June 2, 2003

Cooling Water Intake

  • Susan Dudley

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Proposed National Pollutant Discharge Elimination System Regulations to Establish Requirements for Cooling Water Intake Structures at Phase II Existing Facilities

Stated Purpose:

This notice presents revised analyses supporting a rule to implement §316(b) of the Clean Water Act, including a new analysis of nonuse benefits.

Summary of RSP Comment:

EPA’s efforts to place values on the nonuse benefits attributable to reducing fish losses due to entrainment and impingement at power facility cooling water intakes illustrates the problems with attempting to capture subjective utility measures in policy decisions. EPA estimates that the commercial value (or value to American consumers) of the proposed regulations is $80,000 per year. It estimates the recreational fishing value at another $880,000 per year. In contrast, it values the nonuse benefits associated with the fish protected by the proposed regulations at between $14,170,000 and 26,870,000. On a per-pound basis, the nonuse values of the common fish examined in the NODA are 54 to 100 times greater than actual use values. This is implausible.

EPA’s results suggest that every fish consumed actually costs Americans much more in nonuse values than it provides in consumption value. The logical conclusion from this result is that Americans could experience benefits of between $500 billion and $1 trillion per year, simply by not eating fish. Preferences revealed by the fact that Americans do eat fish shows the impossibility of the benefit estimates presented in the NODA.

Relying on stated preferences regarding hypothetical scenarios is widely recognized to be less reliable than relying on methods based on revealed preferences. In this NODA, EPA compounds the problems inherent in stated preference surveys by attempting to transfer the results of a CV study designed to value wetland habitat to estimate the benefits of common fish species. EPA appears to have gotten caught up in the complicated exercise of adjusting, extrapolating, and transferring, and not stopped to conduct a reality check on the plausibility of the results.

EPA should abandon efforts to estimate nonuse values of fish associated with this rule. While individuals may experience subjective utility gains from knowing that fish are not entrained or impinged, this does not justify regulation that imposes real opportunity costs.