Agenda 2005: A Guide To The Issues

Water

Agenda

• Adopt better pricing of water to encourage conservation.
• Adopt user fees to pay for source-water protection.
• Implement cost-based user fees to fund watershed protection.
• Promote flexibility and compliance assistance in water environmental policy.
• Encourage municipal stormwater utilities.
• Establish a statewide Watershed Management Trust Fund.
• Provide opportunities for industry and farmers to trade for water quality improvements similar to the current air trading program.
• Educate developers and facilitate adoption of conservation-minded water practices.
• Eliminate the discriminatory aspect of the insurance premium tax.
• Consider a market-based trading system for allocating water use

 Facts

• Georgia has more than 70,150 miles of rivers and streams and more than 425,382 acres of lakes, reservoirs and ponds.
• Georgia’s dispute with Alabama and Florida over the allocation of surface water, known as the Tri-State Water War, is headed to the U.S. Supreme Court after talks broke down in 2003. The river basins involved make up 38 percent of Georgia’s total land area, provide drinking water to over 60 percent of Georgia’s population and supply water for more than 35 percent of Georgia’s irrigated agriculture.[1]
• Of Georgia’s assessed waterways, 75 percent of river miles fully or partially meet water quality standards as do 86 percent of lakes and 88 percent of estuaries.[2]
• The pollution impact on Georgia streams has shifted over the last two decades from untreated sewage to stormwater. While untreated sewage remains a problem, especially in the city of Atlanta, most sewage and industrial effluent is now treated before being discharged. However, stormwater runoff from impervious roads and rooftops is causing increasing amounts of “nonpoint” pollution to be washed into rivers and lakes. Nonpoint pollution consists of mud, litter, bacteria, pesticides, fertilizers, metals, oils, detergents and a variety of other substances.
• A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. When one acre of forest is replaced with impervious surface, such as a parking lot, stormwater runoff from a typical thunderstorm increases from virtually nothing to almost 100 percent.
• Wildlife (Canada geese, raccoons, deer and turkey, for example), is often listed as   a culprit pollutant in contaminated Georgia waterways.[3]
• According to the Georgia Department of Natural Resources, while polychlorinated biphenyls (PCBs) and mercury have been “frequently detected in significant amounts in a few species” of Georgia’s fish, it is not known precisely where the mercury in Georgia’s fish originated.[4]

Overview

Sources of Water

Georgia receives an average of 50 inches of rainfall per year compared to an average of 30 inches for the continental United States. The numerous rivers originating in the northern part of the state, the large aquifers of groundwater to the south and the rainfall provide Georgia with abundant water resources. However, there are legitimate concerns about water quality and supply amid memories of the recent drought; a growing population concentrating in the north, where fragile headwaters are located, and ongoing resistance to additional impoundments – reservoirs – in Georgia. Because a more limited quantity of water is less able to safely dilute pollutants and can no longer support aquatic ecosystems that naturally assimilate waste, these issues directly impact one another.

Conflict over Use          

Georgia, Alabama and Florida are in a bitter dispute over the allocation of surface water known as the Tri-State Water War. In 1997, at the request of Georgia, Alabama and Florida, Congress and the president of the United States established interstate water compacts between Georgia and Alabama for the Alabama-Coosa-Tallapoosa (ACT) river system and between Georgia, Alabama and Florida for the Apalachicola-Chattahoochee-Flint (ACF) river system. These river basins make up 38 percent of Georgia’s total land area, provide drinking water to over 60 percent of Georgia’s population and supply water for more than 35 percent of Georgia’s irrigated agriculture. Under the compacts, the three states were to develop agreements for allocating and managing the two interstate river systems to meet water needs through the year 2030 and beyond. The compacts originally required agreement on water allocations by December 31, 1998, but after several extensions failed to provide common ground, the case appears headed to the U.S. Supreme Court.

One reason for the water woes in metro Atlanta is that the urban area is located inland, relatively close to the headwaters of the Chattahoochee River, its major supply river. The city relies on water from upstream reservoirs. A watershed study funded by the city reported in 1998 that stormwater runoff and alterations in stream hydrology were responsible for three-fourths of the pollution loading. The same study found that almost all of Atlanta’s streams were biologically impaired.[5] In past years the city of Atlanta ignored its impact on downstream water users until state and federal fines forced it to act.

Water management in most areas of the state will require addressing both urban and rural interests. For example, the Flint River in central Georgia has its headwaters at Atlanta’s Hartsfield International Airport, making urban runoff the major impact on the upper Flint. Further downstream, the watershed is dominated by impacts from agriculture.

Georgia began a limited market-oriented approach to water allocation with the implementation of the Flint River Drought Protection Act, which became law in 2000. The goal of the legislation is to ensure the Flint River maintains adequate flow to support fish and wildlife during times of severe drought. The state Environmental Protection Division must make a determination by March 1 every year on whether to implement the act. If a severe drought is anticipated and the Act is implemented, farmers who voluntarily remove acreage from irrigation are compensated by the state through an auction.

The first auction was held in 2001 after the EPD formally declared a “severe drought” within the Flint River Basin. The state paid $4.5 million to compensate farmers for not irrigating more than 33,000 acres of farmland during the summer of 2001. The auction held in 2002 resulted in the removal of 40,352 acres from irrigation at an average cost of $127.97 per acre and a total cost of $5,163,645. For each year of the drought, the acres removed from irrigation kept up to 130 million gallons per day in the Flint River and its tributaries that otherwise would have been consumed.[6]

Unlike North Georgia, which relies primarily on surface supplies, South Georgia withdraws most of its water from underground aquifers. The Floridan aquifer, which provides most of South Georgia with drinking water, is becoming contaminated by salt water intrusion along the coast as more groundwater is pumped for agriculture and industry than is recharged by rainfall. The area of cropland under irrigation has increased from under 200,000 acres to almost 1.5 million acres over the last 30 years. Agriculture is the largest consumer of water in the state. As a result, Georgia has imposed a moratorium on any new agricultural water withdrawal permits pending scientific review.

Throughout the state, communities have experienced water use restrictions and pollution issues as supplies of clean, fresh water increasingly fail to meet demand. From 1998 to 2001 Georgia experienced a drought that heightened awareness of the state’s water quantity challenges. During the summer of 2000, groundwater levels reached their lowest recorded levels in almost every aquifer of the state. Many surface water sources set new records for low stream-flow rates as well, with records being broken for gauges monitored for almost 100 years. The recent drought was particularly severe, but periods of low rainfall are a recurring part of Georgia’s climate history.  Plentiful rains resumed in September 2003.

Water quality linked to broader environmental and economic issues

Georgia is under federal court order to identify unhealthy waters and reduce the amount of pollution fouling its rivers. The pollution impact on Georgia streams has shifted over the last two decades from untreated sewage to stormwater. While untreated sewage remains a problem, especially in the city of Atlanta, most sewage and industrial effluent is now treated before being discharged. However, stormwater runoff from impervious roads and rooftops is causing increasing amounts of “nonpoint” pollution to be washed into rivers and lakes. Nonpoint pollution consists of mud, litter, bacteria, pesticides, fertilizers, metals, oils, detergents and a variety of other substances.

A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. When one acre of forest is replaced with impervious surface, such as a parking lot, stormwater runoff from a typical thunderstorm increases from virtually none to almost 100 percent.

There is also a direct link among various types of environmental degradation, ecosystem health and higher economic costs. A progressive loss of tree cover and increases in impervious, paved areas in metro Atlanta have caused summer temperature increases of up to 10 degrees compared to the surrounding countryside. Higher temperatures lead to increased use of electricity for air conditioning. These increased temperatures exacerbate the area’s air quality problems. Air quality contributes to water quality problems because most of the atmospheric pollutants falling on impervious surfaces are washed into streams that feed water supply rivers. The loss of tree cover, higher temperatures and pollution load lead, in turn, to unhealthy streams with a reduced capacity to assimilate wastes.

Need for integrating environmental and economic management

Traditionally, public entities have managed environmental issues one at a time with little regard to their overall cost. But ecosystems are too complex to respond predictably to such a piecemeal management approach. Moreover, this approach reinforces, or even encourages, land-use practices that can substantially disrupt natural cycles that we depend upon for clean air, clean water and temperature moderation. Until recently, these services of nature have met human needs and largely been taken for granted. With water becoming a limiting resource in Georgia’s economic future, the complex hydrologic cycle providing supplies of clean water can no longer be taken for granted.

