Coastal America as a partnership among 13 sub-cabinet level agencies committed ‘to work together and integrate their efforts with state, local and non-governmental activities’. The agencies ‘pledged to

274

The evolution of water resource planning and decision making

coordinate their statutory responsibilities and combine their resources and expertise’ (EPA, 2004b). In 1998 the Clinton Administration established the American Heritage Rivers Initiative, designating 14 rivers or segments thereof as Heritage rivers and appointing, for each, a River Navigator, whose mission was to bring together the efforts of the many federal agencies involved in dealing with the river (USEOP, 1997). Neither program provides a long-term substitute for federal coordination starting at the top. Wisely Replacing Aging Infrastructure The primary focus of water resources planning and management has historically been the development of new projects. Unfortunately, but perhaps understandably, considerably less attention has been given to ensuring that water projects, once built, are well maintained and rehabilitated or replaced when necessary. There is little evidence that the nation is aware either of the bill that eventually will be paid or the consequences of continuing to postpone its payment. This is despite efforts such as those of the American Society of Civil Engineers (ASCE) to bring the problem to public notice. An ASCE Report Card for America’s Infrastructure has biennially assessed 12 areas of infrastructure vital to the nation’s economic survival and quality of life. Four of the 12 areas involved water (ASCE, 2001, 2003, 2005). In its 2005 Report Card ASCE (2005) gave: ●

●

Dams a grade of D, citing 3500 unsafe dams (those with deficiencies that leave them highly susceptible to failure). It was estimated that $10.1 billion will be needed to address all critical non-federal dams over the next 12 years. Both the nation’s 54 000 drinking water systems and its 16 000 wastewater systems a D-. (Both water and wastewater systems were rated D in 2003.) To continue to comply with federal water regulations, drinking water systems face an annual shortfall of $11 billion needed to replace facilities nearing the end of their useful lives. The ASCE noted that the EPA estimated that $390 billion would be needed for infrastructure improvements to wastewater systems over the next 20 years. The EPA’s own gap analysis, conducted in 2002, also noted similar shortfalls (EPA, 2002). The fiscal year (FY) 2008 EPA budget cuts nearly $400 million from the expected FY 2007 budget for wastewater infrastructure, the seventh straight year of declining budget requests for the Clean Water State Revolving Fund program (US House of Representatives, 2007).

Transition to the twenty-first century ●

●

275

Navigable waterways a D- (downgraded from a D+ in 2003), with the ASCE noting that, of the 257 locks on the inland waterways, nearly half were obsolete in 2005 and that by 2020 that fraction is predicted to increase to four-fifths. It was estimated that the cost to replace the present system of locks would be more than $125 billion. Energy, which includes hydropower, a D (downgraded from a D+ in 2003). Attention was specifically drawn to the lack of investment in new transmission facilities.

In making decisions on funding of infrastructure maintenance and replacement, federal and state governments must establish priorities, consider alternative approaches and develop new funding mechanisms. Yet the existing governance structure does not provide a mechanism for evaluating and comparing the needs across all water sectors in order to establish a priority list. Some groups will advocate removal rather than replacement of some structures, especially dams, and much needs to be learned about the benefits and costs of such removals. The construction of major water and wastewater treatment facilities during the 1970s and 1980s was a onetime program that likely will not be repeated. Small communities were given the opportunity to build facilities that would accommodate hoped for growth and that required operation and maintenance funding beyond their means. Use of revolving funds to provide low interest loans to communities for rehabilitation or replacement has proven to be effective but adequate funding has not been forthcoming from the federal level. New attention is focusing on the feasibility and desirability of regional systems (NRC, 2005). Given current budget realities, infrastructure work will have to be phased over the next few decades. Acknowledging the Private Sector As just noted, with an aging infrastructure, both supply and treatment facilities will require modernization. When private organizations offer to design, build and operate new facilities and maintain costs at reasonable levels, the deal is appealing. While concerns about private control of water supply can be mitigated by sound contracts between local governments and private providers, a generalized suspicion is likely to remain. This is so even though in the USA there is and has been for many years a mix of public and private water utilities, so experience is not lacking (Boland, 2000). That the USA is not alone in its concerns may be seen from the debates on this subject at the Third and Fourth World Water Forums held in Kyoto, Japan in 2003 and Mexico City in 2006. At those events

276

The evolution of water resource planning and decision making

considerable attention focused on the negative aspects of privatization of water supply and water treatment, with forum participants expressing concern that turning management of water supply over to profit-making groups was pricing water out of the reach of the poor and giving private industry too much control. It is worth noting that similar concerns have been expressed over passing the missions of operating locks and dams and recreation facilities from the federal government to private contractors. The experiences of other agencies of the government with government to private conversions indicate that they can work if the proper contract mechanisms are put in place. For example, contractors have successfully taken over much of the information technology support for federal agencies. It seems unlikely, however, that the available evidence will be sufficient to quiet the suspicion.

FUTURE DIRECTIONS The nation will have to develop new approaches to water resources planning and management to deal effectively with the water resources challenges of the twenty-first century. Here are suggestions for several fairly specific tasks that ought to be attacked sooner rather than later. Deal with Organizational Structure and the Policy Void The President, in coordination with the Congress, states and tribes, should facilitate joint development of national water policy and a national water vision. In revisiting national water resources policy and coordination, the role of states and regions should be accorded increased prominence, with the federal government playing a facilitative rather than directive role (Foster, 1998). Participants in the 2007 American Water Resources Association’s (AWRA) National Water Policy Dialogue suggested that ‘. . . the center of gravity for national water actions should rest at the state level and be backed by appropriate support from the Federal government’ (AWRA, 2007, p. 1). The President also should reconstitute a water-focused coordinating organization within the US Executive Office of the President (EOP) to better coordinate federal water programs and agencies; assess the status of the nation’s and the world’s water environment; facilitate water research; and support state water resources planning and management programs. Such a coordinating body would also be expected to provide guidance on reconciling traditional water resources demands with those implied by environmental issues.

Transition to the twenty-first century

277

Assess the State of Water Resources in the Nation The WRC conducted the last national water assessment in 1976. Frequent reports by the US Geological Survey (USGS) and the EPA provide insights into quantity and quality aspects of the nation’s water resources but do not provide the breadth required of national assessment of the many uses of water and how water itself impacts human activity. In their 2004 report the Subcommittee on Water Availability and Quality (SWAQ, Committee on Environment and Natural Resources, National Science and Technology Council) outlined ‘the need for coordinated science and technology efforts to better understand water supply and demand in the United States’ (National Science and Technology Council, 2004). The 2007 SWAQ report focused on ‘topics that would benefit from increased interagency and public/private collaboration and/or increased resources’ (National Science and Technology Council, 2007). What structure would best ensure frequent monitoring, assessment and reporting on the state of our water resources? A 2002 National Water Policy Dialogue, conducted by the AWRA, noting a lack of coordination, spoke to the absence of a national water policy. The Dialogue called upon the President and Congress to: ●

●

●

●

Develop a National Water Vision – to determine, in cooperation with the states and local governments, how the nation wants to deal with water. Formulate a National Water Policy that translates the vision into action. This is not a call for a federal water policy that directs the actions of federal, state and local governments, but for a policy that defines the shared responsibilities at each level of government. Provide for coordination and collaboration among federal agencies and with other agencies at state, regional and local levels in the conduct of their water resources activities. Address water issues on a holistic basis, using watersheds and basins as the setting for water resources projects and programs (AWRA, 2002).

