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Estimating Monetized Benefits of Groundwater Recharge from Stormwater Retention Practices

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Estimating Monetized Benefits of Groundwater Recharge from Stormwater Retention Practices Estimating Monetized Benefits of Groundwater Recharge from Stormwater Retention Practices Prepared for United States Environmental Protection Agency Nonpoint Source Control Branch (4503T) 1200 Pennsylvania Avenue, NW Washington, DC 20460 Contract Number: EP-C-11-009 Prepared by 10306 Eaton Place, Suite 340 Fairfax, VA 22030 April 2016 Estimating Monetized Benefits of Groundwater Recharge April 2016 (This page is intentionally left blank.) ii Estimating Monetized Benefits of Groundwater Recharge April 2016 Contents 1 Introduction ........................................................................................................................................... 1 1.1 Purpose and Scope ........................................................................................................................... 1 1.2 Major Assumptions .......................................................................................................................... 2 1.3 Report Organization ......................................................................................................................... 3 2 Methods ................................................................................................................................................. 5 2.1 Geographic Area of Focus ............................................................................................................... 5 2.1.1 Significant Groundwater Use Areas.......................................................................................... 5 2.1.2 Water Shortage Areas ............................................................................................................... 7 2.1.3 Final Area Selection .................................................................................................................. 9 2.2 Monetized Unit Value .................................................................................................................... 10 2.2.1 Data Sources and Data Summaries ......................................................................................... 11 2.2.1.1 Permanent Western Water Rights Transfers ................................................................... 11 2.2.1.2 Bulk Rates ....................................................................................................................... 12 2.2.1.3 Retail Rates ..................................................................................................................... 13 2.2.2 Final Unit Value Selection ...................................................................................................... 15 2.2.2.1 Selection Process............................................................................................................. 15 2.2.2.2 Selection Results ............................................................................................................. 16 2.2.3 Discounting and Escalation Methods ...................................................................................... 22 2.3 Recharge Volume Approximation ................................................................................................. 24 2.3.1 Natural Surficial Recharge ...................................................................................................... 26 2.3.1.1 USGS and Literature References .................................................................................... 27 2.3.1.2 Horsley Method............................................................................................................... 27 2.3.1.2.1 Hydrologic Soil Groups ............................................................................................ 28 2.3.1.2.2 Precipitation Data ...................................................................................................... 29 2.3.1.3 Annual Recharge Rate Summary .................................................................................... 29 2.3.2 Other factors ............................................................................................................................ 29 2.3.2.1 Imperviousness................................................................................................................ 29 2.3.2.2 Area ................................................................................................................................. 29 2.3.2.3 Existing State Retention Standards ................................................................................. 30 2.3.3 Example Calculation ............................................................................................................... 31 2.3.4 Effect of Adjustments to Input Values .................................................................................... 34 2.3.4.1 Groundwater Use Criteria ............................................................................................... 34 iii Estimating Monetized Benefits of Groundwater Recharge April 2016 2.3.4.2 Low Recharge Adjustment .............................................................................................. 34 2.3.4.3 Low Precipitation Adjustment ........................................................................................ 34 3 Results ................................................................................................................................................. 35 4 Uncertainty and Limitations ................................................................................................................ 41 5 Recommendations for Future Study .................................................................................................... 43 6 References ........................................................................................................................................... 45 7 Appendices .......................................................................................................................................... 51 Appendix A Additional Valuation Literature ......................................................................................... 51 Appendix B Graphical Display of Variance within Climate Regions ($/acre-ft) ................................... 57 Appendix C Methodology for Annualization ......................................................................................... 59 Appendix D Method for Escalation of 2011 Values .............................................................................. 63 Appendix E EPA’s Project Prediction Model ........................................................................................ 65 iv Estimating Monetized Benefits of Groundwater Recharge April 2016 Figures Figure 2-1 Counties within the Contiguous U.S. with Significant Groundwater Use. ................................. 7 Figure 2-2 Water Supply Sustainability Index (WSI) for the Contiguous U.S. (Tetra Tech, 2011) ............. 9 Figure 2-3 Counties within the Contiguous U.S. with Significant Groundwater Use and Likely Future Water Need through 2050 Based on the WSI. ............................................................. 10 Figure 2-4 Example of Tiered Rates Structure, Huston County, AL .......................................................... 14 Figure 2-5 State-Specific Final Value Estimates for Unit Price of Groundwater,$/acre-ft (Where the water rights transfer values were selected, differing values reflect annualization based on discount rates of either 3 or 7 percent.) .............................................................................. 20 Figure 2-6 Example Calculation of Net Volume of Recharge Maintained by Implementing Stormwater Retention Practices for New Development in Loudoun County, VA, During the Years 2021-2025 ................................................................................................... 32 Figure 2-7 Example Calculation of Net Volume of Recharge Maintained by Implementing Stormwater Retention Practices for Redevelopment in Loudoun County, VA, During the Years 2021-2025 ............................................................................................................... 33 Figure 3-1 State-Specific Cumulative Volume of Recharge 2021-2040, High Retention Scenario, Medium Escalation Rate, 3% Discount Rate, Unadjusted Recharge, and Counties in the Upper 25% for Groundwater Use, for States without Existing Retention Standards or with Standards Lower than the “High” Retention Scenario. ................................................... 39 Figure 3-2 State-Specific Cumulative Value of Recharge 2021-2040, 2011 Dollars, High Retention Scenario, Medium Escalation Rate, 3% Discount rate, Unadjusted Recharge, and Counties in the Upper 25% for Groundwater Use, for States without Existing Retention Standards or with Standards Lower than the “High” Retention Scenario. .............................. 40 Figure 7-1 Categories of Economic Value of Groundwater Recharge ....................................................... 53 Figure 7-2 Comparison of Annual Payments for Western Water Rights Transfers Using a 3% and 7% Discount Rate .................................................................................................................... 61 Tables Table 2-1 Summary of County Selection by Groundwater Use Category .................................................... 6 Table 2-2 Summary of Counties by Category in the WSI for Contiguous U.S. at Year 2050 with a “Midrange” Climate Change ....................................................................................................
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