Markets have proven highly effective at distributing economic goods and services and preventing scarcity. But when it comes to nature’s goods and services, markets have been fingered as part of the problem instead of part of the solution. Consequently, nature’s goods and services have remained outside the economic system. Ecological economists argue persuasively that market approaches can better address complex interrelated issues affecting the environment, resulting in less waste and a more efficient and fairer allocation of scarce resources.

The water auction on the Flint River, although far from perfect, is an example of such an approach. Rather than prohibiting farmers from withdrawing water during times of scarcity, the auction establishes a water market based on voluntary participation. The result is more water for aquatic life that keeps the river healthy. The water market is based on rules that establish fair trade and fine cheaters. Compared to command-and-control regulations, the market approach better provides for ecosystem needs with increased flexibility based on local conditions. Markets can be established to price natural resources and charge for harmful, polluting activities on a much broader scale.

Rather than addressing environmental problems one at a time through command-and-control regulations, this policy study recommends implementing a market-based approach integrating economic and ecosystem needs.

Uses of Water

There are many different, and often competing, uses for water. Some uses, such as recreation, do not physically remove the water from the water supply. Therefore, it is important when analyzing water use to look at “consumptive” use. Consumptive use is defined as the part of ground or surface water withdrawn that is evaporated, transpired, incorporated into products and crops, consumed by humans or livestock, or otherwise removed from the immediate water supply.

Instream use is a water use that takes place without the water being diverted or withdrawn from surface- or ground-water sources.[7] Examples of instream uses are hydroelectric power generation, navigation and shipping (such as barges) and recreation (boating, water skiing and fishing). In addition, minimum instream flows are necessary to support fish and wildlife habitat, for freshwater dilution of saline estuaries and to effectively dilute wastewater.

Offstream uses refer to water withdrawn from surface- or ground-water sources and conveyed to a place of use. Offstream uses, as defined by the U.S. Geological Survey (U.S.G.S.) are:

• Domestic – Domestic water use includes water for normal household purposes, such as drinking, food preparation, bathing, washing clothes and dishes, flushing toilets and watering lawns and gardens.  
• Commercial – Commercial water use includes water for motels, hotels, restaurants, office buildings, other commercial facilities, and civilian and military institutions. Also included are public-supply deliveries to golf courses.
• Irrigation – Irrigation water use includes all water artificially applied to farm and horticultural crops as well as self-supplied water used to irrigate public and private golf courses. (It is important to note that until 2003, farm use permits were exempted from water use record-keeping requirements. As a result, estimates have been used rather than actual meter readings. Both water use permits and these estimates have been based upon the maximum operating capacity of the user’s pump, not on the basis of the amount of water actually used. Acting on a recommendation of the Joint Comprehensive Water Planning Study Committee, the General Assembly passed a law requiring the state to assist farmers in installing meters to accurately measure their actual water use.)
• Livestock – Livestock water use includes water for livestock, feed lots, dairies, fish farms and other on-farm needs.
• Thermoelectric power – The thermoelectric power category includes water used in the generation of electric power with fossil-fuel, nuclear or geothermal energy. Most of the water withdrawn by thermoelectric plants is used for condenser and reactor cooling.
• Industrial – Industrial water use includes water for such purposes as processing, washing and cooling in facilities that manufacture products. Major water-using industries include, but are not limited to, steel, chemical and allied products, paper and allied products, and petroleum refining.
• Mining – Mining water use includes water for the extraction of naturally occurring minerals; solids, such as coal and ores; liquids, such as crude petroleum; and gases, such as natural gas.
• Public Supply – Public supply water withdrawn by public and private water suppliers and delivered to multiple users for domestic, commercial, industrial and thermoelectric power uses. [The difference between the quantity of water withdrawn by public suppliers in a water-resources region or state and the quantity of water delivered to all users represents losses in the distribution systems, filter back flushing, public use (firefighting, street washing, municipal office buildings, parks and swimming pools) and, in a few areas, water transferred between adjacent states or water-resources regions.]

Excluding agriculture and industry, Georgia’s average daily per capita water consumption is estimated at 166 gallons, compared with 168 gallons in 1995, and compared with a national average of 164.5 gallons.[8]

Water Quality

The quality of surface water is evaluated in terms of whether it meets standards set by the EPA for certain designated uses such as aquatic life support, fishing, swimming, drinking water or wild and scenic. It is important to note that only a small percentage of surface water is actually sampled, pointing to the need for adequate funding of science-based water quality testing.⁸

Section 303(d) of the Clean Water Act requires that regulatory agencies determine total maximum daily loads (TMDLs) for all water bodies that do not meet water quality standards. A TMDL is the amount of a specific pollutant a river, stream or lake can assimilate and still meet federal water quality standards. Georgia is under court order to implement TMDLs for impaired waters. For more information see www.epa.gov/owow/tmdl/atlas/statepdfs/ga.pdf.

The impact of urbanization on water resources

Cities rely upon a clean supply of fresh water for their economic health, yet the expansion of urbanized areas can threaten this vital resource. Urban areas cover 2.8 percent of the state; transportation infrastructure covers another 6 percent.[9] Such development increased the amount of impervious surfaces, including roads, parking lots and rooftops. At the low end of the scale, residential development on estate lots covers 12-20 percent of the land with impervious surface. At the high end, shopping center development results in more than 90 percent imperviousness.

Urbanization can damage water quality out of proportion to the actual rate of development because impervious surface area in many regions now reaches or exceeds the biological threshold of 10 percent at which runoff begins to exceed natural “processing” capacity. A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. Where impervious cover exceeds 5 percent, stream health begins to decline in some regions. With more than 10 percent impervious cover, stream health becomes biologically impaired. At 25 percent cover, streams can be non-supporting. Nutrient loading and other types of pollution also increase in proportion to the impervious surface area in a watershed.

Uncontrolled stormwater runoff creates multiple challenges. In addition to pollution, rapid runoff of stormwater into urban streams erodes channels and destroys aquatic habitat. Stream channel enlargement damages urban infrastructure, such as bridges and sewer lines, erodes property and increases damaging floods. Sediment eroded during the construction phase of new development, and later from enlarging stream channels, smothers aquatic life and accumulates downstream in water supply and flood control reservoirs. By causing rainfall to run off rather than soak into the ground where it recharges aquifers, impervious surfaces also cause wells to dry up and reduce the flow of headwater streams during drought.

During the middle of the 20th century, the increasing density of roads and resulting problems with flooding led engineers to experiment with various approaches to dealing with increased stormwater runoff. Several approaches address these problems, depending on local conditions. However, the enclosed storm-drainage system that conveys surface runoff in underground culverts gained dominance, slowing further experimentation for decades. Yet infrastructure managers discovered that speeding runoff from roads into creeks often caused flooding downstream.

In an effort to reduce flooding, municipalities began requiring in the 1970s that developers install detention basins to hold back peak flow from major storms. Although peak-flow detention looked promising at the time, this approach has failed to adequately control flooding, and in some cases can make flooding worse.[10] These problems with curb and culvert drainage and peak-flow detention were not foreseen because the design standards were never tested for performance on a watershed basis, nor were the standards developed to protect streams or reduce pollution.

The hydrologic cycle and the economy

The natural hydrologic system has evolved over billions of years to recycle water efficiently. Vegetated watersheds store and filter precipitation underground before it is gradually released to the surface through springs and seeps that feed streams. Approximately 40 times more fresh water is stored in aquifers than is visible on the surface as streams, rivers and lakes. During periods of drought, water released from aquifers maintains the flow of streams that feed rivers and lakes. But as the following illustrations show, impervious surfaces and drainage networks that shunt stormwater runoff directly from road surfaces to streams block the function of the natural cycle.

The hydrologic cycle provides services of nature in the form of clean water, clean air and temperature moderation. These services are essential to our economic well-being.