Work in an Interdisciplinary Manner We must demand that those who deal with water resources work in an interdisciplinary manner. Accomplishment of this goes far beyond the blending of programs in universities and the restructuring of organizations to provide for this balance. It will require that decision makers and legislators at the national, state and local level also take this approach. Single focus

278

The evolution of water resource planning and decision making

committees in legislative bodies need to be integrated to provide a more holistic approach to dealing with the challenges we face. Interdisciplinary groups that bring balanced and integrated alternative approaches to dealing with the challenges they face should support senior decision makers. Adequately Support Water Resources Research The road ahead in water resources and water resources planning and management is not clearly marked. Many unknowns and uncertainties will have to be dealt with as they are encountered. That said, there is strong reason to carry out broad efforts in research to work toward solving some of the challenges we do know must be faced. Research enabled us to address many of the issues encountered over the past half-century. It provided the technological advances already mentioned, along with new theories and methodologies that increased the available understanding of the water world in which humanity operates. But given the numerous challenges outlined in this text, the need for research will be at least as important in the decades ahead as it has been in the past. While the National Science Foundation continues to support basic research in water resources, it and other agencies could usefully pay more attention to applied research in planning and management. Decisions on water issues must be founded on unbiased, credible and current scientific data and information. There is a need to adequately support the water resources research programs outlined below. General Needs for water research have been investigated by any number of learned bodies including the NRC (NRC, 2004a, 2001; Baedecker and Friedman, 2000; Naiman et al., 1995). The authors of this book have also identified specific areas where water-related research will be valuable and where research needs can be focused or expanded. In 2001 the Water Science and Technology Board of the NRC issued a report outlining important areas of water resources research needing to be addressed in the next 10 to 15 years in order to meet the challenges ahead (NRC, 2001). The report, which was initiated by the Board, reflected two years of Board discussions on the water issues facing the nation. It concluded that investments in water resources research can especially usefully be made in the following areas: ●

Water availability – Investigations of surface water and groundwater availability should focus on the development of supplyenhancing technologies, on understanding the coupled hydrologic

Transition to the twenty-first century

●

●

279

and biogeochemical cycles that control water quality and on developing means of preventing further declines in water quality. Data from networks of continuous ground-based and remote sensing instrumentation are critical for understanding responses to variable climates at different temporal and spatial scales. Monitoring is important not only for resource planning and regulatory activities, but also for assessing the effectiveness of water policies and management efforts. Water use – There is a great need to better understand the determinants of consumptive water use, the importance and scale of agricultural water use and the nature and impact of environmental uses of water. Research on the technologies and infrastructure for water conservation and recycling will be critical to meeting future water needs. Water institutions – Research leading to the development of improved water management institutions should receive much more emphasis in the research agenda of the twenty-first century than it has in the past. Efforts should focus on legal and economic institutions and should involve researchers from a broad array of social science disciplines (NRC 2001, p. 2).

Shortly after release of the 2001 NRC report, Congress requested that the NRC conduct a follow-on study to ‘illuminate the state of the water resources research enterprise in the United States’ (NRC, 2004a, p. 1). The resulting 2004 report refined and enhanced the findings of the 2001 report, examined investment patterns in research, addressed coordination of research and related institutional options for coordinating, prioritizing and implementing water research (NRC, 2004a). The 2004 report reviewed the research focus areas identified by the 2001 report and concluded that they reflected the current best statement of research needs. The need for research in these areas continues to exist. Ecological restoration and environmental quality Many restoration programs have been launched, but most of the available research has focused on small streams and rivers and only recently did work on large rivers become recognized for funding and other support. The social challenges of determining the ultimate objective of restoration may be equally large. The scientific challenges in understanding restoration ecology are immense and, as Moreau and Loucks indicate in Chapter 4, there has been insufficient focus on and a lack of progress in developing the broad concepts of ecosystem health and services that would support

280

The evolution of water resource planning and decision making

effective planning and management of ecosystem restoration. The critical questions needing answers cross the boundaries of the natural sciences and engineering. For example, the present level of understanding of the relationships between spatial and temporal patterns of flow and their effects on both aquatic and terrestrial ecosystems has progressed only a short distance beyond conceptual models. The research by Stanford (1994), Postel and Richter (2003) and others point out weaknesses in existing models. An emerging consensus among these investigators is that restoration of ecosystems to their natural conditions is most likely to occur if flow regimes are returned to their natural cycles and variability. That can be achieved only partially when streams are managed for multiple purposes. More comprehensive models of aquatic and riparian ecosystems and how they are affected by hydrologic variables are needed, not only to test the developing theories, but also to advance work on tools needed for ongoing projects. Substantial additional work is necessary to develop reliable predictive models to support environmental restoration programs and to assess potential impacts of projects designed primarily for other purposes. There is an equal need to examine the mechanism by which decisions concerning restoration are made and how, in multiple stakeholder environments, consensus on such issues can be reached. To add to the challenge, whether restoration efforts make a difference will not be fully understood for decades after programs are initiated. Achieving this understanding will require substantial investment in monitoring and assessment activities. A second research need is to enhance understanding of the fate and transport of contaminants over long distances and extended time periods, especially for nutrients and toxic substances. Much of the current body of water quality models are based on phenomena that may occur over selected critical reaches of streams for selected periods of time. Nutrients, sediment and long-lived toxic substances frequently have their most significant effects hundreds of miles downstream and months or even years after the substances enter tributary streams. Conduct of Ex Post Facto Research As the previous chapters indicated, assessments of the performance of past water policies and projects can reveal many lessons. Methodologies for the conduct of such research exist but require special attention as they always rest on development of counter-factual scenarios. But the greatest challenge is likely to be to find the support for such applied research. Because it is not dealing with the search for theories or new methodologies it is generally not high on the funding priority lists of research agencies such as the National Science Foundation. Action agencies and

Transition to the twenty-first century

281

their oversight committees in Congress will not be anxious to fund such activity because there may be bad news connected with the product. The Government Accountability Office (GAO) does report on specific elements of programs or projects but the products generally lack the rigor of more formally developed ex post facto evaluations. Further, with adaptive management being increasingly recognized as an appropriate strategy for addressing the uncertainty associated with environmental and other projects, the cost of continued monitoring and evaluation of projects should, in any case, be recognized as a valid project cost. If the monitoring is correctly designed, it can be useful both for real-time adaptation and for later evaluation. New Paradigms for Stakeholder Involvement If adaptive management is to be successful it is almost certainly true the stakeholders will have to be involved both in the monitoring and the choice of adaptations. Local sponsors of projects – be they states, municipalities or special organizations – are paying a cost share for many projects and expect to be at the decision table. But stakeholder involvement necessitates independent scientific support, perhaps in the form of a scientific panel available to them. There is considerable need for research in public involvement and especially in development of decision support systems (DSS). Efforts to further develop interactive, ‘shared vision’ simulation models could lead to improved stakeholder understanding and thereby enhance the decision process.

REFERENCES American Institutes for Research (AIR) (September 2005), Evaluation of the National Flood Insurance Program: Annual Report 2004–2005, contract number 282-98-0029, task order 49, Washington, DC: American Institutes for Research. American Society of Civil Engineers (ASCE) (2001), 2001 Report Card for America’s Infrastructure, Reston, VA: American Society of Civil Engineers. American Society of Civil Engineers (ASCE) (2003), 2003 Report Card for America’s Infrastructure, Reston, VA: American Society of Civil Engineers. American Society of Civil Engineers (ASCE) (2005), 2005 Report Card for America’s Infrastructure, Reston, VA: American Society of Civil Engineers accessed 15 April, 2008 at http://asce.org/reportcard/2005/index.cfm. American Water Resources Association (AWRA) (31 December 2002), Letter to the President of the United States, Speaker of the House of Representatives and Senate Majority Leader, Middleburg, VA: American Water Resources Association.

