ECONOMIC ANALYSIS OF CRITICAL HABITAT DESIGNATION FOR THE FAT THREERIDGE, SHINYRAYED POCKETBOOK, GULF MOCCASINSHELL, OCHLOCKONEE MOCCASINSHELL, OVAL PIGTOE, CHIPOLA SLABSHELL, AND PURPLE BANKCLIMBER Draft Final Report | September 12, 2007 prepared for: U.S. Fish and Wildlife Service 4401 N. Fairfax Drive Arlington, VA 22203 prepared by: Industrial Economics, Incorporated 2067 Massachusetts Avenue Cambridge, MA 02140 Draft – September 12, 2007 TABLE OF CONTENTS EXECUTIVE SUMMARY ES-1T SECTION 1 INTRODUCTION AND FRAMEWORK FOR ANALYSIS 1-1 1.1 Purpose of the Economic Analysis 1-1 1.2 Background 1-2 1.3 Regulatory Alternatives 1-9 1.4 Threats to the Species and Habitat 1-9 1.5 Approach to Estimating Economic Effects 1-9 1.6 Scope of the Analysis 1-13 1.7 Analytic Time Frame 1-16 1.8 Information Sources 1-17 1.9 Structure of Report 1-18 SECTION 2 POTENTIAL CHANGES IN WATER USE AND MANAGEMENT FOR CONSERVATION OF THE SEVEN MUSSELS 2-1 2.1 Summary of Methods for Estimation of Economic Impacts Associated with Flow- Related Conservation Measures 2-2 2.2 Water Use in Proposed Critical Habitat Areas 2-3 2.3 Potential Changes in Water Use in the Flint River Basin 2-5 2.4 Potential Changes in Water Management in the Apalachicola River Complex (Unit 8) 2-10 2.5 Potential Changes in Water Management in the Santa Fe River Complex (Unit 11) 2-22 SECTION 3 POTENTIAL ECONOMIC IMPACTS RELATED TO CHANGES IN WATER USE AND MANAGEMENT 3-1 3.1 Summary 3-6 3.2 Potential Economic Impacts Related to Agricultural Water Uses 3-7 3.3 Potential Economic Impacts Related to Recreational Water Uses 3-14 3.4 Potential Economic Impacts Related to Other Water Uses 3-20 3.5 Potential Regional Economic Impacts Related to Water Uses 3-22 3.6 Caveats to Methodology Used to Estimate Economic Impacts Related to Water Needs for the Seven Mussels 3-27 Draft – September 12, 2007 SECTION 4 POTENTIAL ECONOMIC IMPACTS TO HYDROPOWER, WATER SUPPLY, AND OTHER IMPOUNDMENT PROJECTS 4-1 4.1 Summary 4-1 4.2 USACE Hydropower Facilities 4-5 4.3 Impacts to Water Reservoirs, Non-Federal Hydropower Facilities, and Other Water Projects 4-12 SECTION 5 POTENTIAL WATER QUALITY-RELATED IMPACTS 5-1 5.1 Summary 5-1 5.2 Background 5-1 5.3 Agriculture 5-6 5.4 Urban Runoff 5-9 5.5 Forestry 5-12 5.6 Industrial and Municipal Point Sources 5-13 SECTION 6 ECONOMIC IMPACTS TO OTHER ACTIVITIES 6-1 6.1 Summary 6-1 6.2 Transportation 6-2 6.3 Species Management 6-5 6.4 Deadhead Logging 6-9 6.5 Navigation Dredging, Sand and Gravel Mining, and Non-Native Species 6-12 REFERENCES R-1 APPENDIX A ADMINISTRATIVE COSTS A-1 APPENDIX B INCREMENTAL ANALYSIS OF CRITICAL HABITAT DESIGNATION FOR THE SEVEN MUSSELS B-1 APPENDIX C FINAL REGULATORY FLEXIBILITY ANALYSIS AND ENERGY IMPACTS ANALYSIS C-1 APPENDIX D DETAILED UNIT BY UNIT IMPACTS D-1 APPENDIX E COTTON, PEANUTS, AND CORN ACREAGES IN GEORGIA’S CRITICAL HABITAT COUNTIES E-1 Draft – September 12, 2007 APPENDIX F SUMMARY OF AGRICULTURAL, MUNICIPAL, AND RECREATIONAL WATER VALUATION STUDIES F-1 APPENDIX G U.S. ARMY CORPS OF ENGINEERS LETTER TO GEORGIA DEPARTMENT OF NATURAL RESOURCES’ ENVIRONMENTAL PROTECTION DIVISION G-1 Draft – September 12, 2007 EXECUTIVE SUMMARY 1. The purpose of this report is to identify and analyze the potential economic impacts associated with the proposed critical habitat designation for the fat threeridge, shinyrayed pocketbook, Gulf moccasinshell, Ochlockonee moccasinshell, oval pigtoe, Chipola slabshell, and purple bankclimber, collectively known as the seven mussels. Sections 3 to 6 of the analysis consider all future conservation-related impacts, including impacts associated with overlapping protective measures of other Federal, State, and local laws that aid habitat conservation in the areas proposed for designation. That is, a portion of these “co-extensive” impacts are forecast to occur regardless of critical habitat designation for the seven mussels. Appendix B estimates the potential incremental impacts of critical habitat designation for the seven mussels by attempting to isolate those impacts that would not be expected to occur absent the designation of critical habitat for the seven mussels. Incremental impacts described in Appendix B and summarized in Exhibit ES-8 are those precipitated specifically by this rulemaking as proposed. 2. The Service proposes to designate as critical habitat 1,186 river miles in 11 units with a lateral boundary of the "ordinary high-water mark" in 45 counties in Alabama, Florida, and Georgia.1 Exhibit ES-1 provides a map of these rivers. The lands adjacent to the units comprise a mix of private, State, and Federal lands, which account for roughly 87 percent, 10 percent and three percent of the total area, respectively. 