Georgia’s rapidly expanding population is leading to urbanization throughout the state. Nowhere is the pace of development faster than in metro Atlanta, where the availability of clean water is the only limiting factor. Development practices must be modified to reduce harm to watersheds or the city’s economic growth will stall.

While legislative action has dramatically reduced the muddy runoff down roads and streams that typically reflected development’s impact, there still is the effect of development disturbing runoff channels and streams.

Watershed-based management

The interdependence of watersheds with headwater tributaries feeding creeks, rivers, lakes and estuaries makes watersheds the appropriate level of analysis for water resources. After all, political boundaries seldom coincide with watershed boundaries. Watershed-based ecosystem management replaces centralized one-size-fits-all decision making with more decentralized decision-making within natural drainage basins.

A watershed-based approach faces many obstacles. When the North American continent was settled, waterways served as the main avenues of commerce. In order to provide equal access and defensible boundaries, dividing lines for states, counties and municipalities were drawn down the middle of rivers, streams and lakes. For example, Georgia’s western boundary is defined by the Chattahoochee River and its eastern boundary by the Savannah River and Atlantic Ocean. In hindsight, the practice of dividing surface waters between competing jurisdictions likely encouraged depletion, pollution and waste.

Another impediment to watershed management is the regulatory overlap that has developed between agencies at all levels of government. At the federal level, water resources are addressed by a multitude of agencies including, among others, the U.S. Army Corps of Engineers, Bureau of Reclamation, Environmental Protection Agency, Federal Energy Regulatory Commission, Natural Resource Conservation Service and the Fish and Wildlife Service. At the municipal level, water management is generally divided between separate departments for drinking water, roads and drainage, sewers and parks and recreation. Fragmented management creates a need for interagency cooperation. In various places around the country, watershed resource-management initiatives are establishing cooperative alliances between jurisdictions.

Agenda

Adopt better pricing of water to encourage conservation

Water is arguably our most precious resource. Therefore, it is poor public policy to subsidize inefficient use or actions that have a detrimental impact on water quality. Many local governments in Georgia still use a declining block water rate whereby the more water a consumer uses, the lower the price per unit is charged – exactly opposite of how  a market would price a scarce resource. In addition, prices should be dynamic rather than static. For example, water prices should rise during droughts and fall when water is more plentiful.

Alternatives to pricing involve voluntary conservation and mandatory conservation through watering restrictions. Voluntary efforts are laudable, but unlikely to result in significant savings. Watering restrictions are difficult to enforce and can cause ill will and suspicion among neighbors. Pricing allows individuals to self-regulate their water use, rewards voluntary conservation, can result in significant water savings and provides  local utilities with the much-need revenue for infrastructure maintenance and upgrades.[11]

In addition to conservation, water quality can be influenced by proper pricing. Georgia and Mississippi are the only states in the Southeast where industries and publicly owned treatment plants are not charged a fee to discharge wastewater. Georgia’s neighboring states charges a wastewater permit fee (usually reflecting both the volume and toxicity of the waste discharged.) Not only do these fees provide an incentive to reduce the amount of waste discharged, they also create significant revenues for monitoring and protecting water quality.[12]

Adopt user fees to pay for source-water protection

User fees can pay to protect watersheds that are the source of drinking water, even when the source waters are outside a local political jurisdiction. For example, metro Atlantarelies on water from the Chattahoochee and Etowah Rivers that originates in the mountains of North Georgia. These watersheds are now being rapidly developed, affecting water quality downstream. One way to gain the cooperation of North Georgia counties in protecting water supplies for metro Atlanta would be to pay them through the mechanism of a user fee. Following this approach, members of the Metropolitan North Georgia Water Planning District could agree on a small percentage of their customer’s water bills to be contractually paid to North Georgia counties for the protection of source waters. Collected fees could pay for improved onsite stormwater controls, or the purchase of conservation lands. Georgia would not be the first state to undertake such an approach. Faced with billions of dollars in increased treatment costs, New York City reached a pact with rapidly developing counties in upstate New York to pay for protecting watersheds that supply the city’s drinking water.

A city that has implemented a simple market-based approach for protecting its water supply is Quito, the capital of Ecuador. Deforestation and intrusive development threaten the watersheds supplying Quito. To fund protection of its water supply, the municipal water utility pays 1 percent of its customer’s water bills into a special trust fund to be used exclusively for watershed protection. Quito’s water-user fee was developed by the Nature Conservancy, which reported recently, “Early experiences are encouraging.”[13]

Adopt cost-based user fees to fund watershed protection

One way to balance the need for a dynamic economy with the need to protect essential ecosystem “services” is to adopt user fees that reflect the costs of addressing stormwater runoff and pollution impacts. Urban development is often concentrated around rivers, lakes, wetlands and coastal estuaries – areas that contribute most to the functioning of the hydrologic cycle. Fees that reflect such costs could discourage development of high-impact areas and could encourage innovative development patterns that make better use of natural hydrological cycles.

User fees can play a vital role in providing long-term, dedicated funding for protecting watersheds as well as equitably assigning the costs so those creating the greatest impact pay the highest fee. In addition, user fees can lessen dependence on property taxes, which weaken the linkage between costs and benefits. However, it is critical that the user fees are not perceived as a punitive tax with no objective basis or underlying science. Choosing an objective and scientifically based criteria, such as the amount of impervious surface area covering a given piece of property, will ensure a sense of fairness. The costs of the projects funded by the user fees should be clearly understood by the community so that the fee is perceived as targeted rather than arbitrary.

In place of regulations that force developers to increase density, market approaches such as user fees can equitably assign the cost of impacts to those causing the greatest harm. Since much of the negative impact of urbanization is a result of replacing natural vegetation with impervious surfaces, user fees based on the amount of impervious surface area could also serve as a mechanism for long-term, dedicated funding. This kind of objective, science-based criteria is crucial to the acceptance of a user fee approach.

Unlike current funding of fragmented water utilities through tax revenues, user fees can create incentives to minimize harmful impacts and maintain development within the resource capacity of a given watershed. User fees create a positive feedback loop between costs and benefits. Compared to tax-based regulatory management, user-fee funding is more likely to be economically efficient and respond to the dynamic nature of both real estate markets and ecosystems. Moreover, user-fee-funded utilities are less prone to political manipulation and better able to raise funds needed for long-term planning and maintenance.

Encourage municipal stormwater utilities

Federal requirements for stormwater permits affecting smaller cities and court-mandated enforcement of the Clean Water Act on a watershed basis have spurred many municipalities to consider the user-fee concept for funding improved stormwater management. More than 350 stormwater utilities have been formed nationwide, most within the last decade. At least five stormwater utilities have been formed in Georgia.  Griffin was the first and has set the standard, serving as a model around the state and across the nation.[14] Others are in Decatur, DeKalb County, Conyers and Columbia County. More than a half-dozen other governments are exploring the concept. Expect the creation of more stormwater utilities in Georgia after the Georgia Supreme Court ruled in June, 2004 that Columbia County’s charge is not an “arbitrary and capricious” tax because it is “used only to pay for stormwater management within the designated service area.”[15]

Traditional stormwater management treats stormwater as a waste product of urban development. Responsibility for stormwater management is generally dispersed between various government agencies and departments, fragmenting stormwater management efforts and creating jurisdictional conflicts. Existing programs often suffer from inadequate funding, forcing managers to react to problems such as flooding with short-term, piecemeal solutions. Stormwater systems are rarely built to handle runoff from anticipated future development, often resulting in flooding and a loss of water quality to receiving waters.

The user-fee-funded stormwater utility provides functional recognition of stormwater as a resource. The utility concept focuses management in a single organization, which can be public, private or some combination thereof. Creation of a stormwater utility allows for dedicated infrastructure and management funding, with fees tied to impacts. The approach enables development of comprehensive preventative and enhancement programs.

Many experts, including the EPA, are recommending adaptive management that is responsive to the dynamic nature of both markets and ecosystems. Adaptive management is a process for improving resource management incrementally as managers and scientists learn from new experience and scientific findings. Affordable consulting services are available for setting up and managing a stormwater utility. Municipalities should consider integrating stormwater management, sewage treatment and water supply into single cost-based, user fee-funded water utility.