282

The evolution of water resource planning and decision making

American Water Resources Association (AWRA) (20 February 2007), Letter to the President of the United States, Middleburg, VA: American Water Resources Association. Association of State Floodplain Managers (ASFPM) (2004), No Adverse Impact: A Toolkit for Common Sense Flood Plain Management, Madison, WI: Association of State Floodplain Managers. Baedecker, M.J. and L.C. Friedman (eds) (2000), ‘National research program in the hydrologic sciences’, US Geological Survey, circular 1195, US Department of the Interior, US Geological Survey, Reston, Virginia. Boland, J.J. (October 2000), ‘The business of water: overview and context’, Water Resources Update, 117, 1–5. Browner, C. and D. Glickman (14 February 1998), Letter to the Vice President Accompanying the Clean Water Action Plan, Washington, DC: US Environmental Protection Agency. Carson, R. (1962), Silent Spring, New York: Houghton Miflin Co. Cortner, H.J. (1993), Reconciling Citizen, Analyst and Manager Roles in Democratic Governance: Public Involvement Challenges in the 1990s, Alexandria VA: US Army Corps of Engineers, Institute for Water Resources. Foster, C.H.W. (1998), ‘The art and practice of living in place: lessons from New England regionalism’, Water Resources Update, 111, 18–22. Galloway, G.E. (20 November 2003), Report of the Coastal Louisiana Technical Summit, Flood Control Act, 33 U.S.C. 701a, Reston, VA: American Society of Civil Engineers. Granneman, N.G., R.J. Hunt, J.R. Nicholas, T.E. Reilly and T.C. Winter (2000), The Importance of Groundwater in the Great Lakes Region, investigation report 00-4008, Lansing, MI: US Geological Society. Intergovernmental Panel on Climate Change (IPCC) (2007), Climate Change 2007. The Physical Science Basis: Summary for Policymakers, contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Geneva: Intergovernmental Panel on Climate Change. International Joint Commission (IJC) (April 2003), The Status of Restoration Activities in the Great Lakes Areas of Concern, Washington, DC and Ottawa, ON: International Joint Commission. Loucks, D.P. (2003), ‘Managing America’s rivers: who’s doing it?’, International Journal of River Basin Management, 1 (1), 21–31. Maass, A., M.M. Hufschmidt, R. Dorfman, H.A. Thomas, Jr, S.A. Marglin and G.M. Fair (1962), The Design of Water-Resource Systems: New Techniques for Relating Economic Objectives, Engineering Analysis and Governmental Planning, Cambridge, MA: Harvard University Press. Naiman, R.J., J.J. Magnuson, D.M. McKnight and J.A. Stanford (1995), The Freshwater Imperative: A Research Agenda, Covelo, CA: Island Press. National Academy of Public Administration (NAPA) (2007), Prioritizing America’s Water Resources Investments: Budget Reform for Civil Works Construction Projects at the U.S. Army Corps of Engineers, Summary Report, a report by a panel of the National Academy of Public Administration for the US Congress and the US Army Corps of Engineers, Washington, DC: National Academy of Public Administration. National Assessment Synthesis Team (NAST) (2000), Climate Change Impacts on the United States: The Potential Consequences of Climate Variability and Change, Washington, DC: US Global Change Research Program.

Transition to the twenty-first century

283

National Research Council (NRC) (1999), New Directions in Water-Resources Planning for the U.S. Army Corps of Engineers, Washington, DC: National Academy Press. National Research Council (NRC) (2001), Envisioning the Agenda for WaterResources Research in the Twenty-First Century, Washington, DC: National Academy Press. National Research Council (NRC) (2002), The Missouri River Ecosystem: Exploring the Prospects for Recovery, Washington, DC: National Academy Press. National Research Council (NRC) (2004), Confronting the Nation’s Water Problems: The Role of Research, Washington, DC: National Academy Press. National Research Council (NRC) (2004b), Analytical Methods and Approaches in Water Resources Project Planning, Washington, DC: National Academy Press. National Research Council (NRC) (2005), Regional Cooperation for Water Quality Improvement in Southwestern Pennsylvania, Washington, DC: National Academy Press. National Science and Technology Council, Committee on Environment and Natural Resources, Subcommittee on Water Availability and Quality (2004), Science and Technology to Support Fresh Water Availability in the United States, Washington, DC: Executive Office of the President. National Science and Technology Council, Committee on Environment and Natural Resources, Subcommittee on Water Availability and Quality (2007), A Strategy for Federal Science and Technology to Support Water Availability and Quality in the United States, Washington, DC: Executive Office of the President. Postel, S. and B. Richter (2003), Rivers for Life: Managing Water for People and Nature, Washington, DC: Island Press. Schkade, D.A., T.D. Feather and D.T. Capan (June 1996), Environmental Valuation: the Role of Stakeholder Communication and Collaborative Planning, report 96-R-17, Alexandria, VA: US Army Corps of Engineers, Institute for Water Resources. Stanford, J.A. (July 1994), Instream Flows to Assist the Recovery of Endangered Fishes of the Upper Colorado Basin, biological report no. 24, Denver, CO: US Fish and Wildlife Service. US Army Corps of Engineers (USACE) (March 2004), Civil Works Strategic Plan, Washington, DC: US Army Corps of Engineers. US Army Corps of Engineers (USACE) (2006a), ‘Performance evaluation of the New Orleans and Southeast Louisiana hurricane protection system’, draft final report of the Interagency Performance Evaluation Task Force, vol. I, executive summary and overview 1 June, accessed 30 December, 2008 at https://ipet.wes. army.mil/. US Army Corps of Engineers (USACE) (2006b), ‘Louisiana coastal protection and restoration’, preliminary technical report to the US Congress, US Army Corps of Engineers, New Orleans District, accessed 30 December, 2008 at www. lacpr.usace.army.mil. US Department of Interior (USDOI) (2 May 2003), news release ‘Water 2025: preventing crises and conflict in the west’, US Department of Interior, Washington, DC. US Environmental Protection Agency (EPA) (2002), The Clean Water and Drinking Water Gap Analysis, Washington, DC: Office of Water.

284

The evolution of water resource planning and decision making

US Environmental Protection Agency (EPA) (7 October 2004a), ‘Superfund budget history’, accessed 30 December, 2008 at www.epa.gov/superfund/ accomp/budgethistory.htm. US Environmental Protection Agency (EPA) (7 October 2004b), ‘Coastal America’, accessed at www.epa.gov/owow/oceans/partnerships/coastam.html. US Executive Office of the President (USEOP) (1994), Sharing the Challenge: Floodplain Management into the 21st Century, report of the Interagency Floodplain Management Review Committee, Washington, DC: Government Printing Office. US Executive Office of the President (USEOP) (1997). Federal Support of Community Efforts along American Heritage Rivers, Executive Order 13061, Washington, DC: The White House. US House of Representatives, Transportation and Infrastructure Committee (2007), ‘FY 2008 President’s budget request for the Department of Transportation and Environmental Protection Agency’, press release accessed 30 December, 2008 at http://transportation.house.gov/hearings/hearingdetail.aspx?NewsID528. US Senate (1962), Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources, Senate Document 97, 87th Congress, 2nd Session, Washington, DC: US Government Printing Office. US Senate (2006), Hurricane Katrina: A Nation Still Unprepared, Committee on Homeland Security and Governmental Affairs, Washington, DC: US Government Printing Office. US Water Resources Council (1973), ‘Establishment of principles and standards for planning water and related land resources’, Federal Register, 38 (174), 24778. US Water Resources Council (1983), Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation, Washington, DC: US Government Printing Office. Walters, C.J. and C.S. Holling (1990), ‘Large-scale management experiments and learning by doing’, Ecology, 71 (6), 2060–68. World Commission on Dams (November 2000), Dams and Development: A New Framework for Decision Making, London and Sterling, VA: Earthscan Publications Ltd. World Commission on Environment and Development (WCED) (1987), Our Common Future, Oxford: Oxford University Press.

