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1-56670-639-4/05/$0.00+$1.50 2005 by CRC Press
CHAPTER1
Introduction
Randall J.F. Bruins and Matthew T. Heberling
CONTENTS
The Importance of Integrated, Watershed-Level Analysis
Goal and Genesis of This Book
Organization
Unique ContributionsReferences
THE IMPORTANCE OF INTEGRATED,
WATERSHED-LEVEL ANALYSIS
Aquatic ecosystems such as coasts, estuaries, wetlands, lakes, rivers, and streams
provide many services to human society. They supply water and food, they
assimilate wastes, they offer means of transportation and energy generation, theyprovide habitat for many species that humans value, and they offer recreation,
aesthetics, and inspiration. In taking advantage of these services, humans have
stressed these ecosystems. Alteration of stream corridors, changes in patterns of
flow, introduction of nonindigenous species, and pollution by toxicants, nutrients,
sediments, heat, and oxygen-demanding substances have diminished aquatic eco-
systems ability to continue providing the services that society values.
As social awareness has increased, efforts have been made to better manage
these ecosystems and reduce human impacts upon them. In the United States, these
efforts have included increased regulation and mitigation of pollution; increasedattention to the ecological impacts of water resource projects; modification of
agricultural practices and subsidies; and efforts by urban, suburban and rural com-
munities to better steward their aquatic ecological resources through monitoring,
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planning and collective action. Most of these efforts have been accompanied by a
recognition that aquatic ecosystems have complex interactions with their surrounding
landscapes. As a result, the watershed increasingly is seen as a basic unit for aquatic
ecosystem analysis and management.This book is concerned with two types of analysis that are both important for
aquatic ecosystem management: ecological risk assessment (ERA) and economic
analysis. Both have been recognized as necessary, and their use is provided for in
law and regulation, yet because they arise from very different philosophical tradi-
tions, they have tended to remain separate in both theory and practice.1,2 This
separation hampers environmental management. Analysts from these respective tra-
ditions often fail to coordinate their efforts, frequently misunderstand one anothers
terminology and approaches, or disagree as to what is important, thus providing
decision-makers with incomplete or confusing information. Decision-makers mayalso assume that these analyses ought to be separate and thus fail to recognize the
wealth of insight that their effective integration could produce.
ERA has been defined as a process for collecting, organizing and analyzing
information to estimate the likelihood of undesired effects on nonhuman organisms,
populations or ecosystems.3Recommended procedures for carrying out ERA have
been published by the U.S. Environmental Protection Agency (USEPA),4 and the
practice has been employed for a wide variety of ecological problems and settings.
For example, a 1999 report by the Committee on Environment and Natural Resources
(CENR) documented the use of ERA by five U.S. federal agencies to regulate theuses of toxic substances and pesticides, for the control of nonindigenous species, and
to remediate and determine compensation for damage caused by chemical releases.5
The general principles of ERA also underlie many important regulatory protections
for aquatic ecosystems in the United States, such as state-issued water quality stan-
dards (WQS), but watersheds themselves are not usually the subject of ERA. Routine
management approaches, however, including the monitoring and enforcement of
WQS, cannot address certain kinds of aquatic ecosystem impairment. Some undesired
effects are caused by human-caused insults (hereafter termed stressors) for which
there are no standards; these include, for example, introduced organisms and alteredhabitat. Some are a complex result of multiple kinds of stressors, and in some cases
the causes remain unclear without further study. Moreover, some aquatic ecosystems
host unique resources (such as rare species or habitats) having special requirements
that are not adequately understood. In addition, it is often unclear, without focused
analysis, whether a given set of proposed actions to correct these problems will be
effective. In these cases, ERA that is carried out at the spatial scale of the watershed,
here termed watershed ERA (W-ERA), may be useful.
As is further described in Chapter 3, W-ERA focuses on the key ecological
resources and management goals for the watershed, rather than on regulatory standardsalone. The approach directly engages stakeholders in the determination of assessment
goals and scope, identifies all relevant threats, and applies scientific methods to the
identification of causes, risks, and uncertainties of adverse effects. The resulting infor-
mation is intended to be useful for the design of approaches for ecosystem protection
or restoration, whether these measures are physical or institutional, regulatory or driven
by incentives, or governmental or community-based or some combination of these.
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In 1993, USEPA initiated W-ERA in five watersheds to evaluate the feasibility
and usefulness of this approach (Figure 1.1).5,6The outcomes from some of these
assessments, and their usefulness for management, have been described in the
literature,712and W-ERA guidance has been made available as a web-based training
unit.13Prior to this book, however, little information has been available on approaches
for integrating economic analysis with ERA in a watershed management context
(see CENR5and Appendix 9-A).