Establish a statewide Watershed Management Trust Fund

In 2004, the General Assembly authorized the state Environmental Protection Division to author a statewide comprehensive water management plan by 2007. While the Metropolitan North Georgia Water Planning District was a good start, it deals only with water and covers only a portion of the watersheds impacted by metro Atlanta. Atlanta’s urban development is a serious problem impacting the state’s water resources, but there are other issues affecting rural Georgia that can benefit from a formal institutional framework for managing the environment. This is where the statewide comprehensive plan can bridge the gap.

Although most environmental issues are interrelated, Georgia’s approach to them has often been fragmented and one-dimensional. In addition, previous environmental initiatives in Georgia have been burdened by the lack of a dedicated, long-term funding mechanism. A statewide Watershed Management Trust Fund would give Georgia the vehicle and funding mechanism to address these issues in a holistic manner.

Although initially funded by general appropriations, the goal must be for the Trust Fund to be largely supported by cost-based user fees within five years. In addition to providing incentives in the form of technical assistance and grants for reducing both point and nonpoint sources of pollution, the Fund could incorporate Georgia’s Greenspace Program, which acquires riparian buffers and other greenspace. The Fund could also encourage solution-based cooperative programs across state boundaries to better manage shared river basins and aquifers. While the water war among Georgia, Alabama and Florida appears destined for the courts, other frontiers remain, including the Savannah River that Georgia shares with South Carolina.

Tree loss is an area that could be addressed by the Trust Fund. Thus far, regulatory efforts to protect trees through ordinances have, at best, slightly slowed tree loss and created resentment by builders and homeowners alike. The Trust Fund could provide research grants for studies on applying incentives to protect trees as well as reforestation grants to groups such as Trees Atlanta. The results of these programs could be evaluated for results and cost effectiveness and applied more broadly.

A statewide Watershed Management Trust Fund would result in better data, sound science and cooperation, helping reduce wasteful duplication by requiring local governments to share water quality data in order to qualify for grants.

The Trust Fund could also evaluate the performance of water resource management through science-based measures of the biological integrity of the state’s waters. Georgia’s existing Geographic Information System (GIS) could be utilized to share water resources data across political boundaries and to publicize it in timely fashion via the Internet.

Provide opportunities for industry and farmers to trade for water quality improvements similar to the current air trading program

Water quality trading has been implemented through 11 pilot projects funded by the U.S. Environmental Protection Agency, whose regulations for TMDLs (total maximum daily loads) also encourage trading. Within a watershed, one pollutant source meets regulatory requirements by paying another source that reduces pollutants using lower pollution control costs. The flexibility produces greater efficiency and lower costs – and the desired water quality standard.

This approach is particularly suited to the unique needs of agriculture. In agriculture markets it is very difficult to pass on costs, and costly environmental regulations can often be a competitive burden that results in direct costs to farmers. With pollution trading, farmers are able to receive payment to offset the financial losses due to actions that result in improved environmental quality.

Under a water quality trading scenario, point sources pay nonpoint sources (farmers, tree farms, developers, etc.) for making reductions in phosphorous, nitrogen and sediment runoff in order to meet current water quality standards and TMDL  requirements. For example, a point source could pay (in a contractual relationship) a farmer for reducing phosphorous runoff by a certain amount. If a farmer fails to live up to his contract, the point source parties and the state can sue to enforce. Thus, property rights are recognized and all parties have clear expectations of conduct and punishment, rather than behavioral change interpretations which can vary from one site to the next. Trading makes for a flexible and place-specific program targeted and tailored to the water segment, pollutant, and specific geographic and commodity needs. Trading is superior to a uniform one-size-fits-all program, as long as all sections of the river are required to meet the standard. North Carolina’s Tar-Pamlico river basin has experimented with trading.

Educate developers and facilitate adoption of conservation-minded practices

Encouraging best management practices among developers requires a concerted campaign to demonstrate the intersection of cost-effectiveness and conservation-minded practices. A cooperative effort, instead of the heretofore adversarial relationship between developers and environmental agencies, can pre-empt costly retroactive measures. Numerous examples exist:  For example, pervious concrete paving in parking lots can function in a manner similar to natural ground cover, slowing and absorbing the flow of rain water. That reduces the need for large detention ponds. Cost considerations may be foremost – pervious concrete cost up to 20 percent than regular concrete – but pervious concrete paving can cost less than alternatives. When a parking lot doubles as the storm water management system, the cost of the land for detention ponds, the cost of detention pond construction, and the cost of mitigation facilities are saved.

Green roofs, too, are a selling point in urban areas that mitigate stormwater runoff and attract intown dwellers for their greenspace benefits. Rain sensors on irrigation systems prevent needless watering in subdivisions. Golf courses are considered environmentally desirable disposal sites for effluent – gray water – serving as highly effective wastewater treatment facilities for this partially polluted water. Hotels, too, can be encouraged to use gray water for some purposes.

Consider a market-based trading system for allocating water use

Because water is such a precious resource, Georgia must take steps to develop a fair and environmentally sensitive framework for its allocation and conservation. Many factors are combining to force some very difficult water allocation decisions on Georgia in the near future. Our population continues to increase and commercial, industrial and agricultural output continue to grow just as a large portion of our surface water supply may be allocated to neighboring states and saltwater intrusion threatens our supply of groundwater. As opposed to allowing government to determine the water winners and losers, a market approach would be more efficient and equitable.

The over-withdrawal of groundwater in South Georgia is a perfect example of too many people pursuing an open access resource without defined property rights. Top-down government controls, such as moratoriums, do not address the real problem of the lack of ownership or property rights. Without clearly defined property rights, everyone removes more water than can be recharged since the only penalty is not getting your water out of the aquifer before it is exhausted (also referred to as a “race to the pump”).

Terry Anderson and Pamela Snyder with the Political Economy Research Center in Bozeman, Montana, propose a system that recognizes property rights in the resource as a means of conserving groundwater. In Georgia’s command and control approach, users can only pump so much water and are not allowed to transfer their right to pump, except in the case of farmers, whose agricultural withdrawal permit may be transferred with the land in a sale, but only for agricultural purposes. This approach puts a stranglehold on development without encouraging efficient use.

Anderson and Snyder offer a better management technique that recognizes “highest and best use.” Under their plan, the total amount of water pumped from the aquifer is limited based upon a sound scientific analysis that ensures adequate recharge. Pumping rights are then allocated based upon a market trading system, resulting in a solution that allows for economic growth, as long as it does not overdraw the aquifer. For more information on this idea, see the Georgia Public Policy Foundation’s primer, “Water permit transfers: Bridging the Misinformation Gap.”[16]

A similar procedure can be used to allocate surface water. Scientific analysis would determine the amount of surface water necessary to ensure sufficient instream flows to protect fish and wildlife habitat. Usage rights would then be allocated through the trading system. For example, the market would handle the difficult allocation decisions regarding competing demands such as domestic water use for growing cities, irrigation use for crops, navigation use for barge traffic and industrial use for new industry. In addition, the market provides an automatic response to the inevitable droughts. When prices for water rise, users will be encouraged to consume less, just as they do for other goods.

Adopting a watershed approach to a water market, and requiring that there is no downstream impact when trading occurs, should allay fears that a growing metro Atlanta will “suck up all the water” in Georgia. Water withdrawal permit holders who wish to enter the market will continue to operate under EPD oversight. And they would be transferring – selling – the right to use their allocation, not selling the water itself.

Adopting a market approach does not mean that there is an absence of regulation. Dr. Ronald G. Cummings, Georgia’s eminent scholar in environmental policy at Georgia StateUniversity, has identified many of these issues (environmental impacts, speculation, monitoring and enforcement, transaction costs, impacts to rural economies, exports across state lines, etc.) and proposes policy options to meet these concerns. For more information, see “Water Rights Transfers: Options for Institutional Reform” (2001), Ronald G. Cummings, Nancy A. Norton and Virgil J. Norton, www.gsu.edu/~wwwenv/programs/water/2001_001.pdf.

Barrett Walker, trustee for the Alex C. Walker Educational and Charitable Foundation, contributed to this chapter

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The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (August 17, 2004). Permission to reprint in whole or in part is hereby granted, provided the affiliation is cited.