Index Across Trophic Level System Simulation (ATLSS) 175–6 Adamowicz, W.L. 110 adaptive management 44, 264–5, 281 Advisory Committee on Water Data 171 Advisory Council on Executive Organization (Ash Council) 32 Alabama-Coosa-Tallapoosa (ACT) Rivers 248 All American Canal 232, 236, 237 Allison, G.T. 225 allocation of water effects of federal law on 256–8 groundwater law 255–6 prior appropriation 253, 255 riparian law 253, 254 alternative dispute management (ADR) 65–6, 68, 69 amenity benefits and costs 106–8, 131 hedonic techniques 107–8 American Institute for Research (AIR) 272 American Society of Civil Engineers (ASCE) 43, 165, 274 American Water Resources Association (AWRA) 276 analysis, evolution of 2 analytical initiatives 58 analytical techniques, and environmental values 5 Andreu , J.J. 159 anti-degradation policy 152 Apalachicola-Chattahoochee-Flint (ACF) River Basin 11, 248, 264 aquatic ecosystem models 174–9, 191 aquatic life, protection of 141–5, 150 AQUATOOL model 169 AQUATOX model 176–7 Arctic National Wildlife Refuge 108 Argyle, M. 214

Arizona vs California 233, 234, 237 Arkansas, Red, White River Basin Study 130 Arnold, J.G. 172 Arrow, K.J. 110, 128, 250 Arrow’s Impossibility Theorem 247 Aspen Institute 43 Association of State Floodplain Managers (ASFPM) 272 Bachmat, Y. 170 Baedecker, M.J. 278 Barber, B. 66 Barbier, E.B. 205 Barnthouse, L.W. 215 BASINS, modelling tool 172 Batabyal, A.A. 215 Beck, R.E. 258 Bedient, P.B. 172 benefit quantification techniques 92 benefit-cost analysis 3, 12, 22, 25, 29, 82–135 amenity benefits and costs 106–8 benefit-cost inference and incomplete economic analysis 113 broadening 265–6 decision criterion 121–2 demand curves: changes in output 100–102 discount rate 118–21, 128 ecosystem restoration 129–30 estimation of costs 114–15 hydroelectric benefits 100 intangibles 85 integrating benefits and costs 115–26 intergenerational equity 121, 129 land use changes 100 measuring project benefits and costs 97–114

285

286

The evolution of water resource planning and decision making

changes affecting producers and workers 99–100 price changes and consumers 97–9 non-market benefits and costs 102–111 inferring using benefits transfer 111–13 non-monetarized and non-quantified effects 129 non-use benefits 108–111 price inflation 116–17 principle of present value 117–18 project evaluation 116–17 published standards for 127 recreation benefits 102–6 role of willingness-to-accept 127–8 secondary benefits 88–9, 89–90 special issues in estimation of costs 114–15 standards 29 temporal issues 115–16 uncertainty in 122–3, 129 scenario methods 123 sensitivity analysis 123 simulation techniques 123–4 benefits and costs, environmental 85 benefits transfer method 111–12 activity data 112 unit value transfer 112 value function transfer 112 birds 140 Bishop, R.C. 210, 215 Black, R. 131 Blamey, R. 205 Bohm, P. 131, 205 Boland, J.J. 275 Bonnor, R.E. 222 Bornstein, D. 226 Borton, T.E. 67 Boulder Canyon Project Act (1928) 18, 232, 233 Bower, B.T. 91 Boyle, K.J. 204 Brickman, P.D. 214 Bromley, D. 93–4 Brown, F.L. 250 Brown, G.M. Jr. 106 Browner, C. 269 Buchanan, J. 226 Bureau of Census 158

bureaucratic politics and process model 225 Cabinet Council on Natural Resources and the Environment 38 California State Water Project 93 Carey Act (1894) 221 Carson, R.T. 109, 110, 131, 148, 260 Carter, Jimmy 37 Caulfield, H.P. Jr. 49, 88, 89, 130 Center for Disease Control 156 Central Arizona Project 233 Central and South Florida Project 160 Central and Southern Florida Project Comprehensive Review Study 41 Central Utah Project 234 Central Valley Project 93 Century Magazine 138 Chadwick, E. 142 Chapra, S.C. 179 Chesapeake Bay 173 Chesapeake and Ohio Canal 15 choice based conjoint 110–11 Cicchetti, C.J. 106 Ciriacy-Wantrup, S. 209 civic culture, and water management 64 Civil Works Strategic Plan 269 Clark, Galen 138 Clawson, M. 91, 131 Clean Air Act (CAA), amendments (1990) 195, 196 Clean Rivers Restoration Act (1966) 30 Clean Water Act (1977) 2, 31, 33, 148, 167, 192 amendments (1987) 151–2 implementation 152–5 planning framework 162 provisions 150–52 revision (1977) 36 Clean Water Action Plan 269 Clean Water Restoration Act 150 climate change 58, 267–8 Climate Change 2007 267 Climate Change Impacts on the United States 267 collaborative approach 70 collective action 224 Colorado River 8–9, 11, 18

Index Colorado River Basin 223 1929 to 1968 232–4 1968 to present 234–8 comparison of Rational and Polis Models 239–46 existing governance system 238–9 interest groups 234, 241–2, 247 irrigation 231–2, 236 pre-1929 230–32 salinity 235–6 and USBR 234 water governance case study 230–46 water scarcity 236–7 water transfer 237–8 Colorado River Commission 231, 232 Colorado River Storage Project Act (1956) 233 common pool property 224 community and cultural values, measurement 92 compensating variation 84–5, 97–9, 131 ‘compensation principle’ 84 ‘compensation test’ 84 Comprehensive Environmental Response, Compensation and Liability Act (1980) 36, 109, 159 Comprehensive Everglades Restoration Plan (CERP) 42, 160 conflict management and participation 65–6 tools 73 Congressional Behavior Model 225–6 conservation 22, 27, 30 conservation movement 138 construction agencies 27, 51 see also USACE, USBR, NRCS Consumer Price Index (CPI) 116 ‘consumer surplus’ 130 consumers, and price changes 97–9 consumption 199, 200 Consumptive Uses and Losses Report 238 contaminants 280 regulation 42 contingent choice method 203 contingent valuation 92, 95 advantages of 203 embedding effect 204 non-use benefits 108–110

287

technical problems for studies 204–6 yea saying 204 coordinated water management 31 Cortner, H.J. 268 Cost of Living Adjustments (COLAs) 116 cost pricing 93 cost sharing 39, 40, 45, 68, 92, 125, 262 Costanza, R. 195, 196 Council of Economic Advisors 91 Council on Environmental Quality (CEQ) 32, 69, 159 Crawford, N.H. 172 Creighton, J. 67, 69 Crenson, M.A. 227 Criteria for the Federal Evaluation of Resource Investments 97 Cummings, R. 130 Czech, B. 139, 148, 149 da Costa, J.R. 180 Dahl, R.A. 8, 76, 226 Dahl, T.E. 137, 148 Daly, H.E. 198, 199 dam building 147, 181, 223, 232, 233, 274 1800 to 1900 15 1920s 140–41 Dam Removal Clearing House 43 Danish Hydraulic Institute 169 database initiatives 58 Davies, J.C. III 144 Davis, R.K. 91, 106, 131 decision analysis 213 decision making benefit-cost analysis 121–2 and ethical dimensions 63 political 220–52 tensions between the political and technical 64–5 decision support systems 180 deforestation 18 Degrees of Belief 65 Delaware River Basin Commission (DRBC) 53 Delaware River Estuary 190–91 Delft Hydraulics 169 Delli Priscoli, J. 64, 73, 75 demands 1, 35, 75 democracy 75