Economists study choices made by individuals or other entities relating to the
allocation of scarce resources across competing uses (see Chapter 5). Watershedmanagement choices involve complex and uncertain trade-offs of current and future
financial and ecological resources. Economics offers an analytic framework for deter-
mining whether a given choice appears to provide a net benefit to society. Depending
on the approach used, economic analysis can also address impacts on affected parties,
illuminate negotiation processes, and help evaluate the long-term sustainability of
various outcomes. However, the integration of W-ERA and economic analysis that is
needed to realize these insights entails theoretical, technical, and procedural challenges.
GOAL AND GENESIS OF THIS BOOK
The goal of this book is to enhance the management of aquatic ecosystems by
improving the integration of ERA and economic analysis. This book is intended for
technically educated readers with an interest in improving environmental manage-
ment, including researchers, analysts, advocates, and decision-makers working at
Figure 1.1 Locations in the USA of five watershed ecological risk assessment studies under-taken by USEPA and other partners. Comparison economic analyses were under-taken at three of the five locations as indicated.
Mid-SnakeRiver, ID
Middle Platte
River, NE
Big DarbyCreek, OH
WaquoitBay, MA
Clinch Valley,VA/TN
Location of watershed ecologicalrisk assessment (W-ERA)
Location of W-ERA and relatedeconomic analysis
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local, state, regional, or national levels. It is based on experience in the United States,
but many of the principles discussed are broadly applicable.
This book originated with a program of USEPA-funded research to investigate
the integration of ERA and economics, with an emphasis on the watershed as the
scale for analysis. In 1998, the National Center for Environmental Assessment
of USEPAs Office of Research and Development solicited applications for assis-tance to conduct case studies of the integration of ERA and economic analysis.
Research was required to include original economic analysis conducted in col-
laboration with an ongoing ERA, to reflect the state of the science of ERA and
economics, and to be relevant to decision-making with respect to the problem
being assessed. In 1999, following peer review of proposals, economic case
studies were funded in conjunction with three of the five aforementioned W-ERAs
(Figure 1.1, Table 1.1).
The ecological settings and resources of concern differed among the three loca-
tions. The degree of progress made by each W-ERA team prior to initiation of theeconomic study varied as well, and diverse methodological lenses were brought to
these problems by the respective economic teams. But the commonalities between
these three studies were also considerable in that each involved the watershed scale,
each introduced economists to the ERA process, and each confronted the challenging
task of interpreting ecological risks in economic terms and in a manner that would
be meaningful to decision-makers.
Building on those commonalities, a workshop was held at USEPA in Cincinnati,
Ohio in 2001 to review progress on the studies, to discuss environmental problems
involving other watershed settings, and to discuss the ideal characteristics of ageneralized approach for conducting studies of this type. Based on the workshop
results, a conceptual approach for the integration of ERA and economic analysis in
watersheds was developed. Reports of the three case studies and a description of
the conceptual approach for integration were described in a USEPA report (Inte-
grating Ecological Risk Assessment And Economic Analysis In Watersheds: A Con-
ceptual Approach And Three Case Studies14) and also form the nucleus for the present
Table 1.1 Case studies of the integration of watershed ecological risk assessment andeconomic analysis, funded by USEPA in 1999
Study Area Project Title
Principal Investigators and
Grantee Institution
Big Darby Creekwatershed, Ohio
Determining biodiversityvalues in a place-basedecological risk assessment
O. Homer Ereksonaand Orie L.Loucks
Miami University, Oxford, Ohio
Upper Clinch Valley,Virginia and Tennessee
A trade-off weighted indexapproach to integratingeconomics and ecological riskassessment
James Kahnaand StevenStewarta
University of Tennessee-Knoxville
Central Platte Riverfloodplain, Nebraska
A strategic decision modelingapproach to management of
the middle Platte ecosystem
Raymond SupallaUniversity of Nebraska-Lincoln
aNo longer at grantee institution; see list of contributors.
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volume (Chapters 912). To this nucleus, chapters on other methods and perspectives
and three additional case studies have been added, broadening this exploration
beyond the USEPA research context.
ORGANIZATION
Because ERA and economic analysis stem from different intellectual traditions,
most readers will not be familiar with the methods and terminology of both.
Therefore, an effort is made to limit jargon and to carefully define and cross-
reference terms and concepts. Since an abundance of acronyms in such a work is
practically unavoidable, each acronym is defined at its first use in every chapter,and a list of acronyms is compiled in the front matter for the convenience of the
bewildered reader.
