Florida Everglades, Research Paper Example

Hypothesis

The ultimate cost of restoring the Florida Everglades far surpasses the economic benefits.

Methodology

Our goal is to perform a cost benefit analysis of the Comprehensive Everglades Restoration Plan (CERP) to prove that the costs associated with the restoration far outweigh the benefits. Cost Benefit Analysis is a technique used to decide whether or not to choose a certain option.  This method totals the costs and benefits, and if the benefits are greater than the costs, the option is worthwhile.

Given the multitude of variables available and the difficulty of quantifying most of these variables, we choose the three variables that we considered to have the largest monetary value for both cost and benefit analysis.  For the costs analysis our dependent variables are land acquisition, construction, operations and maintenance.  For the benefit analysis our dependent variables are groundwater purification, aquifer recharge, real estate, and park visitation.  The dependent variable for both the cost and benefit is time, 50 years, which is the projected usability of the CERP water improvement systems.

Introduction

The Florida Everglades was originally a free-flowing river of grass running from the Kissimmee lakes out to the Florida Bay.  This wetland ecosystem is integral to a large diversity of plants and animals native to the South Florida area. However, human activity and land use changes over the past century have altered the ecological landscape from agriculture, urbanization, and the engineered diversion of surface waterways. The federal government and State of Florida are attempting to undo the environmental damage wrought by the past century of land change that have reduced the Everglades ecosystem to approximately 50 percent of its original extent (R. Walker, 2001).

The first step of the major alterations to the vital natural environment began with the passing of the “Swamp and Overflowed Lands Act of 1850” by the US Congress, which transferred Florida’s swamp and overflowed lands to State ownership for sale and usage of the land.  Unfortunately, at the time there was no understanding about the integral natural ecosystem and the land was considered to be useless marshland.  By 1930, over 665 miles of drainage canals, 47 levees, and 16 locks and dams had been built to divert the natural flow.  This “drying” of the land, opened the doors to new uses for the previously flooded land and the state began selling off parcels for other uses, such as development and agriculture.

During the period between 1930 and the 1970s the issues caused by the land use changes and natural flow diversion became evident.  In the 1930s there was continual flooding in the areas surrounding Lake Okeechobee as well as extreme dry spells and the threat of saltwater intrusion in Miami and other coastal cities.  By the 1960s and 70s several native species, such as the American Alligator, Florida Panther, Snail Kite, and Cape Sable Seaside Sparrow were placed on the endangered species list.

In response to growing signs of ecosystem deterioration, in 1996 the U.S. formally established the South Florida Ecosystem Restoration Task Force. This Task Force, composed of federal agencies and state, local, and tribal representatives was charged with coordinating and facilitating efforts to restore the South Florida Ecosystem.

This team of agencies and organizations became involved in an elaborate planning process to restore the ecosystem, maintain flood control and meet South Florida’s water needs for the next 50 years.  This think tank’s work became the Comprehensive Everglades Restoration Plan (CERP).  The plan is expected to take roughly 30 years to implement.

CERP’s tasks range from land acquisition and operational modifications to large-scale infrastructure improvements in a mission to achieve both objectives.  The financial responsibility of this project is equally shared between South Florida Water Management District and the U.S. Army Corps of Engineers (USACE).

Restoration Costs

In this section our goal was to place an economic value on the actual reconstruction costs suggested by CERP to restore the Everglades.  For the analysis of the restoration costs, the variables considered were divided between three main categories: land acquisition, construction, and operation, maintenance, and repairs.

Land Acquisition

The South Florida Ecosystem Restoration Task Force was tasked with performing a Land Acquisition Strategy (LAS) to decide the amount land that will be needed for the restoration projects.  The LAS addresses three strategic goals:

• Goal #1: Get the water right
• Goal #2: Restore, preserve, and protect habitats and species
• Goal #3: Foster compatibility of the built and natural systems

To achieve Goal #1, 43 necessary projects have been identified that will require land acquisitions totaling 461,590 acres.  To date, 67% (310,800 acres) of that land has been claimed.  The total cost to date is $3,281,567, and an estimated $1,426,278 is needed to complete acquisition (CERP 2001).

Goal #2 entails 21 projects which includes acquisition of lands for habitat improvement projects that supplement and complement the existing network of publicly held parks, preserves, and refuges. To date, 1,725,561 acres are estimated to be needed to achieve the targets established for this goal with 1,698,894 acres already acquired (98%). The total estimated cost of the acquisitions is approximately $1,177,639, and an estimated $332,515 is needed for completion (CERP 2001).