288

The evolution of water resource planning and decision making

Desert Land Act (1877) 16 Design of Water-Resource Systems 26, 93 Desvousges, W. 204 Diamond, P.A. 131 Diener, E. 214 Dietz, T. 206 diminishing marginal utility 87 discount rate 118–21, 128 discount rate formula 89, 91 distribution analysis 31 Dombeck, M.P. 138 Donigian 172 Downs, A. 227 Draft Report on the Environment 2003 154 drainage basins, national study 21 dredged material 151 drought games 31 Drury, W. 207 Dupuit, J. 87 Dzurik, A.A. 41, 45, 46 Eckstein, O. 17, 26, 85, 92, 95, 130 ecological assessment 174–9 ecological restoration 129–30, 167, 266 and environmental quality 279–80 ecologists, and economists 5–6, 188–221 economic analysis 82, 83–5, 113–14 historic contributions on water resources 94–6 of water projects 21, 26 early foundations 85–8 economic development 15, 25, 86, 90 economic efficiency 23, 92 Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) (1983) 10, 38, 58, 91, 122, 127, 161, 162, 228, 262 economic evaluation of water projects 22, 23 Economic Theory of Politics 8, 227 economics role of 3 of water quality management 91 The Economics of Welfare 87

economists and ecologists 5–6, 188–221 defining what is to be valued 206–9 disciplinary arrogance 200–209 divisions between 198 Environmental Monitoring and Assessment Program (EMAP) 192–5 interdisciplinary collaboration 188–90 Quality of the Environment program, at Resources for the Future (RFF) 190–92 and the Science Advisory Board 195–7 valuing changes in ecosystem service flows 201–4, 208 ecosystems protection of 159–61 and uncertainty 209 value of 196–7 valuing changes in ecosystem service flows 201–4 ‘efficiency’ accounting stance 34 Eisner, T. 210 Ekelund, R.B. Jr. 86 El Sarafy, S. 214 Elgin, D.S. 46, 49 endangered species 148–50, 210 Endangered Species Act (ESA) (1973) 35, 148, 235 Endangered Species Committee 148–9 Endangered Species Preservation Act (1966) 148 Enhanced Stream Water Quality Model (QUAL2E) 174 environment 27–8, 31–7, 260–61 environmental assets, safe minimum standards (SMS) for 209 environmental benefits and costs 85 environmental conflict resolution (ECR) 69–71 Environmental Defense 55 environmental effects prediction techniques 165–81 demand for 165–8 groundwater models 170–71 hydrologic/hydraulic models 169–70

Index modelling process 179–81 state of development 168–9 water quality models 173–4 watershed models 172–3 environmental impact statements 32 environmental legislation 35 environmental mediation 66 Environmental Monitoring and Assessment Program (EMAP) 192–5 environmental movements 31, 36, 41 environmental policies 137–45, 146–65 environmental protection 3, 4, 12, 56 environmental quality 10–11, 24, 34, 161 and ecological restoration 279–80 and travel cost 104–6 ‘Environmental Quality Account’ 31 Environmental quality (EQ) accounting stance 34 environmental restoration 37, 178 environmental systems models 168 environmental values 4, 136–45, 146 and analytical techniques 5 incorporation in water resources project planning 161–4 and water allocation 59–60 in water resources planning programs 145–6 equivalence 117 Erie Canal 15 Erskine, H. 203, 214 Espelande, W.N. 223 ethical dimensions, water management 62–3 Everglades National Park Protection and Expansion Act (1989) 41 Everglades Restoration 37, 39, 41, 42, 44, 160, 175, 268 existence value 91 extinction 211 Exxon Valdez 110 Fair, G.M. 143 Farmer, M.C. 209 Feather, T.D. 44, 175 federal agencies, and planning processes 51 Federal Emergency Management Agency (FEMA) 39–40

289

Federal Energy Regulatory Commission (FERC) 18 federal government 15–16, 17–18 role of 7, 11, 221, 223, 249 Federal Interagency Flood Management Task Force 39–40 Federal Interagency River Basin Committee (FIARBC) 53, 88, 145 federal law, effects on water allocation and use 256–8 Federal Natural Resource Development 96 Federal Power Act, amendment (1986) 38, 39 Federal Power Commission 18, 19, 92 Federal Register 110 federal water policy 273–4 federal water policy coordinating institution (proposed) 57–8 Federal Water Policy Initiatives 37 Federal Water Pollution Control Act (1956) 144 Amendments 236 Federal Water Pollution Control Administration 144–5 Federal Water Power Act (1920) 19 Federal Water Quality Administration 150 Fedra, K. 180 financial analysis and policies 124–6 Fischer, L.K. 80 Fischhoff, B. 215 Fish and Wildlife Coordination Act (1934) 140 Fish and Wildlife Coordination Act (1946) 27 fish/fishing 104, 131, 175, 177–8, 235 flood control 16, 25, 28–9, 259–60, 271–3 cost sharing 18 Mississippi River 19 Flood Control Act (1917) 18 Flood Control Act (1936) 20, 22, 87–8, 260 and economic analysis 85, 87, 94 Flood Control Act (1944) 25 Flood Control Act (1960) 29 Flood Control Act (1965) 29 flood insurance 29

290

The evolution of water resource planning and decision making

Flood Insurance Act (1968) 29 Flores, N.E. 110, 131 Florida, Pelican Island 140 flow targets 177–8 food webs 178 Foreman, J. 210, 215 Foster, C.H.W. 276 Fox, I. 130 Fradkin, P.L. 250 A Framework for the Economic Assessment of Ecological Benefits 196 France, Ecole National de Ponts et Chaussees (ENPC) 86–7, 94 Freeman, A.M. 196, 214 Friedkin, J.F. 236 Friedman, L.C. 278 Gallatin, A. 86, 94 Gallatin Report (1808) 15 Galloway, G.E. 268 Gardner, B.D. 49 Georgakakos, A.P. 180 Geospatial Information Systems (GIS) 263 Getches, D.H. 230, 250, 254, 258 Gilbert, F.S. 207 Ginsberg, B. 227 Glickman, D. 269 Global Water Partnership (GWP) 65 governance 6–7 concept of 220 evolution of 1–2 models of 225–6 and politics 7–8 see also water governance Government Performance and Results Act (1993) 269 Granneman, N.G. 271 ‘Green Book’ 25, 44, 88–9, 94, 145 Griffin, J. 214 Grigg, N.S. 29, 40, 45 Gross Domestic Product Implicit Price Deflator series 116 groundwater and planning and management 270–71 protection of 150 groundwater law 255–6 groundwater models 170–71

guidelines 25–6, 32, 87–91 Guring, G. 214 Habermas, J. 65 habitat equivalency 131 Habitat Evaluation Procedures 175, 178, 212 Habitat evaluation system (HES) 212 Habitat Suitability Index (HSI) 174 Haefele, E. 220 Hammack, J. 106 Hanchey, J.R. 67 Hanemann, W.M. 131, 205 Hanke, S.H. 46 Hargrove, E.C. 53 Harris, C.C. 204, 215 Harrison, R.W. 137 Harvard Resources for the Future (RFF) 91 Harvard Water Program 93, 96, 169, 262 Hausman, J.A. 130, 131 Hayes 139 Hays, S.P. 138, 146, 209 hedonics 92, 95, 107–8 Heilbroner, R.L. 198 Hells Canyon 92 Herbert, R.F. 86 Hicks, J.R. 99, 130 high quality waters (HQW) 152 Hirschleifer, J. 92, 95 history of water resource planning and development 1800 to 1900 15–16 1900 to 1933 16–20 1933 to 1943 20–23 1943 to 1969 23–31 1969 to 1980 31–7 1980 to present 37–44 Holmes, B.H. 14, 15, 19, 26, 27, 29, 31 Homestead Act (1862) 222 Hoover Dam 232, 240 Hotelling, H. 91, 130, 131 House Document 308 (US House of Representatives) (1926) 19 House Document 465 (US House of Representatives) 29 Huber, W.C. 172 Hufschmidt, M.M. 49, 89, 95 Hundley, N. Jr. 250

