Dear TDEC Deputy Commissioner Sloan (Paul),
Over the past 22 years SOCM has worked for the protection of the Rock Creek watershed related to its 1987 designatioin as "lands unsuitable" for surface coal mining. As the result from this work Tennessee now has designated Hall Creek as a Tier 2 stream and created a state park in the watershed. Hall Creek and its upper tributaries are part of the Rock Creek ecosystem. Hall Creek and its tributaries play a key part in water supply and water resources along the Cumberland Trail State Park's Rock Creek Section. The Fish and Wildlife Service is currently developing a designation for the Laurel Dace has an endangered species. The Laurel Dace is only found on in the Rock Creek watershed.
The Stripmine Issuies Committee of SOCM wishes to request that TDEC consider an economic analysis of the benefits of designating the waters of this watershed or sections thereof as an ONRW (Outstanding National Resource Waters) in future development planning for the Cumberland Trail State Park. The park is in the early developing stages. SOCM feels that the Rock Creek watershed and ecosystem will play a major economic role in future planning for the park. SOCM conducted an economic study for the Rock Creek LUMP in celebration of the 20th anniversity in 2007 and submitted to TDEC. As TDEC moves forward in planning and developing the Cumberland Trail State Park and its recreational activities for the citizens of Tennressee such an economic analysis of ONRW would be helpful.
SOCM understands that state departments and agencies' budgets are tight. But, due to proposals of opening the watershed up to 1700 acres for surface coal mining raises serious concerns to the future of the Cumberland Trail State Park's ability to grow. This would have an economic impact on future State of Tennessee funding for the park. Hikers and campers do not want to come to a park filled with acid mine drainage from the Sewanee coal seam. The loss of job develpment to the regional recreational industries is undetermine at this point in time. The Sewanee coal seam is considered the most toxic coal seam in Tennessee. These key points was a cornerstone to former Gov. Don Sundquist's position in protecting Fall Creek Falls' watershed in 2000 from surface coal mining.
It is SOCM's position that water supply and water resources will have an economic impact on the future of the Cumberland Trail State Park and Tennessee's growing recreational industries, and the growing recreational industries of Hamilton County, TN and the greater Chattanooga, TN area, and the growing recreational job markets in Tennessee. It is important to address these concerns at the early stages of the development planning for the Cumberland Trail State Park and for southern Bledsoe County and northern Hamilton County. Such a study will be helpful as a blueprint in future development planning for all sections of the Cumberland Trail State Park.
I am attaching an executive summary of a study related to ONRW in Monroe County. It maybe helpful in considering such a study for the Rock Creek watershed and its trubutaries. SOCM believes that our request for such a study is reasonable and timely. If you have any further questions please contact Ann League at the SOCM Lake City Office. I thank you for this opportunity to make our request. We appreciate any efforts to address these concerns.
A study conducted by agricultural economists with the University of Tennessee's Agricultural Experiment Station finds potential profits for communities in Tennessee who work to protect their natural waterways by obtaining and maintaining designations of "Outstanding National Resource Waters." An executive summary of their analysis follows. To obtain a copy of the full report, contact the lead researcher, Paul Jakus.
Economic Analysis of Designating Outstanding National Resource Waters in Tennessee:
Theory and An Application in Monroe County
Dept. of Agricultural Economics, Dr. Paul M. Jakus Dr. Matthew N. Murray, Professor, Paula Dowell, Graduate Research Assistant, Center for Business and Economic Research, University of Tennessee
The goal of this report is to outline procedures to be used in cost-benefit analysis of designating Outstanding National Resource
Waters in Tennessee. These procedures are then applied to a watershed located in Monroe County, Tennessee.
Environmental Protection Agency and Tennessee State Water Quality regulations require surface waters to be classified into three categories. Tier 1 waters are those of "average" quality. A tier 1 designation is a minimum water quality standard for all water. Degradation of Tier 1 water can occur as long as existing uses of water can be maintained. Tier 2 waters are those of "higher" quality. Tier 2 water quality may not be degraded unless an appeal is made. The appeal must demonstrate severe economic or social hardship associated with maintaining the antidegradation goals of the Tier 2 standard. Tier 3 waters are those surface waters of exceptional quality whose quality may never be degraded. No appeal for exemption from water quality standards is permitted.
The Outstanding National Resource Water (ONRW) designation is used to upgrade Tier 2 waters to Tier 3 status on the basis of exceptional ecological and/or recreational significance. Water quality, as measured by traditional parameters, need not be especially high to satisfy "exceptional" ecological or recreational significance.
Once a region is named as an ONRW, a community may not appeal for an exemption to antidegradation statutes. Thus, it is imperative that cost-benefit analysis be conducted prior to designating ONRW regions.
Cost-benefit analysis (CBA) in a public policy setting requires that all private and public costs and benefits be included in the analysis. Costs are measured in terms of compensation for ONRW classification, also known as a "willingness to accept" measure. Benefits are measured as "willingness to pay" for the designation.
