1. Econ 201 Lecture 9.4 Water Pollution: Puget Sound Clean Up 3-6-09

2. Efficiency and Cost- Effectiveness Ambient Standards and the Zero-Discharge Goal The shift from ambient standards to a zero discharge goal was problematic. –The feasibility of meeting such a goal is small and thus enforcement is a problem. On-going law suits –For some pollutants, such a high cost might be justified. However, the zero discharge goal does not distinguish among pollutant types.

3. National Effluent Standards Enforcement Problems: –Cost-effectiveness requires individual standards for each source, instead EPA chose general standards for broad categories of sources Allocating Control Responsibility –Studies show that uniform standards do not closely approximate the least-cost allocation.

4. TABLE 17.2 Empirical Studies of Water Pollution Control

5. Pretreatment Standards Nonpoint Pollution Nonpoint source pollution has become a significant part of the total water quality problem. Howerver more intensive controls have been placed on point sources as an attempt to compensate for nonpoint sources. Studies suggest that some nonpoint sources could be controlled at low costs, especially with policies aimed at reducing nitrogen use.

6. TABLE 17.3 Summary of NPDES Trading Programs That Have Traded at Least Once

7. The European Experience –In Europe, economic incentives such as effluent charges play a much larger role. –German experience Pay 100% on all pollutants if exceed threshold 50% on all if meet minimum standard If 75% lower than standard, pay only 50% on actual Waived for 3 years if new equipment purchased which reduces to 20% Estimated to cost 1/3 of uniform standard

8. Puget Sound Clean Up Objectives –Reduce 150k per day pounds of toxic chemicals that enter Puget Sound daily Over 2 years -> equivalent to Exxon Valdez spill –Acquire/restore prime marine habitats Replace degraded shorelines, wetlands, estuaries –40 major species have declined

9. Puget Sound Clean Up Initiative Governor’s proposal –Added $42M to already allocated $90M –Puget Sound Partnership 10 person team of elected official, business leaders Proposed actions –$21M faster clean-up of pollution and shoreline –$6.5M upgrade of septic systems -> into PS –$4M for Parks to upgrade sewer systems –$3M restore estuaries (wetlands) –$2M to remove creosote logs –$1.5M for oil spill and hazardous chemical clean-up, including storage

10. Puget Sound Clean Up What’s happening today –Port Gardner Bay Clean Up (9 sites) Oil, gasoline, diesel fuels, heavy metals Everett shipyard North Marina Baywoods Exxon/Mobil storage Weyerhauser East Waterway ASARCO (Arsenic)

11. An Overall Assessment Use of cost-effective policies would reduce costs substantially while not affecting the benefits. Economic incentives would also facilitate change better than technology-based standards that are rigid. Marketable permits for water pollution control are being explored for many bodies of water in the U.S. –Permits will encourage firms to try to minimize costs. Economic incentives put pressure on sources to find better ways to control pollution.