Index hurricanes 271, 272 hydro electric power generation 256–7 hydroelectric benefits 100, 275 hydrologic/hydraulic models 31, 169–70 hydrological Simulation Program FORTRAN (HSPF) 172–3 hydrology 93 Hynning, C.J. 142 Idaho, demand curve for potatoes 101 Idaho Power Commission 92 ignorance 210, 211 In-stream Flow Incremental Method 175 Ince, S. 169 independent water project review process 37 Index of Biological Integrity (IBI) 179 individual species, protection of 139–41, 148–50 ‘informed consent’ 63 infrastructure, replacement 274–5 Inland Waterways Commission (IWC) 139 institutional analysis model 227 institutional model 8 intangibles 85, 88, 145 integrated water resources management (IWRM) 57, 65, 69, 70, 74 Interagency Council on Public Participation (ICCP) 68 interdisciplinary working 277–8 interest group model 226 interest groups 222, 223 Colorado River Basin 234, 241–2, 247 intergenerational equity 121, 129, 268 Intergovernmental Panel on Climate Change (IPCC) 267 International Joint Commission 261 International non-governmental organizations (INGOs) 55 International Union for Conservation and Natural Resources (IUCN) 164 interstate rivers 257–8 iron triangles 226, 232 irrigation 16, 17, 19, 115, 125, 222, 234, 236, 237

291

James, L.D. 46 Jefferson, Thomas 76 Johansson-Stenman, O. 206 Journal of Economic Perspectives 131 jurisdictional boundaries 65 Kahneman, D. 128 Kaldor, N. 130 Kalter, R.J. 97 Karr, J.R. 178 Kates, R.W. 28 Kempton, W. 136, 146 Kingcaid Act (1920) 18 Kirby, J. 164 Kissimmee River Restoration Project 160 Kneese, A.V. 91 Knetsch, J.L. 91, 93, 128, 205 Krausman, P.R. 139, 148, 149 Krutilla, J.V. 17, 26, 85, 89, 91, 92, 95, 108, 125, 130, 215 Lake Ontario 176 Lancaster, K.J. 107 land reclamation 137 land use changes 100 land use control and zoning 28–9 Lane, R.E. 214 Lasswell, H.D. 8, 64, 227 Law of the River 236, 237, 239, 250 Lee, R.R. 46 legislation 17 American law on allocation of water 253–8 drivers of 55 levees 18, 19, 28 Lindblom, C.E. 8 Linsley, R.K. 172 local governments 22–3, 52, 158 local interests 223 local organizations 28 Lochhead, J.S. 237, 250 Locke, J. 198 Loucks, D.P. 49, 180, 269 Lower Colorado River Multi-species Conservation Program 235 Maass, A. 8, 26, 93, 169, 227, 262 McCool, D. 226

292

The evolution of water resource planning and decision making

McCutcheon, S.C. 179 MacDonnell, L.J. 238, 250 Macilwain, C. 210 McKee, J.E. 144 McMichael, A.J. 196 MacRae, D. 202, 214 Mäler, K.G. 104, 119 Malthusian Principle 196 market benefits 100, 131 market goods, evaluation 3 market prices 114 Marshall, A. 199, 214 Martin, L.R. 165 Martin, Q.W. 180 Martin, R. 230, 250 Marx, K. 198 Massachusetts, water quality legislation 143 Massachusetts State Board of Health 142 maximum contaminant level goals (MCLG) 42 Mehan, G.T. III 154 Merck 215 Metcalf and Eddy, Inc. 172 Metropolitan Water District (MWD) 236, 237 Meyers, C.J. 250 Migratory Bird Hunting and Conservation Stamp Act (1934) 140 Migratory Birds Conservation Act (1929) 140 MIKE-BASIN model 169 Millenium Ecosystem Assessment 206–7 Miller, T.O. 235 Minard, J. 87 Mini Historical Statistics 155 Mississippi River Basin 16, 164 flood control 19 Mississippi River Commission 16 Missouri River Basin Development plan (Pick-Sloan plan) 25 Mitchell, R.C. 131, 214 models Across Trophic Level System Simulation (ATLSS) 175–6 AQUATOOL 169 AQUATOX 176–7

bureaucratic politics and process model 225 for environmental systems 168 governance 225–6 groundwater 170–71 hydrologic/hydraulic 169–70 institutional analysis model 227 institutional model 8 interest group 226 modelling process 179–81 PHABSIM 175 predictive 166–8 QUAL2E 174 Rational 228, 229, 239–46, 248–9, 333 RIBASIM 169 simulation 75, 123–4 Soil and Water Assessment tool (SWAT) 172 SPARROW 173 stakeholder involvement 180 Stanford Watershed 172 Storm Water Management 172 Streeter-Phelps 173, 191 SWAT 172 terrestrial and aquatic ecosystem 174–9 WASP6 174 water quality 167, 173–4 watershed 172–3 Moore 73 Morey, E.R. 104, 105, 131 Mueller, J.A. 179 Muir, John 138 Multiple Purpose River Development 92, 95 multiple-objective analysis (1943 to 1969) 24 multiple-objectives 89 multiple-purpose planning 18, 19 projects 1900 to 1933 20 for river basins 21 Municipal Wastewater Treatment Construction Grant amendments (1981) 38 Nadeau, R.L. 210 Naiman, R.J. 278 National Academy of Public Administration (NAPA) 266, 273

Index National Assessment Synthesis Team (NAST) 267 National Board of Engineers for Rivers and Harbors 17 National Commission on Water Quality 35 National Conservation Commission 17 National Drinking Water Standards (NDWS) 156 national economic development (NED) 34, 46, 91, 145, 161 National Environmental Policy Act (NEPA) (1969) 31, 32, 56, 159, 160, 161, 167, 260 and public involvement 67 National Flood Insurance Program (NFIP) 262 National Forestry Commission 139 National Oceanic and Atmospheric Administration (NOAA) 110, 128, 204 National Park Service (NPS) 18, 28, 147 National Planning Board (NPB) 21, 145 National Pollution Discharge Elimination System (NPDES) 36, 163 National Priorities List 159 National Research Council (NRC) 171, 264, 278, 279 National Resources Board (NRB) 21, 145 National Resources Committee 21, 142, 144 National Resources Planning Board (NRPB) 21, 24 National Sciences and Technology Council 277 National Water Commission (NWC) 23, 34–5, 50–51, 56 national water policy 56 National Water Quality Assessment Program 154 National Waterways Commission 17 National Weather Service River Forecast System 30 Nationwide Rivers Inventory (NRI) 147–8

293

Native American and federal reserved water rights 257 natural areas, preservation 137–9, 147–8 Natural Resource Conservation Service (NRCS) 22 natural resource damage assessment 109–10 Natural Resource Districts (NRD) 55 Natural Resources Conservation Service (NRCS) 51 Natural Resources Defence Council 55 nature, value of 198–9 Navier, Henri 87 navigation 15, 18, 25, 256, 275 Nebraska, Natural Resource Districts (NRDs) 80–81 negative externalities 93 New Directions in U.S. Water Policy 34–5, 50, 56 new technology 263–4 Nominal Group Technique 67 non-governmental organizations (NGOs) 50–51 and planning processes 55 non-market benefits and costs 102–111 non-monetarized and non-quantified effects 129 non-use benefits 108–111 choice based conjoint 110–11 contingent valuation 108–110 normative theory 88 North Atlantic Regional study (NAR) 29 North Carolina basin-wide water quality planning program 163–4 Northeast Water Supply Study (NEWS) 29 Northwest Fishbowl Planning approach 67 Norton, V. 130 Noss, R.F. 209 Office of Water Policy 38 Ohio River 144 Ohio River Valley Water Sanitation Commission (ORSANCO) 53 Ohio vs US Department of Interior 109 Omnibus Rivers and Harbors Act (1826) 15–14