Part Iof this book,Background, Concepts, and Methods, introduces some basic
concepts and terminology of ERA and economics, especially as applied to watershed
management. Chapter 2 provides an historical overview of the federal role in
watershed planning and management in the United States, which traces the changes
in governmental approach that have resulted from changes in both the understanding
of environmental problems and popular notions of governance. The chapter attributes
many past and present shortcomings of federal management to an inadequate appre-ciation of the ecological connectedness of land and water, as well as to the difficulty
inherent in valuing ecological resources in a manner consistent with the Constitu-
tional objective to promote the general welfare.
Chapter 3summarizes the USEPAs Guidelines for Ecological Risk Assessment.4
These Guidelines, which were published in 1998 following a 10-year period of
consensus-building involving scientists both within and outside the USEPA, describe
the principles underlying ERA and provide a procedural approach for conducting
assessments that is designed to be broadly applicable. The chapter also presents
some critiques of these methods, and it discusses their application by the USEPAto the watershed scale.
As is discussed in Chapter 2, the USEPA has important programmatic author-
ity under the Clean Water Act (CWA), but it lacks the project authority, often
critical to watershed management efforts, that is vested in the land and water
resource management agencies. Therefore,Chapter 4 illustrates how ERA can
be applied within the six-step water resources planning process established for
federal agencies.15It describes the use of ERA in U.S. Army Corps of Engineers
ecological restoration projects, and inAppendix 4-A it presents an example of
the use of ERA to evaluate project alternatives for a hypothetical salt marshrehabilitation effort.
Chapter 5then introduces basic concepts and methods for the economic analysis
of environmental problems the discipline commonly referred to as environmental
economics. It explains what is meant by the term economic value, how economists
measure the value of environmental changes, and how those measurements are
incorporated in analytic approaches such as costbenefit analysis. It discusses game
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theory, a field of economics that is concerned with the study of interacting decision-
makers and has applications to environmental management, and it introduces the
emerging body of practice and critique loosely referred to as ecological economics.
Appendix 5-Aintroduces two techniques used to elicit, by means of questionnaires,the economic value that individuals would place on hypothetical environmental
changes; these stated preference techniques are the contingent valuation method
and conjoint analysis (or choice modeling).
Chapters 6and7 each comment, from differing perspectives, on the limited
degree of interaction between ERA and economics that is currently seen within the
CWA-mandated water quality standards (WQS) program, a program with important
influence on watershed management practices. Chapter 6 explains current uses of
ERA and economic concepts in WQS development; it presents conceptual arguments
for improved integration, yet stops short of procedural recommendations. Chapter7, on the other hand, presents a vision for integration accomplished through an
adaptive implementation process, whereby stakeholders and regulators periodically
reexamine the risks, benefits, and uncertainties associated with standard setting in
a degraded aquatic system and revise restoration goals based on public preferences.
Since both of these chapters, and later chapters as well, make frequent reference to
the CWA concept of biological (orbiotic) integrity, and to the ecological indices
sometimes used to measure it,Appendix 6-Adescribes four such indices of biotic
integrity used by the State of Ohio.
Economic value, asChapter 5explains, is determined based on trade-offs thatindividuals would be willing to make. Environmental law sometimes requires that
ecological damages be compensated by proportionate restoration. While a legally
required exchange does not have the same economic characteristics as one that is
freely chosen, it nonetheless requires the establishment of a currency as a basis
for equivalence.Chapter 8introduces the reader to various restoration currencies,
derived from ecological and economic concepts, that are used in the determination
of natural resource damage compensation. It focuses especially on habitat equiva-
lency analysis, the most commonly used approach.
Chapter 9culminates Part I by proposing a conceptual approach for the inte-gration of ERA, economics, and other disciplinary methodologies in the context of
watershed management. The chapter begins by referring to several procedural
approaches, which are compiled in Appendix 9-A, and criteria that have been applied
to environmental management. It then outlines a new approach that draws from their
common elements but is more explicit as to how ecological and economic analyses
should interact. (A secondAppendix, 9-B, briefly introduces sociocultural assess-
ment methods that may serve to complement ecological and economic analyses.a)
This new conceptual approach for integration serves as a point of reference for
critical discussion of the case studies presented next.Part II,Applications, presents six case studies, each demonstrating the use of
a different economic method. The first three (described in Chapters 1012) were
part of a USEPA-sponsored program of research and demonstration, as described in
the previous section. They sought to apply the USEPAs Guidelines for Ecological
a Health risk assessments may also be required, but these methods are familiar to many readers and arenot discussed in this text.
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Risk Assessment4 in stepwise fashion; economic analysis was not a part of that
process but was begun as a separate initiative several years later. The other three
(described inChapters 1315) are more varied in purpose and approach.