Agenda 2005: A Guide To The Issues – Water

Agenda

• Adopt better pricing of water to encourage conservation.
• Adopt user fees to pay for source-water protection.
• Implement cost-based user fees to fund watershed protection.
• Promote flexibility and compliance assistance in water environmental policy.
• Encourage municipal stormwater utilities.
• Establish a statewide Watershed Management Trust Fund.
• Provide opportunities for industry and farmers to trade for water quality improvements similar to the current air trading program.
• Educate developers and facilitate adoption of conservation-minded water practices.
• Eliminate the discriminatory aspect of the insurance premium tax.
• Consider a market-based trading system for allocating water use

 Facts

• Georgia has more than 70,150 miles of rivers and streams and more than 425,382 acres of lakes, reservoirs and ponds.
• Georgia’s dispute with Alabama and Florida over the allocation of surface water, known as the Tri-State Water War, is headed to the U.S. Supreme Court after talks broke down in 2003. The river basins involved make up 38 percent of Georgia’s total land area, provide drinking water to over 60 percent of Georgia’s population and supply water for more than 35 percent of Georgia’s irrigated agriculture.[1]
• Of Georgia’s assessed waterways, 75 percent of river miles fully or partially meet water quality standards as do 86 percent of lakes and 88 percent of estuaries.[2]
• The pollution impact on Georgia streams has shifted over the last two decades from untreated sewage to stormwater. While untreated sewage remains a problem, especially in the city of Atlanta, most sewage and industrial effluent is now treated before being discharged. However, stormwater runoff from impervious roads and rooftops is causing increasing amounts of “nonpoint” pollution to be washed into rivers and lakes. Nonpoint pollution consists of mud, litter, bacteria, pesticides, fertilizers, metals, oils, detergents and a variety of other substances.
• A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. When one acre of forest is replaced with impervious surface, such as a parking lot, stormwater runoff from a typical thunderstorm increases from virtually nothing to almost 100 percent.
• Wildlife (Canada geese, raccoons, deer and turkey, for example), is often listed as   a culprit pollutant in contaminated Georgia waterways.[3]
• According to the Georgia Department of Natural Resources, while polychlorinated biphenyls (PCBs) and mercury have been “frequently detected in significant amounts in a few species” of Georgia’s fish, it is not known precisely where the mercury in Georgia’s fish originated.[4]

Overview

Sources of Water

Georgia receives an average of 50 inches of rainfall per year compared to an average of 30 inches for the continental United States. The numerous rivers originating in the northern part of the state, the large aquifers of groundwater to the south and the rainfall provide Georgia with abundant water resources. However, there are legitimate concerns about water quality and supply amid memories of the recent drought; a growing population concentrating in the north, where fragile headwaters are located, and ongoing resistance to additional impoundments – reservoirs – in Georgia. Because a more limited quantity of water is less able to safely dilute pollutants and can no longer support aquatic ecosystems that naturally assimilate waste, these issues directly impact one another.

Conflict over Use          

Georgia, Alabama and Florida are in a bitter dispute over the allocation of surface water known as the Tri-State Water War. In 1997, at the request of Georgia, Alabama and Florida, Congress and the president of the United States established interstate water compacts between Georgia and Alabama for the Alabama-Coosa-Tallapoosa (ACT) river system and between Georgia, Alabama and Florida for the Apalachicola-Chattahoochee-Flint (ACF) river system. These river basins make up 38 percent of Georgia’s total land area, provide drinking water to over 60 percent of Georgia’s population and supply water for more than 35 percent of Georgia’s irrigated agriculture. Under the compacts, the three states were to develop agreements for allocating and managing the two interstate river systems to meet water needs through the year 2030 and beyond. The compacts originally required agreement on water allocations by December 31, 1998, but after several extensions failed to provide common ground, the case appears headed to the U.S. Supreme Court.

One reason for the water woes in metro Atlanta is that the urban area is located inland, relatively close to the headwaters of the Chattahoochee River, its major supply river. The city relies on water from upstream reservoirs. A watershed study funded by the city reported in 1998 that stormwater runoff and alterations in stream hydrology were responsible for three-fourths of the pollution loading. The same study found that almost all of Atlanta’s streams were biologically impaired.[5] In past years the city of Atlanta ignored its impact on downstream water users until state and federal fines forced it to act.

Water management in most areas of the state will require addressing both urban and rural interests. For example, the Flint River in central Georgia has its headwaters at Atlanta’s Hartsfield International Airport, making urban runoff the major impact on the upper Flint. Further downstream, the watershed is dominated by impacts from agriculture.

Georgia began a limited market-oriented approach to water allocation with the implementation of the Flint River Drought Protection Act, which became law in 2000. The goal of the legislation is to ensure the Flint River maintains adequate flow to support fish and wildlife during times of severe drought. The state Environmental Protection Division must make a determination by March 1 every year on whether to implement the act. If a severe drought is anticipated and the Act is implemented, farmers who voluntarily remove acreage from irrigation are compensated by the state through an auction.

The first auction was held in 2001 after the EPD formally declared a “severe drought” within the Flint River Basin. The state paid $4.5 million to compensate farmers for not irrigating more than 33,000 acres of farmland during the summer of 2001. The auction held in 2002 resulted in the removal of 40,352 acres from irrigation at an average cost of $127.97 per acre and a total cost of $5,163,645. For each year of the drought, the acres removed from irrigation kept up to 130 million gallons per day in the Flint River and its tributaries that otherwise would have been consumed.[6]

Unlike North Georgia, which relies primarily on surface supplies, South Georgia withdraws most of its water from underground aquifers. The Floridan aquifer, which provides most of South Georgia with drinking water, is becoming contaminated by salt water intrusion along the coast as more groundwater is pumped for agriculture and industry than is recharged by rainfall. The area of cropland under irrigation has increased from under 200,000 acres to almost 1.5 million acres over the last 30 years. Agriculture is the largest consumer of water in the state. As a result, Georgia has imposed a moratorium on any new agricultural water withdrawal permits pending scientific review.

Throughout the state, communities have experienced water use restrictions and pollution issues as supplies of clean, fresh water increasingly fail to meet demand. From 1998 to 2001 Georgia experienced a drought that heightened awareness of the state’s water quantity challenges. During the summer of 2000, groundwater levels reached their lowest recorded levels in almost every aquifer of the state. Many surface water sources set new records for low stream-flow rates as well, with records being broken for gauges monitored for almost 100 years. The recent drought was particularly severe, but periods of low rainfall are a recurring part of Georgia’s climate history.  Plentiful rains resumed in September 2003.

Water quality linked to broader environmental and economic issues

Georgia is under federal court order to identify unhealthy waters and reduce the amount of pollution fouling its rivers. The pollution impact on Georgia streams has shifted over the last two decades from untreated sewage to stormwater. While untreated sewage remains a problem, especially in the city of Atlanta, most sewage and industrial effluent is now treated before being discharged. However, stormwater runoff from impervious roads and rooftops is causing increasing amounts of “nonpoint” pollution to be washed into rivers and lakes. Nonpoint pollution consists of mud, litter, bacteria, pesticides, fertilizers, metals, oils, detergents and a variety of other substances.

A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. When one acre of forest is replaced with impervious surface, such as a parking lot, stormwater runoff from a typical thunderstorm increases from virtually none to almost 100 percent.

There is also a direct link among various types of environmental degradation, ecosystem health and higher economic costs. A progressive loss of tree cover and increases in impervious, paved areas in metro Atlanta have caused summer temperature increases of up to 10 degrees compared to the surrounding countryside. Higher temperatures lead to increased use of electricity for air conditioning. These increased temperatures exacerbate the area’s air quality problems. Air quality contributes to water quality problems because most of the atmospheric pollutants falling on impervious surfaces are washed into streams that feed water supply rivers. The loss of tree cover, higher temperatures and pollution load lead, in turn, to unhealthy streams with a reduced capacity to assimilate wastes.

Need for integrating environmental and economic management

Traditionally, public entities have managed environmental issues one at a time with little regard to their overall cost. But ecosystems are too complex to respond predictably to such a piecemeal management approach. Moreover, this approach reinforces, or even encourages, land-use practices that can substantially disrupt natural cycles that we depend upon for clean air, clean water and temperature moderation. Until recently, these services of nature have met human needs and largely been taken for granted. With water becoming a limiting resource in Georgia’s economic future, the complex hydrologic cycle providing supplies of clean water can no longer be taken for granted.