294

The evolution of water resource planning and decision making

O’Neill, R.V. 208 open access property 224 option value 91 organizational structure 276 Orlob, G.T. 179 Orme dam 223 other social effects (OSE) accounting stance 34 Owen, J. 207 Palmer, R.N. 30, 180 Pareto improvements 84, 130 Park, R.A. 176 participation 65–6, 75 Payne, J.W. 205 PCB contamination 176–7 Pearce, D.W. 215 Peden, W. 76 Pelican Island, Florida 140 Pennsylvania, Unified Watershed Assessment 164 permits 52, 148, 151, 152, 163, 254 Perrings, C. 215 PHABSIM model 175 Phelps, E.B. 167 Pick-Sloan plan, (Missouri River Basin Development plan) 25 Pigou, A.C. 87, 94, 130 Pinchot, Gifford 139 planning coordination 26 planning frameworks 46 planning processes basin and watershed planning 269–71 coordinating planning efforts 48–9 defining goals and objectives 46–7 developing implementation plans 50 elements of 45–6 establishing a database 47–8 establishing monitoring programs 50 evaluation of plans 49 evolution 44–50 and federal agencies 51 groundwater 270–71 identifying and evaluating alternatives 49 identifying issues and problems 46 and local governments 52 making recommendations 49–50 managing conflicts 48

methodologies and goals 45 and non-governmental organizations 55 obtaining stakeholder input 48 planning objectives and measuring results 268–9 and regional institutions 52–5 and state agencies 51–2 Platt, R.H. 142 Policies, Standards and Procedures in the Formulation, Evaluation and Review of Plans for Use and Development of Water and Related Land Resources (Senate Document 97) 26, 29, 90–91, 96, 145–6, 262 Polis Model 8–9, 228 compared with Rational Model 229 and the Colorado River Basin 239–46, 248–9 political decision making 6–9, 220–54 approaches to 227–9 inertial problems 222 institutional analysis model 227 levels of 221 local interests 223 Polis Model 228 public choice or rational choice model 227 Rational Model 228 time dimension 221–2 Politics 227 politics and governance 7–8 and public interest 261–2 of water governance 226–9 pollution 33–4, 37, 201–2, 261 from non-point sources 151 from urban storm water run-off 151, 152 and population 199 public water supplies 143–4 Quality of the Environment program 190–91 pollution control 30, 144 affordability 155 Pontius, D. 250 population 141, 142 and pollution 199 pork barrel projects 226 Portney, P.R. 131

Index Postel, S. 280 Potomac River Basin study 30–31 Powell, John Wesley 138 predictive models 166–8 present value, principle of 117–18 preservation 90 of individual species 148–50 of natural areas 137–9, 146–7 Presidential Advisory Committee on Water Resources Policy 26 President’s Committee on Water Flow 21 President’s Council on Sustainable Development (PCSD) 165 President’s Water Resource Policy Commission 26 price changes, and consumers 97–9 price inflation 116–17 Principles and Standards for Planning Water and Related Land Resources (P&S) (1973) 34, 45, 93, 96, 161, 162 prior appropriation 230–31, 253, 255 private property 224 private sector initiatives (1800 to 1900) 15 probabilities 65 ‘problem-sheds’ 3, 11 Producer Price Index (PPI) 116 producers, changes affecting 99–100 project cost-sharing rules 37 project effects 82–3 project evaluation 116–17 property regimes 224 property rights 93, 202, 224–5 Proposed Practices for Economic Analysis of River Basis Projects (The Green Book) 25, 44, 88–9, 94, 145 protection of aquatic life 141–5, 150 of ecosystems 159–61 of groundwater 150 of individual species 139–41 of public health 141–5, 150 public, role of 268 public choice theory 226, 227 public dialogue 65 public health 36, 141–5, 150 Public Health Act (UK) (1848) 142

295

Public Health Prevention and Bioterrorism Preparedness Act (2002) 42 public interest 247–8 public involvement 3 and US Army Corps of Engineers (USACE) 62 in water planning 62–76, 67–8 chronology of changes 66–71 simulation models 75 skills 75 Public Involvement in the Corps of Engineers Planning Process 67 public sector 275–6 public water supplies, pollution 143–4 Public Works Administration 21 publicly owned treatment works (POTW) 34, 150 Putnam, R.D. 227 Quality of the Environment program, at Resources for the Future (RFF) 190–92 RAND Corporation 91 Randall, A. 209 Raskin, P. 169 Rational Model 228, 333 compared with Polis Model 229 and the Colorado River Basin 239–46, 248–9 Ready, R.C. 205, 210, 215 Reclamation Act (1902) 16, 17, 221, 259 Reclamation Program 19 Reclamation Project (1902) 125 Reclamation Project Act (1939) 125 Reclamation projects 241 Reclamation Service 223 recreation benefits 1, 102–6 survey approaches to estimating 106 travel cost method 91, 95, 102–6 regime theory 226 Regional Economic Development (RED), accounting stance 34 regional economic effects (REE) 161 regional institutions, and planning processes 52–5 regional interests 56

296

The evolution of water resource planning and decision making

regions, and planning and management 58 Regulatory Right-to-Know Act (2001) 154 Reich, R. 65, 76 Reisner, M. 250 remediation 261 Report Card for America’s Infrastructure 274 Report on the Lands of the Arid Region of the West 138 Report of the Poor Law Commissioners Concerning the Labouring Population of Great Britain 142 Report of the Sanitary Commission of Massachusetts 142 research 278, 280–81 Reserved rights doctrine 233 Resource Conservation and Recovery Act (CWA) (1976) 31 and Superfund 158–9 Resources for the Future (RFF) 190–92 restoration projects 167 RIBASIM model 169 Richter, B.D. 177, 280 riparian land resources 137, 147 riparian law 253, 254 risk 189 River Analysis System 169 river basin commissions (RBCs) 11, 27 abolition 91 river basins 83–4, 92 planning for 26, 269–70 River of Grass Evaluation Methodology (ROGEM) 175 Rivers and Harbors Act (1927) 19, 29 Rogers, P. 26, 45, 240 Roosevelt, Theodore 17, 259 Rorty, R. 190 Rosen, S. 107 Rouse, H. 169 Russell, C.S. 85, 189, 214 Safe Drinking Water Act (SDWA) (1974) 31, 35–6, 38 reauthorized (1996) 42 standards 156–8 safe minimum standards (SMS), for environmental assets 209, 211

Sagoff, M. 114, 131, 222 Sax, D.F. 215 scenario methods 123 Schad, T.D. 46, 58 Schiller, A. 214 Schilling, K.E. 49 Schkade, D.A. 205, 268 Schnoor, J.L. 179 Science Advisory Board 195 secondary treatment 153 security, and water sources 43, 262 Sen, A. 205 Senate Select Committee on Water Resources 26–7 sensitivity analysis 123 sewers 142–3, 144 local government expenditures 155 shared vision planning 74 Shattuck, Lemuel 142 Sheer, D.P. 31 Sierra Club 55, 146, 147 Silent Spring 148, 260 simulation models 75, 123–4 Sinden, J.A. 205 Slovic, P. 215 small watershed program 28 Smith, A. 198 Smith, R.A. 173 Smith, V.K. 106 society, nature of 8 Soil Conservation Service (SCS) 22, 25, 28, 172 Soil and Water Assessment Tool (SWAT) models 172 Solid Waste Disposal Act 150 South Florida Water Management District (SFWMD) 41, 160, 175 SPARROW model 173 stakeholder involvement 281 Stakhiv, E. 165, 178 Stalnaker, C. 175 standards 10 for benefit-cost analysis 127 Standards and Criteria for Formulating and Evaluating Federal Water Resources Developments 89, 95 Stanford, J.A. 178, 280 Stanford Watershed Model 172 state agencies, and planning processes 51–2