The case studies presented inChapters 10and11both address the protectionof streams that have unusually high diversity of fish and mussels, including many
rare species. Big Darby Creek in central Ohio is located in the broad plains of the
eastern corn belt, where agriculture predominates but suburban development is
expanding. In contrast, the Clinch and Powell Rivers (Clinch Valley) are located
in the mountainous terrain of southwest Virginia and northeast Tennessee, where
agriculture is confined to narrow floodplains and coal mining, though declining,
remains an important influence. In these studies, economists applied stated prefer-
ence techniques the contingent valuation method in the case of Big Darby Creek
and conjoint analysis in the Clinch Valley to put the value of protecting theseunique species, and the high quality environments that support them, into an eco-
nomic context.
Chapter 12focuses not on estimating value but on resolving conflict. The Platte
River watershed encompasses portions of Wyoming, Colorado, and Nebraska; to
date these states have been unable to reach agreement on the provision of sufficient
water and restored habitat to meet the needs of threatened and endangered species,
including several migratory bird species, in a critical reach of river located in central
Nebraska. In the case study, economists used game theory to search for solutions
most likely to satisfy the preferences of the interested factions.Chapter 13 describes an effort to predict the likely impacts of economic
development on stream ecology in two Dutchess County, New York watersheds
within the Hudson River catchment. This ongoing study seeks to combine eco-
nomic simulation (inputoutput modeling), spatiotemporal analysis of land use
changes, and spatial analysis of stream biological integrity to help Dutchess County
residents better understand the potential long-term consequences of their imme-
diate choices.
Chapters 14and 15demonstrate the application of methods for scaling resto-
ration to balance losses. In Chapter 14, the economic value of a proposed set ofremedial actions (i.e., clean-up) and other ecological enhancements in a polluted
watershed is calibrated to equal the value of natural resource damage using a method
termed total value equivalency. The method is applied in the assessment of damages
resulting from polychlorinated biphenyl (PCB) discharges into the Lower Fox River
and Green Bay in Wisconsin and Michigan. Chapter 15 presents a determination of
habitat replacement cost, a method that balances an amount of harm inflicted on
populations of particular species with the amount of habitat restoration that would
restore those populations. The method is used to determine the monetary amount
needed to restore habitat sufficient to compensate for damages to fish and shellfishpopulations caused by the intake of power-plant cooling water from Plymouth Bay
in Massachusetts.
Part III, Conclusions, consists of one final chapter,Chapter 16, which examines
the commonalities of these studies and draws general conclusions. The chapter
describes the barriers to ecologicaleconomic integration that still remain, and it
makes recommendations for further research.
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UNIQUE CONTRIBUTIONS
This book makes several unique contributions to environmental management. First,
it places economic analysis into a context that is familiar to risk assessors. Becauseit uses the specific procedures and terminology of ERA, it will help ERA practitioners
better understand how those procedures can be integrated with economic analysis.
The conceptual approach presented inChapter 9 borrows heavily from the USEPAs
ERA Framework. The case studies demonstrate how risk assessment outcomes
that is, probabilities of adverse changes in ecological assessment endpoints figure
into economic analysis, and they sensitize the reader to the difficulties that economists
face in using those results. They also illustrate for risk assessors the importance of
the withwithout context that is familiar to economists. Whereas risk assessors
sometimes focus mainly on identifying risks associated with current situations andtrends, or on identifying exposure targets for reducing those risks, economists most
often focus on choices between alternative actions. Therefore, economists demand a
comparison of current and future risks with and without a given action. The
economists perspective, evident both in the conceptual approach and the case studies,
prods the risk assessor to use ERA in a way that maximizes its value to decision-
makers. The case studies allow comparison of six different economic approaches.
Second, the risk assessment perspective employed in this book poses interesting
challenges for the economist. Economists sometimes use relatively vague statements
about the ecological improvements expected under a given policy to elicit themonetary amounts individuals would pay to obtain the policy, either because they
lack more specific information on ecological changes or as a way to match the
individuals understanding of the ecosystems. ERA, on the other hand, uses the best-
available data and methods to quantify the linkages between human activities, the
stressors they produce, and the ensuing effects on particular ecological endpoints.
The resulting statements about risk are as specific as possible about the nature and
magnitude of effects expected, but they may also include descriptions of uncertain-
ties. Translating these statements into terms amenable to economic analysis is dif-
ficult, as these case studies illustrate, but the challenge must be accepted if thesesciences are to be integrated.15
Finally, this book introduces a conceptual approach for integrating ERA and
economic analysis in the context of watershed management (see Chapter 9, especially
Figure 9.1). The approach draws its elements from existing USEPA guidance, as well
as from other environmental management frameworks developed by various agencies
and advisory bodies. By synthesizing these elements in a way that emulates yet expands
theERA Framework, which is a familiar tool in the field of environmental management,
it communicates the essential principles of integration to an important audience.
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3. Suter, G.W., Efroymson, R.A., Sample, B.E., and Jones, D.S.,Ecological Risk Assessment
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