Markets have proven highly effective at distributing economic goods and services and preventing scarcity. But when it comes to nature’s goods and services, markets have been fingered as part of the problem instead of part of the solution. Consequently, nature’s goods and services have remained outside the economic system. Ecological economists argue persuasively that market approaches can better address complex interrelated issues affecting the environment, resulting in less waste and a more efficient and fairer allocation of scarce resources.

The water auction on the Flint River, although far from perfect, is an example of such an approach. Rather than prohibiting farmers from withdrawing water during times of scarcity, the auction establishes a water market based on voluntary participation. The result is more water for aquatic life that keeps the river healthy. The water market is based on rules that establish fair trade and fine cheaters. Compared to command-and-control regulations, the market approach better provides for ecosystem needs with increased flexibility based on local conditions. Markets can be established to price natural resources and charge for harmful, polluting activities on a much broader scale.

Rather than addressing environmental problems one at a time through command-and-control regulations, this policy study recommends implementing a market-based approach integrating economic and ecosystem needs.

Uses of Water

There are many different, and often competing, uses for water. Some uses, such as recreation, do not physically remove the water from the water supply. Therefore, it is important when analyzing water use to look at “consumptive” use. Consumptive use is defined as the part of ground or surface water withdrawn that is evaporated, transpired, incorporated into products and crops, consumed by humans or livestock, or otherwise removed from the immediate water supply.

Instream use is a water use that takes place without the water being diverted or withdrawn from surface- or ground-water sources.[7] Examples of instream uses are hydroelectric power generation, navigation and shipping (such as barges) and recreation (boating, water skiing and fishing). In addition, minimum instream flows are necessary to support fish and wildlife habitat, for freshwater dilution of saline estuaries and to effectively dilute wastewater.

Offstream uses refer to water withdrawn from surface- or ground-water sources and conveyed to a place of use. Offstream uses, as defined by the U.S. Geological Survey (U.S.G.S.) are:

• Domestic – Domestic water use includes water for normal household purposes, such as drinking, food preparation, bathing, washing clothes and dishes, flushing toilets and watering lawns and gardens.  
• Commercial – Commercial water use includes water for motels, hotels, restaurants, office buildings, other commercial facilities, and civilian and military institutions. Also included are public-supply deliveries to golf courses.
• Irrigation – Irrigation water use includes all water artificially applied to farm and horticultural crops as well as self-supplied water used to irrigate public and private golf courses. (It is important to note that until 2003, farm use permits were exempted from water use record-keeping requirements. As a result, estimates have been used rather than actual meter readings. Both water use permits and these estimates have been based upon the maximum operating capacity of the user’s pump, not on the basis of the amount of water actually used. Acting on a recommendation of the Joint Comprehensive Water Planning Study Committee, the General Assembly passed a law requiring the state to assist farmers in installing meters to accurately measure their actual water use.)
• Livestock – Livestock water use includes water for livestock, feed lots, dairies, fish farms and other on-farm needs.
• Thermoelectric power – The thermoelectric power category includes water used in the generation of electric power with fossil-fuel, nuclear or geothermal energy. Most of the water withdrawn by thermoelectric plants is used for condenser and reactor cooling.
• Industrial – Industrial water use includes water for such purposes as processing, washing and cooling in facilities that manufacture products. Major water-using industries include, but are not limited to, steel, chemical and allied products, paper and allied products, and petroleum refining.
• Mining – Mining water use includes water for the extraction of naturally occurring minerals; solids, such as coal and ores; liquids, such as crude petroleum; and gases, such as natural gas.
• Public Supply – Public supply water withdrawn by public and private water suppliers and delivered to multiple users for domestic, commercial, industrial and thermoelectric power uses. [The difference between the quantity of water withdrawn by public suppliers in a water-resources region or state and the quantity of water delivered to all users represents losses in the distribution systems, filter back flushing, public use (firefighting, street washing, municipal office buildings, parks and swimming pools) and, in a few areas, water transferred between adjacent states or water-resources regions.]

Excluding agriculture and industry, Georgia’s average daily per capita water consumption is estimated at 166 gallons, compared with 168 gallons in 1995, and compared with a national average of 164.5 gallons.[8]

Water Quality

The quality of surface water is evaluated in terms of whether it meets standards set by the EPA for certain designated uses such as aquatic life support, fishing, swimming, drinking water or wild and scenic. It is important to note that only a small percentage of surface water is actually sampled, pointing to the need for adequate funding of science-based water quality testing.⁸

Section 303(d) of the Clean Water Act requires that regulatory agencies determine total maximum daily loads (TMDLs) for all water bodies that do not meet water quality standards. A TMDL is the amount of a specific pollutant a river, stream or lake can assimilate and still meet federal water quality standards. Georgia is under court order to implement TMDLs for impaired waters. For more information see www.epa.gov/owow/tmdl/atlas/statepdfs/ga.pdf.

The impact of urbanization on water resources

Cities rely upon a clean supply of fresh water for their economic health, yet the expansion of urbanized areas can threaten this vital resource. Urban areas cover 2.8 percent of the state; transportation infrastructure covers another 6 percent.[9] Such development increased the amount of impervious surfaces, including roads, parking lots and rooftops. At the low end of the scale, residential development on estate lots covers 12-20 percent of the land with impervious surface. At the high end, shopping center development results in more than 90 percent imperviousness.

Urbanization can damage water quality out of proportion to the actual rate of development because impervious surface area in many regions now reaches or exceeds the biological threshold of 10 percent at which runoff begins to exceed natural “processing” capacity. A growing body of scientific evidence indicates a direct link between impervious cover and stream health. Thus, impervious cover in a watershed is a good indicator of the overall health of streams that feed rivers and lakes. Where impervious cover exceeds 5 percent, stream health begins to decline in some regions. With more than 10 percent impervious cover, stream health becomes biologically impaired. At 25 percent cover, streams can be non-supporting. Nutrient loading and other types of pollution also increase in proportion to the impervious surface area in a watershed.

Uncontrolled stormwater runoff creates multiple challenges. In addition to pollution, rapid runoff of stormwater into urban streams erodes channels and destroys aquatic habitat. Stream channel enlargement damages urban infrastructure, such as bridges and sewer lines, erodes property and increases damaging floods. Sediment eroded during the construction phase of new development, and later from enlarging stream channels, smothers aquatic life and accumulates downstream in water supply and flood control reservoirs. By causing rainfall to run off rather than soak into the ground where it recharges aquifers, impervious surfaces also cause wells to dry up and reduce the flow of headwater streams during drought.

During the middle of the 20th century, the increasing density of roads and resulting problems with flooding led engineers to experiment with various approaches to dealing with increased stormwater runoff. Several approaches address these problems, depending on local conditions. However, the enclosed storm-drainage system that conveys surface runoff in underground culverts gained dominance, slowing further experimentation for decades. Yet infrastructure managers discovered that speeding runoff from roads into creeks often caused flooding downstream.

In an effort to reduce flooding, municipalities began requiring in the 1970s that developers install detention basins to hold back peak flow from major storms. Although peak-flow detention looked promising at the time, this approach has failed to adequately control flooding, and in some cases can make flooding worse.[10] These problems with curb and culvert drainage and peak-flow detention were not foreseen because the design standards were never tested for performance on a watershed basis, nor were the standards developed to protect streams or reduce pollution.

The hydrologic cycle and the economy

The natural hydrologic system has evolved over billions of years to recycle water efficiently. Vegetated watersheds store and filter precipitation underground before it is gradually released to the surface through springs and seeps that feed streams. Approximately 40 times more fresh water is stored in aquifers than is visible on the surface as streams, rivers and lakes. During periods of drought, water released from aquifers maintains the flow of streams that feed rivers and lakes. But as the following illustrations show, impervious surfaces and drainage networks that shunt stormwater runoff directly from road surfaces to streams block the function of the natural cycle.

The hydrologic cycle provides services of nature in the form of clean water, clean air and temperature moderation. These services are essential to our economic well-being.

