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A STUDY of PULP MILL EFFLUENT in BRITISH COLUMBIA by TONY

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A STUDY of PULP MILL EFFLUENT in BRITISH COLUMBIA by TONY ENVIRONMENTAL IMPACTS AND ECONOMIC COSTS: A STUDY OF PULP MILL EFFLUENT IN BRITISH COLUMBIA By TONY CHRISTOPHER LEMPRIERE B.A., University of Toronto, 1985 M.A., Queen's University, 1988 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE in THE FACULTY OF GRADUATE STUDIES (Resource Management and Environmental Studies) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA April 1995 ® Tony Lempriere, 1995 In presenting this jthesis in partial fulfillment of the requirements for an advanced degree at the University of British Columbia, I agree thatjthe Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted| by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written|permission. j Department of ^p^mi/Jol /^QftctjX<frWf c^^^^nu^on/T^^ticJ- WwdcQ The University of British Columbia Vancouver/ Canada Date Do Aprsi ( • 11 ABSTRACT Lempriere, T.C. [1995]. Environmental impacts and economic costs: A study of pulp mill effluent in British Columbia. Master of Science Thesis, Resource Management and Environmental Studies, University of British Columbia, Vancouver. In this thesis I study the economic cost of the environmental impacts of pulp and paper mill effluent in British Columbia. The thesis is not a benefit-cost analysis of the industry. Rather, my primary objective is to assess what the process of trying to estimate the costs reveals about the difficulties and limitations in the economic analysis of environmental damages. I review the environmental impacts of pulp mill effluent in British Columbia. There is a great deal of uncertainty in many respects about these impacts, but it is clear that in some cases they have been significant. A considerable body of literature addresses the theory and methodology of how to measure such impacts in economic terms. I draw upon this literature in four case studies of certain environmental impacts and specific types of economic damage. The case studies examine 1) dissolved oxygen reductions in Alberni Inlet and the impact on sport salmon fishing; 2) chlorinated dioxin contamination in Howe Sound and commercial shellfishing ground closures; 3) chlorinated dioxin contamination in the Columbia River and the impact on sport fishing; and 4) fish tainting at Kitimat and its effect on the Haisla people. In each case study, I estimate a range of values for the economic cost of the specific environmental impact in question. In each, there are significant and difficult questions which must be addressed. I conclude by noting that there are many instances where credible economic value estimates of environmental damages can be derived. Even partial and incomplete estimates can be helpful in demonstrating that the environment is an important source of economic value. However, the case studies suggest that five potentially severe sets of problems will invariably accompany economic analysis of environmental impacts. The first four ; UJ — complexity, uncertainty, site-specificity and limited information — are typical of most studies of environmental issues, but economic analysis adds a new dimension to each. The fifth set of problems is unique to economic analysis. These difficulties limit the ability of economists to undertake comprehensive analyses of the environment or environmental degradation. : 1Y_ TABLE OF CONTENTS ABSTRACT ii TABLE OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii ACKNOWLEDGEMENTS viii 1. INTRODUCTION 1 1.1 Goal and Motivation 1 1.2 The British Columbia Pulp and Paper Industry 5 1.3 Thesis Outline 7 2. THE ENVIRONMENTAL IMPACTS OF PULP MILL EFFLUENT IN BRITISH COLUMBIA 11 2.1 De-Oxygenating Substances 13 2.2 Total Suspended Solids (TSS) 19 2.3 Chemical Contaminants 22 2.4 Summary 36 3. THE ECONOMIC COST OF WATER POLLUTION 37 3.1 Types of Economic Value 41 3.2 The Theory of Economic Value 43 3.3 Measuring Economic Value 48 3.4 Measurement Issues in Assessing The Economic Cost of Water Pollution 53 3.5 Summary 65 4. DISSOLVED OXYGEN REDUCTIONS AND SPORT FISHING - ALBERNI INLET 67 4.1 Background 67 4.2 Economic Valuation 78 4.3 Summary 89 5. DIOXIN CONTAMINATION AND SHELLFISHERY CLOSURES - HOWE SOUND 90 5.1 Background 90 5.2 Economic Valuation 96 5.3 Summary 103 6. DIOXIN CONTAMINATION AND CONSUMPTION ADVISORIES - COLUMBIA RIVER 105 6.1 Background 105 6.2 Economic Valuation 110 6.3 Summary 118 , ; , Y. ; __ 7. FISH TAINTING AND FOOD FISHING - KTTIMAT 119 7.1 Background 119 7.2 Economic Valuation 124 7.3 Summary 129 8. DISCUSSION 130 8.1 Case Study Results 130 8.2 Difficulties in the Economic Analysis of Pulp Mill Pollution 138 9. CONCLUSION 144 REFERENCES CITED 147 APPENDIX A. FISHERY CLOSURES AND FISH CONSUMPTION ADVISORIES, BRITISH COLUMBIA, 1988 TO FEBRUARY 1995 161 • Vi ; ; LIST OF TABLES