Goal #3 complies with the Farm Security and Rural Investment Act of 2002, which authorized programs with financial incentives to private landowners to restore or enhance wetland and improve wildlife habitat while protecting working farms or retiring marginal land from agricultural production.  This goal requires an estimated 391,162 acres, with 228,914 acres already acquired (58%).  The total cost to date is $2,494,156,605 with an estimated $874,494,525 needed for completion (CERP 2001).

Construction

The complete CERP plan accounts for the construction projects and costs covering the entire 16 counties and categorizes them by region and data pertaining to these projects are publicly available from CERP.  Using the data from the CERP Final Feasibility Report 1999, and summing the construction projects within each region, then adjusting these costs to 2010 values provides a cost value for the anticipated projects, which are $5.6M and $7.3M respectively.  The 1999 cost levels were adjusted to 2010 levels using the US Bureau of Labor and Statistics online inflation calculator.

Table 2 – Construction Costs (1999 Cost Values from CERP Final Feasibility Report 1999 & Adjusted 2010 Cost Values by using US Bureau of Labor and Statistics Online Inflation Calculator)

Operation, Maintenance and Repairs

The complete CERP plan also accounts for the annual operations, maintenance, repair and replacement costs over the all projects within the entire 16 counties, which is also publicly available in the 1999 CERP Final Feasibility Report.  These 1999 costs provided in the report were found by CERP from extrapolating operational cost histories over the South Florida Water Management District.

Using the 1999 annual projected costs from the CERP Feasibility Report, summing these values by projects within each region and then adjusting these costs to 2010 values provides the 1999 and 2010 annual costs for these projects, which were $173M and $201M respectively.  The cost level adjustments were performed using the US Bureau of Labor and Statistics online calculator.   Averaging the 1999 and 2010 annual costs and then multiplying by 50, assuming the CERP lifespan of 50 years provides a lifespan cost of $9.35B.

Tabulated results are shown on the next page.

Table 3 – Operation, Maintenance and Repair Costs (1999 Cost Values from CERP Final Feasibility Report 1999 & Adjusted 2010 Cost Values by using US Bureau of Labor and Statistics Online Inflation Calculator)

Costs Summarized

In this section we placed economic values on the restoration costs, using the defined variables: land acquisition, construction, and operation, maintenance, and repairs. The values are summarized in the table below.

Restoration Benefits

In this section our goal was to place an economic value on the benefits of the Everglades restoration.  Due to the fact that the Florida Everglades is a natural resource, choosing variables to analyze for financial beneficial values proved difficult.  Through research we were able to find an economic benefit analysis performed by Mather Economics prepared for The Everglades Foundation. (Additional details about this document can be found under References)

Using the Mather Economics document and analyzing their values and estimated benefits, we used the following three categories: groundwater purification and aquifer recharge, real estate, and park visitation.

Groundwater Purification and Aquifer Recharge

Groundwater in the coastal areas of the South Florida are growing increasingly brackish and will have to be desalinated for most uses. The operating cost of desalination increases directly with the salinity of the water input. The restoration of sheet flow can be expected to decrease groundwater salinity, so, restoring the Everglades can be expected to result in at least the energy cost savings from desalinating less saline groundwater. (Mather Economics 2009)

The Mather Economics analysis used US Geological Survey (USGS) water withdrawal data for the 16 counties included in South Florida from 1985 to 2005, which provided data for analysis of the increasing saltwater concentration.  Then, using a value of $0.08 per kW/h (based on the Florida 2007 average $0.0767) and projecting for the annual desalination costs over the next 50 years gives a net present value of $13.15B and when adjusted for population and energy growth over 50 years gives a final value of $24.7B in benefits.

Table 5 – Groundwater Purification (Values from Mather 2009)

Real Estate

The restored Everglades is expected to play a role in property value as people tend to prefer to live, recreate and work on or near the water (ocean, bay, lake, river, etc.) and the improvement in water quality will cause a positive increase in real estate values. Economists have developed a technique called hedonic pricing, a method that can quantify the incremental value of environmental attributes.  This same type of analysis is performed to quantify the negative effects of proximity to toxic waste sites.  Water quality with respect to real estate is typically expected to have a positive effect from 5 to 7% (Mather Economics 2007).