Georgia’s rapidly expanding population is leading to urbanization throughout the state. Nowhere is the pace of development faster than in metro Atlanta, where the availability of clean water is the only limiting factor. Development practices must be modified to reduce harm to watersheds or the city’s economic growth will stall.

While legislative action has dramatically reduced the muddy runoff down roads and streams that typically reflected development’s impact, there still is the effect of development disturbing runoff channels and streams.

Watershed-based management

The interdependence of watersheds with headwater tributaries feeding creeks, rivers, lakes and estuaries makes watersheds the appropriate level of analysis for water resources. After all, political boundaries seldom coincide with watershed boundaries. Watershed-based ecosystem management replaces centralized one-size-fits-all decision making with more decentralized decision-making within natural drainage basins.

A watershed-based approach faces many obstacles. When the North American continent was settled, waterways served as the main avenues of commerce. In order to provide equal access and defensible boundaries, dividing lines for states, counties and municipalities were drawn down the middle of rivers, streams and lakes. For example, Georgia’s western boundary is defined by the Chattahoochee River and its eastern boundary by the Savannah River and Atlantic Ocean. In hindsight, the practice of dividing surface waters between competing jurisdictions likely encouraged depletion, pollution and waste.

Another impediment to watershed management is the regulatory overlap that has developed between agencies at all levels of government. At the federal level, water resources are addressed by a multitude of agencies including, among others, the U.S. Army Corps of Engineers, Bureau of Reclamation, Environmental Protection Agency, Federal Energy Regulatory Commission, Natural Resource Conservation Service and the Fish and Wildlife Service. At the municipal level, water management is generally divided between separate departments for drinking water, roads and drainage, sewers and parks and recreation. Fragmented management creates a need for interagency cooperation. In various places around the country, watershed resource-management initiatives are establishing cooperative alliances between jurisdictions.

Agenda

Adopt better pricing of water to encourage conservation

Water is arguably our most precious resource. Therefore, it is poor public policy to subsidize inefficient use or actions that have a detrimental impact on water quality. Many local governments in Georgia still use a declining block water rate whereby the more water a consumer uses, the lower the price per unit is charged – exactly opposite of how  a market would price a scarce resource. In addition, prices should be dynamic rather than static. For example, water prices should rise during droughts and fall when water is more plentiful.

Alternatives to pricing involve voluntary conservation and mandatory conservation through watering restrictions. Voluntary efforts are laudable, but unlikely to result in significant savings. Watering restrictions are difficult to enforce and can cause ill will and suspicion among neighbors. Pricing allows individuals to self-regulate their water use, rewards voluntary conservation, can result in significant water savings and provides  local utilities with the much-need revenue for infrastructure maintenance and upgrades.[11]

In addition to conservation, water quality can be influenced by proper pricing. Georgia and Mississippi are the only states in the Southeast where industries and publicly owned treatment plants are not charged a fee to discharge wastewater. Georgia’s neighboring states charges a wastewater permit fee (usually reflecting both the volume and toxicity of the waste discharged.) Not only do these fees provide an incentive to reduce the amount of waste discharged, they also create significant revenues for monitoring and protecting water quality.[12]

Adopt user fees to pay for source-water protection

User fees can pay to protect watersheds that are the source of drinking water, even when the source waters are outside a local political jurisdiction. For example, metro Atlantarelies on water from the Chattahoochee and Etowah Rivers that originates in the mountains of North Georgia. These watersheds are now being rapidly developed, affecting water quality downstream. One way to gain the cooperation of North Georgia counties in protecting water supplies for metro Atlanta would be to pay them through the mechanism of a user fee. Following this approach, members of the Metropolitan North Georgia Water Planning District could agree on a small percentage of their customer’s water bills to be contractually paid to North Georgia counties for the protection of source waters. Collected fees could pay for improved onsite stormwater controls, or the purchase of conservation lands. Georgia would not be the first state to undertake such an approach. Faced with billions of dollars in increased treatment costs, New York City reached a pact with rapidly developing counties in upstate New York to pay for protecting watersheds that supply the city’s drinking water.

A city that has implemented a simple market-based approach for protecting its water supply is Quito, the capital of Ecuador. Deforestation and intrusive development threaten the watersheds supplying Quito. To fund protection of its water supply, the municipal water utility pays 1 percent of its customer’s water bills into a special trust fund to be used exclusively for watershed protection. Quito’s water-user fee was developed by the Nature Conservancy, which reported recently, “Early experiences are encouraging.”[13]

Adopt cost-based user fees to fund watershed protection

One way to balance the need for a dynamic economy with the need to protect essential ecosystem “services” is to adopt user fees that reflect the costs of addressing stormwater runoff and pollution impacts. Urban development is often concentrated around rivers, lakes, wetlands and coastal estuaries – areas that contribute most to the functioning of the hydrologic cycle. Fees that reflect such costs could discourage development of high-impact areas and could encourage innovative development patterns that make better use of natural hydrological cycles.

User fees can play a vital role in providing long-term, dedicated funding for protecting watersheds as well as equitably assigning the costs so those creating the greatest impact pay the highest fee. In addition, user fees can lessen dependence on property taxes, which weaken the linkage between costs and benefits. However, it is critical that the user fees are not perceived as a punitive tax with no objective basis or underlying science. Choosing an objective and scientifically based criteria, such as the amount of impervious surface area covering a given piece of property, will ensure a sense of fairness. The costs of the projects funded by the user fees should be clearly understood by the community so that the fee is perceived as targeted rather than arbitrary.

In place of regulations that force developers to increase density, market approaches such as user fees can equitably assign the cost of impacts to those causing the greatest harm. Since much of the negative impact of urbanization is a result of replacing natural vegetation with impervious surfaces, user fees based on the amount of impervious surface area could also serve as a mechanism for long-term, dedicated funding. This kind of objective, science-based criteria is crucial to the acceptance of a user fee approach.

Unlike current funding of fragmented water utilities through tax revenues, user fees can create incentives to minimize harmful impacts and maintain development within the resource capacity of a given watershed. User fees create a positive feedback loop between costs and benefits. Compared to tax-based regulatory management, user-fee funding is more likely to be economically efficient and respond to the dynamic nature of both real estate markets and ecosystems. Moreover, user-fee-funded utilities are less prone to political manipulation and better able to raise funds needed for long-term planning and maintenance.

Encourage municipal stormwater utilities

Federal requirements for stormwater permits affecting smaller cities and court-mandated enforcement of the Clean Water Act on a watershed basis have spurred many municipalities to consider the user-fee concept for funding improved stormwater management. More than 350 stormwater utilities have been formed nationwide, most within the last decade. At least five stormwater utilities have been formed in Georgia.  Griffin was the first and has set the standard, serving as a model around the state and across the nation.[14] Others are in Decatur, DeKalb County, Conyers and Columbia County. More than a half-dozen other governments are exploring the concept. Expect the creation of more stormwater utilities in Georgia after the Georgia Supreme Court ruled in June, 2004 that Columbia County’s charge is not an “arbitrary and capricious” tax because it is “used only to pay for stormwater management within the designated service area.”[15]

Traditional stormwater management treats stormwater as a waste product of urban development. Responsibility for stormwater management is generally dispersed between various government agencies and departments, fragmenting stormwater management efforts and creating jurisdictional conflicts. Existing programs often suffer from inadequate funding, forcing managers to react to problems such as flooding with short-term, piecemeal solutions. Stormwater systems are rarely built to handle runoff from anticipated future development, often resulting in flooding and a loss of water quality to receiving waters.

The user-fee-funded stormwater utility provides functional recognition of stormwater as a resource. The utility concept focuses management in a single organization, which can be public, private or some combination thereof. Creation of a stormwater utility allows for dedicated infrastructure and management funding, with fees tied to impacts. The approach enables development of comprehensive preventative and enhancement programs.

Many experts, including the EPA, are recommending adaptive management that is responsive to the dynamic nature of both markets and ecosystems. Adaptive management is a process for improving resource management incrementally as managers and scientists learn from new experience and scientific findings. Affordable consulting services are available for setting up and managing a stormwater utility. Municipalities should consider integrating stormwater management, sewage treatment and water supply into single cost-based, user fee-funded water utility.