Index state (governmental) property 224 State Water Planning survey 44 State Water Project 93 Stern, P.C. 206 Stockfisch, J.A. 120 Stone, D.A. 7, 8, 220, 227, 228–9, 244 Storm Water Management Model 172 Streeter, H.W. 167 Streeter-Phelps model for dissolved oxygen 173, 191 Subcommittee to Study Civil Works of the House Committee on Public Works 26 Superfund Act (1980) 36 Susquehanna River 67 Susquehanna River Basin Commission (SRBC) 54 sustainability (sustainable development) 5, 164–5 history of concept 164 and weighting 165 Swamp Lands Act (1849) 137–8 Takacs, D. 208, 209 Tarlock, A.D. 258 Tarr, J. 144 technical approaches 57 Tennessee Valley Authority (TVA) 20, 29, 53, 259 terrestrial and aquatic ecosystem models 174–9 terrorism, and water sources 43, 262 Thacher, J. 131 Thomann, R.V. 179 time, in project analysis 115–16 Toman, M. 214, 215 total maximum daily loads (TMDLs) 167 travel cost method 91, 95, 102–4, 131 valuing changes in environmental quality through 104–6 Tullock, G. 226 UK, law on water allocation 253 uncertainty 189 in benefit-cost analysis 122–3, 129 and ecosystems 209 United Nations Educational, Scientific and Cultural Organization (UNESCO) 165

297

United States vs Jay Woods (1987) 38 US Army Corps of Engineers (USACE) 8, 10, 21, 25, 29, 175, 265, 266, 269, 272 ADR program 68 Civil Works Programs 69, 71 conflict resolution tools 72 and cost sharing 68 creation of 15 early navigation work 125 ECR programs 71 and evolution and elements of planning processes 44–50 evolution of responsibilities 44 expansion of functions 16–17, 41 Hydraulic Engineering Center (HEC) 169 Institute for Water Resources (IWR) 45, 67–8, 180 select bibliography 78–9 management of watershed stakeholders 71–2 and public involvement 62 public involvement tools 72 public participation 67–8 and regional framework studies 29 restoration projects 161–2 training program 67 trends in responsibilities and approaches 47 watershed approach 70 and WRDA 160 US Bureau of the Budget (BOB) 21, 25, 88 Budget circular A-47 89, 94–5 US Bureau of Land Management 137 US Bureau of Reclamation (USBR) 16, 25, 51, 223, 233 and Colorado River Basin 233 regional multi-purpose planning functions 18 US Commission on the Organization of the Executive Branch of the Government 26 US Congress 27, 46 US Department of Agriculture (USDA) 21 Agricultural Research Service 172 US Department of Environment and Natural Resources (DENR) 163

298

The evolution of water resource planning and decision making

US Department of Interior (USDOI) 18, 120 Division of Forestry 139 US Environmental Protection Agency (EPA) 32–3, 42, 46, 153, 159, 163, 176, 192–5, 195, 196, 236 and planning processes 51 regulatory approach 58 Watershed/Water Quality Modeling Technical Support Center 172 US Executive Office of the President (EOP) 21, 263 US Fish and Wildlife Service (USFWS) 22, 140, 141, 175, 235 US Forest Service (USFS) 18 US Geological Survey (USGS) 56, 138 US Government Accountability Office (GAO) 46, 125, 140, 281 US House of Representatives 19, 29, 61 US Interagency Committee on Water Resources (USIACWR) 25, 88 US Office of Management and Budget (OMB) 10, 21, 69, 88, 119, 120, 122, 154 Circular A-47 44 US Senate 61, 90, 96 value 194 community and cultural 92 concept of valuation 197 of ecosystems 196 Vaughan, W.J. 124, 206 Vick, S.G. 65 Viessman, W. Jr. 44, 49, 57 Vitousek, P.M. 215 Washington, DC, study of metropolitan area water supply problems 30–31, 56 WASP6 model 174 wastewater treatment 31, 33, 151, 167 water availability 278–9 water demand prediction 30 water governance Colorado River Basin, case study 230–46 politics of 226–9 underlying principles 224–5 water institutions 279

water management and civic culture 64 contemporary trends 56–7 discontinuity between geography and jurisdiction 65 ethical dimensions 62–3 implementing adaptive management 264–5 integrated 57 participation and conflict management 65–6 and planning changes to 262–3 tensions between the political and technical 64–5 Water Management Districts (WMD) 55 water planning, public involvement 62–76 water pollution control 33–4, 37 Water Pollution Control Act (1948) 27–8, 144 Water Pollution Control Act Amendments (1972) 31, 33–4 water power 16, 19 water property rights 224–5 water quality 33, 36, 104, 131 federal action on 144 and federal law 257 Water Quality Act (1965) 28, 150 Water Quality Act (1987) 40 water quality management, economics of 91 water quality models 167, 173–4 water resource decisions, in the past half century 1–2 Water Resource Development 92, 95 water resource planning and development (1800 to 1900) 15–16 water resources historic contributions to economic analysis 94–6 national assessment 277 research 278 Water Resources Council (WRC) 27, 34, 37, 38, 91, 122, 127, 161, 174, 228 Water Resources Development Act (1965) 45–6 Water Resources Development Act (1974) 120

Index Water Resources Development Act (1986) 39, 45, 125, 268 Water Resources Development Act (1990) 41, 160 Water Resources Development Act (2000) 44 water resources evaluation, US guidelines for 87–91 Water Resources Planning Act (1965) 27, 44, 54, 56, 91, 240, 262 Water Resources Planning Act (1996) 160 water resources planning programs, environmental values 145–6 water resources project planning, incorporation of environmental values 161–4 Water Resources Research 131 water rights 225 Native American and federal reserved water rights 257 Water Science and Technology Board (WSTB) 171 Water Supply 92, 95 water supply, local government expenditure on 158 water use 279 Water in the West 42 waterborne disease 156, 157, 158 Waters, F. 230, 250 watershed models 172–3 watershed protection approach 162–3 Watershed Restoration Action Strategies (WRAS) 164 watersheds 18, 44 planning 269–70 weak complementarity 104–5 Weatherford, G.D. 250 Weisbrod, B.A. 91 ‘welfare economics’ 83, 84, 92, 97 well-being of people 90 wellhead protection programs 38

299

Werick, W.J. 180 Western Water Policy Review Act (1992) 42–3 Western Water Policy Review Advisory Commission 42 Weston Solutions, Inc. 177 wetlands 137, 140, 157, 166 Wetlands Evaluation Techniques (WET) 212 White, G.F. 23, 28 Whittington, D. 214 Widditsch, A. 67 Wild and Scenic Rivers Act (1968) 30, 147 Wilderness Society 55 wildlife reserves 140 Willig, R.D. 99, 130 willingness-to-accept 85, 127–8, 130, 205 willingness-to-pay (WTP) 85, 90, 130, 154, 193–4, 205, 206 embedding effect 204 marginal (MWTP) 202–3 Winters vs U.S. 257 Wolf, H.W. 144 workers, changes affecting 99–100 Works Progress Administration 21 World Commission on Environment and Development (WCED) 164, 268 World Conservation Strategy 164 World Meteorological Organization (WMO) 267 Yellowstone National Park 138 Yellowstone Park Protection Act 140 Yosemite Valley 138 Hetch-Hetchy watershed 139 Young, H.P. 115 Young, R.A. 49 zoning 28, 29