Costs may take the form of (1) the additional out-of-pocket costs (increased market expenditures) by firms, private individuals, and public entities that are required to satisfy ONRW antidegradation standards and, (2) opportunity costs associated with foregone economic development opportunities.
Benefits may take the form of (1) use values, those values associated with high quality recreation and increased residential property values and, (2) non-use values, those values which may be associated with existence of the region, vicarious use of the region (through photographs, for example), or maintaining the option to use the area in the future.
Economic Impact Analysis (EIA) can be used to measure benefits and costs in terms of increased value of output, income, and jobs in an economy. EIA provides analysis that is complementary to cost-benefit analysis.
Generally speaking, CBA and EIA are two complementary types of analysis. CBA measures "social" well-being in which all economic consequences for individual people are assigned an estimated dollar value and then added across all people. EIA measures economic consequences in terms of changes in income, jobs, tax revenues, etc. EIA uses these estimates to assess "regional" well-being.
Most Southeastern states have already designated some ONRW regions, although they might use a different name for the region such as Exceptional Resource Water, or Outstanding Resource Water. Only Florida and Louisiana have required formal economic analysis for ONRW designation in the past; Alabama, South Carolina, and Virginia will require economic analysis for future ONRW classification.
The potential ONRW region used in the application of cost-benefit analysis is located in Monroe County. The ONRW is in the Lower Little Tennessee watershed, and includes portions of the Tellico River and Citico Creek. Most of the region is on US Forest Service land (in the Tellico District of Cherokee National Forest).
The ONRW is a popular recreation site, hosting about 650,000 to 900,000 recreation visitor days (about 1.95 million to 2.70 million trips) each year. Recreational activities include fishing, hunting, camping, whitewater boating, and sightseeing along the Cherohala Skyway.
The ONRW watershed is not entirely on public lands. Some 2400 county residents live on private land in the region. The vast majority of these residents have onsite wastewater treatment systems that dispose of wastewater using subsurface drainfields.
Benefits of ONRW designation were estimated using a telephone survey of 829 East Tennessee residents. Interviews were conducted with 136 residents of Monroe County, while the remainder of the interviews were with residents of Blount, Bradley, Hamilton, Knox, Loudon, McMinn, Meigs, Polk, Rhea, and Roane counties. These counties were selected because the bulk of non-resident recreation in the ONRW region would come from these counties.
About 50% of Monroe County residents indicated that they had recreated in the ONRW region in the previous twelve months, whereas only 25% of non-residents said that they had been to the ONRW region.
Both residents and non-residents were highly supportive of ONRW designation, with over 80% of each group indicating they were in favor of the designation. Only 7% of residents and 4% of non-residents were opposed to the designation.
The only industrial activity in the ONRW region is timber harvest. Timber companies must follow USFS Best Management Practices. These practices are currently sufficient to satisfy ONRW water quality standards, so no costs to the timber industry are expected as a result of ONRW designation.
County officials do not anticipate further industrial development within the ONRW region, so costs associated with foregone economic development are zero.
Public water supply and treatment facilities all lie downstream of the ONRW region, so no costs associated with expansion of supply and treatment facilities are expected.
Major costs of ONRW designation will be to private homeowners. ONRW classification may lead to heightened monitoring and enforcement of water quality standards in the region. For current residents in the region, this may result in accelerated replacement of failing septic systems.
New homes locating in the ONRW region are assumed to require more expensive onsite wastewater treatment systems to satisfy antidegradation standards. The additional cost of using recirculating sand filter systems, in comparison to standard septic systems, is approximately $6,600 per household. The annualized cost for this amount (at 8% per year over 20 years) is $671. The additional cost of the recirculating sand filter system, relative to a conventional septic system, is about 2.2% of median annual household income.
County officials estimate that 7-10% of future population growth in the unincorporated portion of the county will occur in the ONRW region. Aggregating over all households and discounting over the 20 year time horizon, the total cost is estimated to be just over $480,000.
The benefits of ONRW designation are those associated with increased recreation use. Eighteen percent of respondents said they would increase recreation in the region following designation, whereas 2.5 percent said they would decrease recreation.
The net economic value of a recreation trip in the ONRW region is estimated to be $21.98. ONRW designation is predicted to increase trips to the ONRW by 144,000 trips per year. The increase in net economic value over 20 years is estimated to be $33.6 million.
Expenditures for recreation in Monroe County by non-residents is estimated to be $9.51 per person per day. Economic impact analysis indicates that these expenditures are expected to increase in the annual value of total output in Monroe County by $925,000 and increase income in the county by $280,000 annually. Expenditures provide about 14 or 15 full-time equivalent jobs each year. Over a 20 year period, the additional income is valued at $2.97 million.
Benefits in terms of increased income ($2.97 million) exceed the costs ($0.5 million) over the 20 year time horizon. Non-market benefits exceed $30 million over the same 20 year horizon.
Contact: Margot Pantalone
Posted February 13, 2001 by: Lindsey Harrison