Establish a statewide Watershed Management Trust Fund

In 2004, the General Assembly authorized the state Environmental Protection Division to author a statewide comprehensive water management plan by 2007. While the Metropolitan North Georgia Water Planning District was a good start, it deals only with water and covers only a portion of the watersheds impacted by metro Atlanta. Atlanta’s urban development is a serious problem impacting the state’s water resources, but there are other issues affecting rural Georgia that can benefit from a formal institutional framework for managing the environment. This is where the statewide comprehensive plan can bridge the gap.

Although most environmental issues are interrelated, Georgia’s approach to them has often been fragmented and one-dimensional. In addition, previous environmental initiatives in Georgia have been burdened by the lack of a dedicated, long-term funding mechanism. A statewide Watershed Management Trust Fund would give Georgia the vehicle and funding mechanism to address these issues in a holistic manner.

Although initially funded by general appropriations, the goal must be for the Trust Fund to be largely supported by cost-based user fees within five years. In addition to providing incentives in the form of technical assistance and grants for reducing both point and nonpoint sources of pollution, the Fund could incorporate Georgia’s Greenspace Program, which acquires riparian buffers and other greenspace. The Fund could also encourage solution-based cooperative programs across state boundaries to better manage shared river basins and aquifers. While the water war among Georgia, Alabama and Florida appears destined for the courts, other frontiers remain, including the Savannah River that Georgia shares with South Carolina.

Tree loss is an area that could be addressed by the Trust Fund. Thus far, regulatory efforts to protect trees through ordinances have, at best, slightly slowed tree loss and created resentment by builders and homeowners alike. The Trust Fund could provide research grants for studies on applying incentives to protect trees as well as reforestation grants to groups such as Trees Atlanta. The results of these programs could be evaluated for results and cost effectiveness and applied more broadly.

A statewide Watershed Management Trust Fund would result in better data, sound science and cooperation, helping reduce wasteful duplication by requiring local governments to share water quality data in order to qualify for grants.

The Trust Fund could also evaluate the performance of water resource management through science-based measures of the biological integrity of the state’s waters. Georgia’s existing Geographic Information System (GIS) could be utilized to share water resources data across political boundaries and to publicize it in timely fashion via the Internet.

Provide opportunities for industry and farmers to trade for water quality improvements similar to the current air trading program

Water quality trading has been implemented through 11 pilot projects funded by the U.S. Environmental Protection Agency, whose regulations for TMDLs (total maximum daily loads) also encourage trading. Within a watershed, one pollutant source meets regulatory requirements by paying another source that reduces pollutants using lower pollution control costs. The flexibility produces greater efficiency and lower costs – and the desired water quality standard.

This approach is particularly suited to the unique needs of agriculture. In agriculture markets it is very difficult to pass on costs, and costly environmental regulations can often be a competitive burden that results in direct costs to farmers. With pollution trading, farmers are able to receive payment to offset the financial losses due to actions that result in improved environmental quality.

Under a water quality trading scenario, point sources pay nonpoint sources (farmers, tree farms, developers, etc.) for making reductions in phosphorous, nitrogen and sediment runoff in order to meet current water quality standards and TMDL  requirements. For example, a point source could pay (in a contractual relationship) a farmer for reducing phosphorous runoff by a certain amount. If a farmer fails to live up to his contract, the point source parties and the state can sue to enforce. Thus, property rights are recognized and all parties have clear expectations of conduct and punishment, rather than behavioral change interpretations which can vary from one site to the next. Trading makes for a flexible and place-specific program targeted and tailored to the water segment, pollutant, and specific geographic and commodity needs. Trading is superior to a uniform one-size-fits-all program, as long as all sections of the river are required to meet the standard. North Carolina’s Tar-Pamlico river basin has experimented with trading.

Educate developers and facilitate adoption of conservation-minded practices

Encouraging best management practices among developers requires a concerted campaign to demonstrate the intersection of cost-effectiveness and conservation-minded practices. A cooperative effort, instead of the heretofore adversarial relationship between developers and environmental agencies, can pre-empt costly retroactive measures. Numerous examples exist:  For example, pervious concrete paving in parking lots can function in a manner similar to natural ground cover, slowing and absorbing the flow of rain water. That reduces the need for large detention ponds. Cost considerations may be foremost – pervious concrete cost up to 20 percent than regular concrete – but pervious concrete paving can cost less than alternatives. When a parking lot doubles as the storm water management system, the cost of the land for detention ponds, the cost of detention pond construction, and the cost of mitigation facilities are saved.

Green roofs, too, are a selling point in urban areas that mitigate stormwater runoff and attract intown dwellers for their greenspace benefits. Rain sensors on irrigation systems prevent needless watering in subdivisions. Golf courses are considered environmentally desirable disposal sites for effluent – gray water – serving as highly effective wastewater treatment facilities for this partially polluted water. Hotels, too, can be encouraged to use gray water for some purposes.

Consider a market-based trading system for allocating water use

Because water is such a precious resource, Georgia must take steps to develop a fair and environmentally sensitive framework for its allocation and conservation. Many factors are combining to force some very difficult water allocation decisions on Georgia in the near future. Our population continues to increase and commercial, industrial and agricultural output continue to grow just as a large portion of our surface water supply may be allocated to neighboring states and saltwater intrusion threatens our supply of groundwater. As opposed to allowing government to determine the water winners and losers, a market approach would be more efficient and equitable.

The over-withdrawal of groundwater in South Georgia is a perfect example of too many people pursuing an open access resource without defined property rights. Top-down government controls, such as moratoriums, do not address the real problem of the lack of ownership or property rights. Without clearly defined property rights, everyone removes more water than can be recharged since the only penalty is not getting your water out of the aquifer before it is exhausted (also referred to as a “race to the pump”).

Terry Anderson and Pamela Snyder with the Political Economy Research Center in Bozeman, Montana, propose a system that recognizes property rights in the resource as a means of conserving groundwater. In Georgia’s command and control approach, users can only pump so much water and are not allowed to transfer their right to pump, except in the case of farmers, whose agricultural withdrawal permit may be transferred with the land in a sale, but only for agricultural purposes. This approach puts a stranglehold on development without encouraging efficient use.

Anderson and Snyder offer a better management technique that recognizes “highest and best use.” Under their plan, the total amount of water pumped from the aquifer is limited based upon a sound scientific analysis that ensures adequate recharge. Pumping rights are then allocated based upon a market trading system, resulting in a solution that allows for economic growth, as long as it does not overdraw the aquifer. For more information on this idea, see the Georgia Public Policy Foundation’s primer, “Water permit transfers: Bridging the Misinformation Gap.”[16]

A similar procedure can be used to allocate surface water. Scientific analysis would determine the amount of surface water necessary to ensure sufficient instream flows to protect fish and wildlife habitat. Usage rights would then be allocated through the trading system. For example, the market would handle the difficult allocation decisions regarding competing demands such as domestic water use for growing cities, irrigation use for crops, navigation use for barge traffic and industrial use for new industry. In addition, the market provides an automatic response to the inevitable droughts. When prices for water rise, users will be encouraged to consume less, just as they do for other goods.

Adopting a watershed approach to a water market, and requiring that there is no downstream impact when trading occurs, should allay fears that a growing metro Atlanta will “suck up all the water” in Georgia. Water withdrawal permit holders who wish to enter the market will continue to operate under EPD oversight. And they would be transferring – selling – the right to use their allocation, not selling the water itself.

Adopting a market approach does not mean that there is an absence of regulation. Dr. Ronald G. Cummings, Georgia’s eminent scholar in environmental policy at Georgia StateUniversity, has identified many of these issues (environmental impacts, speculation, monitoring and enforcement, transaction costs, impacts to rural economies, exports across state lines, etc.) and proposes policy options to meet these concerns. For more information, see “Water Rights Transfers: Options for Institutional Reform” (2001), Ronald G. Cummings, Nancy A. Norton and Virgil J. Norton, www.gsu.edu/~wwwenv/programs/water/2001_001.pdf.

Barrett Walker, trustee for the Alex C. Walker Educational and Charitable Foundation, contributed to this chapter

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The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (August 17, 2004). Permission to reprint in whole or in part is hereby granted, provided the affiliation is cited.