Table 1.1 British Columbia Pulp and Paper Mills, 1994 6 Table 2.1 British Columbia Pulp Mills: Production and BOD5 and TSS Discharges, 1980, 1990 and 1994 15 Table 2.2 British Columbia Pulp Mills: AOX Discharges, 1989, 1991 and 1994 24 Table 2.3 British Columbia Pulp Mills: Average Acute Toxicity, 1987, 1990 and 1994 28 Table 3.1 Assessing the Economic Cost of Water Pollution 38 Table 3.2 Components of the Economic Value of Aquatic Environmental Services 42 Table 3.3 Summary of Common Environmental Damage Valuation Techniques 50 Table 3.4 Examples of Economic Costs Due to Water Pollution 54 Table 4.1 Chinook and Sockeye Run, Alberni Inlet, 1956-93 70 Table 4.2 Dissolved Oxygen Criteria for Salmonids 72 Table 4.3 Sport Catch and Effort, and Components of Sockeye Catch, Alberni Inlet, 1956-94 79 Table 4.4 Factors, Alternative Assumptions and Estimated Economic Cost to Sport Fisheries of 1990 Sockeye Mortality in Alberni Inlet 81 Table 4.5 Estimates of WTP Values Relevant to Alberni Inlet Sport Salmon Fishing 86 Table 5.1 Shrimp, Prawn and Crab Commercial Harvests in British Columbia and DFO Management Area 28, 1981-94 93 Table 5.2 Factors, Alternative Assumptions and Estimated Economic Cost to Commercial Shellfishers of Chlorinated Dioxin-Related Closures, Howe Sound 98 Table 5.3 Estimated Geographical Distribution of Area 28 Shellfish Catch Prior to Closures 99 Table 6.1 Factors, Alternative Assumptions and Estimated Economic Cost of Reduced Sport Fishing Due to Chlorinated Dioxin-Related Consumption Advisories, Lower Columbia River 111 Table 6.2 The Effects of Pollution on Lower Columbia Sport Fishing, 1990 116 Table 7.1 Factors, Alternative Assumptions and Estimated Economic Cost to the Haisla of Eulachon Tainting at Kitimat, 1973-1995 125 Table 8.1 Summary of Case Study Cost Estimates 131 Table 8.2 Potential Economic Costs of Pulp Mill Effluent at Case Study Sites 134 . •. •. yjj : LIST OF TABLES (Continued) Table A. 1 Fishery Closures and Consumptions Advisories Due to Chlorinated Dioxin Contamination, Coastal British Columbia Locations, 1988-1995 162 Table A.2 Fish Consumption Advisories Due to Chlorinated Dioxin Contamination, Interior British Columbia Locations, 1989-1994 164 LIST OF FIGURES Figure 3.1 Supply, Demand and Economic Value 44 Figure 4.1 Port Alberni and Area 68 Figure 4.2 . Dissolved Oxygen Saturation by Depth, Port Alberni, 1977-88 74 Figure 5.1 Howe Sound 91 Figure 6.1 Lower Columbia River and Area 106 Figure 7.1 Kitimat and Area 120 ACKNOWLEDGEMENTS I especially wish to thank my supervisor, Ilan Vertinsky, for his support arid financial assistance. I also wish to thank the other members of my Supervisory Committee ~ Ken Hall, Les Lavkulich and Peter Nemetz ~ for their confidence and helpful suggestions. Numerous officials from the Federal Department of Fisheries and Oceans, Environment Canada, the British Columbia Ministry of Environment, Lands and Parks, and the British Columbia Ministry of Agriculture, Fisheries and Food provided a great deal of helpful information without which much of my research could not have been completed. I would like to express my deepest appreciation to Jerry Carter for his unflagging support and confidence throughout the preparation of this thesis. 1 1. INTRODUCTION 1.1. Goal and Motivation In this thesis I ask what are some of the economic costs of the environmental impact of pulp and paper mill effluent in British Columbia? I intend not to provide a definitive answer to this question but rather to examine certain specific impacts and, in doing so, to investigate some of the difficulties that arise in the economic analysis of the industry's effluent. By environmental impact I refer to obvious effects such as the destruction or alteration of natural habitats, mortality of aquatic organisms and changes in species mix, but also to less obvious chronically toxic effects which kill or impair over a longer period. Often, concerns about the environmental impacts of wastewaters focus on human health rather than the health of the aquatic environment. By economic cost I refer to the economic value lost to British Columbia as a result of pulp and paper mill environmental impacts. Applied welfare economics suggests that the conceptually appropriate measures of such costs are reductions in consumer and producer surplus. For example, an activity such as salmon harvesting or boating along a river provides a value or benefit to its participants and society. However, the actual benefit derived, the net economic value or surplus, is the total value less the cost of undertaking the activity. It is the reduction in these economic values due to mill-related environmental damage that I investigate. The importance and size of the pulp and paper industry in Canada, and the extent of its impact on the environment, have meant that it has been of particular regulatory and public concern.
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