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Are Your TMDLs Cost Effective

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As states embark on the load allocation phase of their respective Total Maximum Daily Load (TMDL) programs, the question on everyone's mind is: “Are the allocations and associated implementation plans, economically feasible?” The current approach adopted by states allocates pollutant loads in the absence of economic criteria. The available TMDL literature discusses the need to incorporate a cost analysis. Unfortunately, the economic analyses are often performed at a later stage once the loads have been allocated and the implementation strategies are being evaluated. No models evaluate the load allocation from an economic perspective. Landry (2002) has proposed an economic evaluation of the water quality standards prior to TMDL development. Landry suggests that by changing the designated use a superior economic solution may be derived. Should economics be similarly incorporated into the allocation phase? Can significant cost savings be realized by incorporating economic concerns at an earlier stage of the TMDL process? This paper presents a cost optimization pollutant allocation strategy that can be used to incorporate costs into the decision process. This approach is in the process of being implemented for the Roses Creek watershed in Virginia. Although results are not yet available, the paper details the process and uses hypothetical results to demonstrate the strengths of the approach.

It may be argued that incorporating the economic criteria into an already complex load allocation problem overcomplicates the process. The potential for cost savings is significant and overshadows these concerns. Several efforts to date have suggested the incorporation of cost effectiveness ratios in the load allocation process. This simple linear approach does not take advantage of the savings to be realized by the non-linear nature of the relationship between pollutant reduction efficiency and reduction cost. As pollutant load reductions approach 100 percent, costs are shown to escalate exponentially. Many existing load allocations call for 100 percent pollutant reductions without concern for implementation cost. The non-linear optimization model embedded in the cost optimization pollutant allocation strategy will demonstrate the potential cost savings.

The TMDL process is said to be a holistic watershed approach. For this reason alone, the economic evaluation of pollutant allocation alternatives cannot be simply overlooked. Ignoring economic analysis at an early stage may cause serious and costly pollutant allocation revisions. The likelihood of successful implementation of TMDL depends on realistic load distributions among the polluters. Economic assessment at the load allocation phase is required to achieve this goal.
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Document Type: Research Article

Publication date: 2003-01-01

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