3. The economic analysis focuses on identifying and quantifying impacts of potential changes in existing water uses to maintain flows to conserve the seven mussels. The Service identifies “flow regime,” specifically "permanently flowing water" in the Proposed Rule, as one of the Primary Constituent Elements (PCE) for the seven mussels. In addition, the Service states that the seven mussels cannot survive in impounded ponds, lakes, or intermittent streams. Thus, continuously flowing water is assumed to be a necessary habitat feature for the seven mussels. This analysis therefore assumes that changes in water management and use may occur to conserve the seven mussels, and that these changes could generate economic efficiency and regional economic impacts. This analysis does not make assumptions or recommendations regarding how such changes will occur, or who will bear the cost of these changes in water management and use. 4. This analysis expects most changes in water management and use within proposed critical habitat will occur in the Apalachicola-Chattahoochee-Flint (ACF) Basin. The Apalachicola, Chattahoochee, and Flint Rivers are particularly complex hydrological systems. Multiple management structures and numerous withdrawals currently exist on 1 U.S. Fish and Wildlife Service, Proposed Designation of Critical Habitat for Five Endangered and Two Threatened Mussels in Four Northeast Gulf of Mexico Drainages, 71 FR 32746, June 6, 2006. ES-1 Draft – September 12, 2007 the Flint and Chattahoochee Rivers; these two rivers converge at Jim Woodruff Dam to form the Apalachicola River. The Chattahoochee River is managed through a series of dams and hydroelectric plants that provide water for hydropower production, flood control, municipal uses, recreation, and other uses. Water in the Flint River Basin is used primarily for agricultural irrigation. Freshwater flowing out of Jim Woodruff Dam supports recreational and commercial fisheries in Apalachicola Bay. 5. Competition for water, and conflicts among water users in the ACF Basin system, exist independent of the seven mussels and will likely continue to occur absent seven mussels conservation efforts. Water demands in the summer and fall periodically exceed the supply of water in the ACF Basin; as the demands increase and the supply remains constant, these shortages are likely to become more frequent and more severe.2 In the Chattahoochee basin, the U.S. Army Corps of Engineers (USACE) manages a complex system, considering both competing demands and past and future hydrologic conditions in order to optimize the use of stored water.3 During times of drought in the system and reduced inflow from the Flint River due to agricultural irrigation, the USACE has historically used reservoir storage to maintain flows at or above 5,000 cubic feet per second (cfs) on the Apalachicola River.4 Current management in support of federally listed species listed species in the Apalachicola River (i.e., fat threeridge, purple bankclimber, Chipola slabshell, and Gulf Sturgeon) consists of the Modified Interim Operation Plan (Modified IOP) for Jim Woodruff Dam, as described in the Biological Opinion submitted to the Service on February 16, 2007 and approved by the Service on February 28, 2007. Debates continue regarding the appropriate allocation of Chattahoochee water; negotiations over this allocation have been ongoing between Alabama, Florida, and Georgia for over 15 years. These debates have delayed finalization of the USACE's draft 1989 water control plan for the ACF Basin, and will shape the next water control plan for the System. 6. Meeting flows for the conservation of the seven mussels may place additional demands on a system that is already constrained. Estimation of the potential economic impacts that may result from meeting flows for the conservation of the seven mussels requires an understanding of the timing and magnitude of flows. For stream reaches proposed for critical habitat designation, no estimate of required minimum flow for seven mussels 2 U.S. Army Corps of Engineers. 1998. Water Allocation for the Apalachicola-Chattahoochee-Flint (ACF) River Basin: Alabama, Florida, and Georgia. Draft Environmental Impact Statement, September. 3 The USACE is responsible for management of four Federal reservoir projects within the Chattahoochee basin. There are other opportunities for conservation management within the basin that are outside the Federal Reservoir areas, but beyond the authority of the USACE. 4 In their public comment the U.S. Army Corps of Engineers explained the influence of upstream flows on Unit 8 Apalachicola River. The "...Jim Woodruff Dam/Lake Seminole has very limited storage capacity and is dependent upon releases from the upstream reservoirs or flows from the Flint River to make releases to meet downstream flow needs. These factors influence a conservative operation at Lake Lanier, in order to conserve storage for future augmentation flows for balancing project purposes throughout the basin and to meet downstream minimum flows...." Public comment letter, submitted by Curtis M. Flakes, Chief, Planning and Environmental Division, Inland Environment Team, Mobile District, U.S.