Standards for Living Organisms in Ships' Ballast Water Discharged in U.S. Waters

Reduce environmental harms associated with introduction of invasive species. This general concept is linked to citizens' quality of life via a discussion of effects on water-dependent infrastructure, subsistence, recreation, tourism, commercial fishing, and sport fishing. "The standard’s main goal is the prevention of future NIS invasions. Prevention of future NIS invasions will also prevent the negative impacts of such invasions, including loss of biodiversity, damage to water-dependent infrastructure, and impacts on commercial fishing, recreational fishing, water-dependent tourism, public health, and subsistence populations" (section 5.3).

Costs of controlling invasive species, damage to tourism, damage to infrastructure, and damage to fishing are monetized based on prior studies. Effects on ecology, public health and subsistence populations are not.

Setting standards for concentrations of organisms in discharged ballast water will reduce the incidence of invasive species introduction by reducing the number of organisms introduced: "The BWDS in Alternatives 2 through 5 are intended to decrease the probability of NIS establishment by reducing the number of individual organisms that are introduced via BWD . . . A mathematical model was developed based on the premise that a decrease in the number of living organisms initially introduced through ballast water discharges into a waterway reduces the probability that a population becomes successfully established" (section 5.7).

The RIA cites several examples of significant, costly invasive species introduced via ballast water discharge. It also cites research finding that discharging a larger number of organisims increases the risk of an infestation.

It acknowledges a range of possible costs from invasions and a range of effectiveness rates for the chosen alternative. A table lists effects of possible uncertainties on the benefits estimates, but the analysis calculates ranges to reflect only two of the uncertainties. "As discussed earlier, no comprehensive estimate is available on the costs from past invasions. Most studies focus on one species and often only consider certain types of costs or costs in certain regions, resulting in a wide variability of estimates. For this reason, we do not try to develop a composite cost estimate for all invasions, but instead select a low and high estimate for fish, aquatic plants and invertebrates based on representative species. We then calculate a mid-point for the range and calculate costs for future invasions using all three values" (section 5.6).

The analysis states that risk of harms from discharge of untreated ballast water is not borne by the vessel owner and hence is an externality. This is not elaborated to any great extent. "Vessels that release untreated ballast water increase risks to aquatic life and possibly human health and cause other environmental and economic harm without accounting for the consequences of these actions on other parties . . . who do not directly participate in the business transactions of the business entities. These costs are not borne by the responsible entities and are therefore external to the business decisions of the responsible entity. The goal of environmental legislation and implementing regulations, including the proposed BWDS, is to correct these environmental externalities by requiring vessels to treat their ballast water releases in order to reduce the environmental harm that results from the introduction of some non-indigenous invasive species" (section 1.1).

The analysis simply asserts that costs of ballast water discharge are an externality because they are not considered by the business owner. The analysis notes that interconnectedness of waterways may make it difficult for states to contain the problem.

The section on benefits cites a large number of studies on the costs of invasive species. The analysis cites studies showing that vessels account for a large portion of invasive species and ballast water accounts for a minority but still significant percentage of invasions. This helps demonstrate that vessels are a source of the problem, though it does not directly show why this is an externality.

It acknowledges a range of possible costs from invasions, but there is no discussion of uncertainty about existence of the problem. "Reporting on the costs in NIS invasions is almost an industry in itself. Despite the difficulty of obtaining economic estimates of the costs of aquatic introductions . . . such figures are widely published. The importance of these estimates is that they establish the scale of the costs in comparison with the costs of meeting a BWDS" (section 5.2).

No action plus several alternative standards of varying stringency.

It considers no action, three alternative discharge standards that differ by orders of magnitude, and sterilization. "No action" means ships would have to continue current practice of exchanging ballast water outside U.S. waters or retain ballast water. All alternatives except no action are essentially standards of varying stringency, but a wide range. The regulation is a performance standard; the Coast Guard does not mandate any particular technology for meeting it, and in fact discusses multiple technologies.

The analysis estimates how alternatives would reduce the percentage of successful invasions, but does not carry this through to estimate the number of invasions or monetized costs avoided for each alternative. "The alternatives differ in the degree to which they would prevent introduction of individual organisms in different size classes and hence, the degree to which they increase extinction probability of NIS" (section 5.7; see section D for further explanation).

The cost baseline includes projections of additions and retirements from the fleet. The benefit baseline starts with projected invasions based on extrapolation of historical trend from 1790–2000. There is no consideration of any changes that might naturally occur that could create deviation from this trend; the baseline simply assumes problem will continue in the absence of a new regulation.

The analysis considers compliance costs associated with installing equipment. It suggests some ships may comply by continuing to exchange ballast water, which suggests costs might be lower. Social opportunity costs are not calculated. Costs are clearly calculated for option 2, the chosen alternative, but only rough estimates are considered for the other alternatives (section 3.5–Meeting Stricter Standards); "The costs associated with the higher standards of Alternatives 3 and 4 (one-tenth and one-hundredth of Alternative 2, respectively) are more speculative. Capital and operational costs could certainly increase. We estimate the costs for Alternative 3 would be double those for Alternative 2, and that the costs for Alternative 4 would be quadruple those for Alternative 2" (executive summary).

The analysis quantifies compliance costs associated with installing equipment. This does not include enforcement costs.

The analysis concludes that the effect on consumers will be small because the cost is a small percentage of shipping costs, measured by charter rates. The percentages are calculated, but pass-through to consumers is not.

Overall social costs are not considered. There is a brief mention of a few relevant issues in section 5.8, which considers whether some of the benefits might actually be transfers.

Several sources of cost uncertainty are discussed and a range of costs is calculated. Low, high, and middle estimates are presented.

The analysis compares costs and benefits of the chosen alternative, but not for the other alternatives. This could have been done using the data in the RIA. There is one broad reference to possible net benefits of other alternatives: "The range of potential benefits for Alternatives 3 and 4 (Table 5.12) are in general less than two to three times higher than Alternative 2, possibly indicating that the cost to benefit comparisons would be less favorable for these Alternatives. However, the range of uncertainty in both the cost and effectiveness assessments for these standards makes it difficult to conclusively draw comparisons" (section 6.1).

The analysis does not calculate cost-effectiveness, but this could have been done. The rough cost figures for several alternatives, combined with the effectiveness estimates from the environmental impact statement, provide a starting point.

Costs are calculated for individual types of ships and for small businesses. The analysis asserts that the effect on consumers will not be noticeable because the cost is a small percentage of total shipping costs and shipping costs are a small percentage of the retail price.

Section 5.1, "Resources at Risk," lists various costs associated with invasive species, and these specific costs usually imply specific parties who bear costs of invasions and therefore receive benefits from the regulation.