The current estimated aggregate value of owner-occupied residential real estate in the 16 counties encompassing South Florida is $9.8B. Using hedonic estimates of water quality effects, the elasticity of real estate values with respect to water quality is 0.07042.  Additionally, if the dissolved oxygen (a measurement of water quality) is improved to 1970 values, there will be a 23.4% improvement in water quality. (Mather Economics)Using the current value of real estate in the 16 counties in South Florida and multiplying by the factors of elasticity and improved water quality gives a benefit of 16.1B.

Park Visitation

The Everglades is one of South Florida’s main tourist and recreational attractions, as it provides numerous activities such as sightseeing, bird watching, camping, cycling, canoeing, nature hikes, kayaking, hunting, and fishing.  To quantify the monetary benefit that the restoration would create, the Mather’s analysis used a travel-cost method.  This uses traveling expenses incurred to visit a destination as representing the opportunity costs. (Mather 2009)

Using present park visitation values, removing resident visitors to account for the impact of traveling visitors only, and estimating travel expenditures per visitor provides the current value of park visitations.  Then estimating a marginal increase of 2% due to the restoration over the next 50 years provides a total value of $1.3B as shown below.

Benefits Summarized

Using the benefits summarized from the Mather’s Economic Report and analyzed from the variables: groundwater purification and aquifer recharge, real estate, and park visitation gives a total benefit value of $42.1 Billion. Table 2 presents a summary of the total value of the Everglades restoration services.

Benefit Cost Analysis

The benefit cost analysis using the aforementioned variables are tabulated below, where each variable has a calculated financial value.

Conclusion

Our findings have proven our hypothesis to be false.  While the cost to remedy the effects of the development of the Everglades is high, the long-term results will justify the immediate means.  The restoration and maintenance of these lands can only be measured by information based on current regulations and data on trends in development, consumption and recreation.  Variables that can be based on unforeseen environmental conditions and economic and political climates can increase or decrease the value of restoration. As our society’s awareness and attitudes about environmental issues grow, those feelings can help raise the value. Consumption and other negative ecological effects can also decrease as our society increases “green” tactics. Public opinion can also add value to the data, in addition to estimates that may be affected by politically charged research efforts. Because of the increased debate over environmental issues, it is possible that ecological lobbies and programs like the one studied may incorporate skewed data into their findings, in an effort to inflate the value on conservation.  Also, the current economic climate may not readily allow for such funding, so the need to justify the work is critical.  Overall, the study does bring to light the need for a balance between consumer needs and ecological impact in development.  Through the use of thorough examination of the land and the role it plays in its environment, projects can be completed in both the most cost-effective and ecologically sound manner.

References

(1999). “Final Feasibility Report and PEIS.” The Comprehensive Everglades Restoration Plan, document can be downloaded from <http://www.evergladesplan.org/pub/restudy_eis.aspx>.

(2010). “Everglades: A Brief History.” The Comprehensive Everglades Restoration Plan, <http://www.evergladesplan.org/about/learn_everglades.aspx>

Mather Economics. (2010). “Measuring the Economic Benefits of America’s Everglades Restoration.” Palmetto Bay, Florida: The Everglades Foundation.

Clement, Gail. Florida International University Library. (2010). “Reclaiming the Everglades: Everglades Timeline South Florida Boom and Bust.” Everglades Information Network and Digital Library, Florida International University Library. <http://everglades.fiu.edu/reclaim/timeline/timeline7.htm>

(2010). “Development of the Central & South Florida (CS&F) Project.” The Comprehensive Everglades Restoration Plan, <http://www.evergladesplan.org/about/restudy_csf_devel.aspx>

Cave, D. (2010, March 19). Renewed Support for an Everglades Land Deal, but Cost Is Still in Question. New York Times.

(2010). “The Living Everglades.” South Florida Water Management District, <http://glades.sfwmd.gov/empact/home/02_everglades/08_faq.shtml>

Milon, W. J. (Summer 2010). “Who Wants To Pay For Everglades Restoration? The Magazine of Food, Farm and Resource.

Stapleton, Christine. (August 12, 2010). “$197 Million U.S. Sugar Land Deal for Everglades Cleanup Still Faces Challenges.” The Palm Beach Post, <http://www.palmbeachpost.com/news/state/197197-million-u-s-sugar-land-deal-for-855637.html>