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Ethical Economics

Ethical Economics Economic damages from nutrient pollution create a "toxic debt"
Rhitu Chatterjee, Environmental Science and Technology
Web Release Date: November 12, 2008
Copyright © 2008 American Chemical Society

A U.S. analysis of nutrient pollution in freshwater reveals annual losses of at least $4 billion, mostly from dips in lakefront property values and loss of recreational use.

Nutrient-rich, oxygen-starved dead zones in coastal areas have been steadily growing in the past few decades. But the problem is not restricted to coastal waters. As a new study published in ES&T (DOI 10.1021/es801217q) shows, freshwater bodies throughout the U.S. are also polluted with excess nitrogen and phosphorus. Such pollution is costing the country a significant amount of money: at least $4 billion is lost annually as a result of the degradation of freshwater sources, the authors conclude.

Too many nutrients in water bodies cause algae to flourish and cover the surface, depriving life below of sunlight and oxygen and creating dead zones.

To understand the true extent of nutrient pollution in freshwater bodies, ecologist Walter Dodds and his colleagues at Kansas State University examined the data on nitrogen and phosphorus levels in water bodies throughout the country collected by the U.S. EPA. Ecologists have broadly divided the U.S. by ecoregions on the basis of geography, geology, vegetation, and human impacts. The authors found that 90% of rivers in 12 out of the 14 regions contained excessive nitrogen and phosphorus, compared with reference nutrient levels calculated in several previous studies. The average total nitrogen was 5.5 times greater and the total phosphorus 3 times higher than median reference levels, Dodds found.

The environmental impacts of nutrient pollution are widely acknowledged by scientists and regulators. EPA has developed water-quality criteria for nitrogen and phosphorus pollution, and states are working on plans to tackle the problem. But given that the major contributors to this pollution are nonpoint sources, individual states and EPA have had less success in regulating these sources than they have had with point sources of pollution. Nutrient pollution remains a persistent problem throughout most of the country, but its economic impacts are less studied.

The authors of the new study calculated the monetary damages of such pollution in the U.S. by looking at the following four factors: losses in lakefront property values, reduced fishing and other recreational activities on lakes, cost of biodiversity loss, and cost of purifying drinking water. Estimation of damages required an extensive data hunt—the authors gathered numbers from various federal and regional agencies, water-treatment facilities, and survey reports. For example, to calculate the cost of biodiversity loss, the authors traced the amount of money spent under the U.S. Endangered Species Act. Using previously published estimates that 25% of aquatic endangered and threatened species are imperiled because of eutrophication, the authors found that the U.S. spends $44 million per year to protect species from the impacts of nutrient pollution.

Together, the potential losses amounted to more than $4.3 billion every year, and these costs are borne by agencies, drinking-water facilities, and citizens. When clean drinking water is unavailable, people pay for bottled water. When lakes are closed because of odor or water-quality problems, local economies lose money because fewer people spend money on recreation.

"This analysis is extremely important because the U.S. is very limited by freshwater right now," says Stephen Carpenter, a zoologist with the University of Wisconsin. To use water wisely in the near future, we need to understand the costs associated with this scarce resource, he says. But the values in the study are "strikingly low," he adds.

Dodds and his coauthors agree. "Our valuation is likely an underestimate," they write. For example, they couldn't assign economic costs to rivers, because "there is a much weaker link between the level of nutrients in the water and when people stop recreating," or when property values drop, or taste and odor problems develop, Dodds says. Gaps in data also prevented them from calculating the economic damages from dead zones in the Great Lakes and in coastal areas, he adds.

These costs are usually disregarded as externalities, says Jason Hill, a research associate in the University of Minnesota's department of applied economics. Externalities or external costs are not directly borne by those creating the problem. For example, farmers or people making economic decisions about agricultural products regard the costs of environmental damage from agriculture as externalities. But, to compare alternative ways of producing food or fuel, for example, "you need to understand both direct costs that producers pay . . . and external costs absorbed by society," says Hill. "What I really liked about this paper is that they are trying to quantify and value some of the externalities."

The new study suggests that "it's cheaper to prevent pollution than to clean it up," says Jules Pretty, an environmental scientist at the University of Essex's Center for Environment and Society (U.K.). It is a good reminder that "ecosystem services are the hidden value in the world economy, and the costs to the environment are a kind of toxic debt." Today, the world is grappling with an enormous credit crunch, he adds. But "the real credit crunch is that we're borrowing from the environment. [And] those costs will still have to be paid by our children and our children's children," he says.

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