The Cost Of Cleanup:
Footing The Bill

Whether flowing off the Chesapeake's vast watershed or falling from the sky in rain and snow, too many nutrients find their way into the Bay's rivers and mainstem. According to most researchers, these unwanted nutrients, mostly nitrogen and phosphorus, fuel unwanted algal growth and loss of vital oxygen in the estuary. Because of these consequences, nutrients - from sewage, from fertilizer, from air pollution - have come to represent the estuary's most significant systemic problem (see Issue At A Glance).

States in the Bay region, joined by the federal government, have committed themselves to reducing that unwanted load of nutrients by 40 percent (based on 1985 levels) by the year 2000. But with nutrient-reduction plans taking shape for each of the Bay's tributaries, citizens and decision makers alike have turned their attention to a nagging question: how much will these efforts cost, and how will we pay for them?

Throughout the summer and early autumn, a Blue Ribbon Panel, chaired by Eileen Rehrmann, County Executive of Harford County, has struggled with this funding issue, trying to rise above the normal debate about raising or cutting taxes. Appointed by Maryland Governor William Donald Schaefer, the Panel has wrestled with charts and graphs and a pile of information about waste treatment plants, stormwater runoff, agricultural programs and resource protection.

Their assignment: to come up with creative funding mechanisms to implement a "Tributary Strategies" plan, the state (and Bay Program's) effort to clean up the streams and rivers that feed the Bay.

Their task has not been an easy one. Estimates are that cleaning up the tributaries could cost an additional $60-90 million a year.

The Nutrient Problem

When the problem of excess nutrients was discovered, the Bay states began working to stem the tide of phosphorus and nitrogen entering the Chesapeake, beginning with waste treatment plants.

"We know how to control most nutrients," says Cecily Majerus, Governor Schaefer's coordinator for Chesapeake Bay programs. "We already have programs for reducing nutrients from waste treatment plants, for example. And the level of phosphorus entering the Bay is already down. The biggest problem is nonpoint."

"Nonpoint" is a term our forebears would not have known, though they would have understood at least part of the problem: runoff from land that has, for example, lost the protective forest cover.

"If you look at cores from the Chesapeake Bay bottom," says Grace Brush, researcher at The Johns Hopkins University, "you can see exactly when the clearing of land began." What you see, according to Brush, is an influx of sediment, and a change in pollen type, from oak, maple and ash to crops like tobacco and corn. "The changes in the Bay began with deforestation," Brush says, "and then became more pronounced with the use of fertilizer."

But the problem of nonpoint pollution has worsened over this last half century: with population surging in the Chesapeake region - an 18 percent growth is expected in Maryland by 2020 - and with the development of once-pristine areas, suburban communities, streets and highways have also become a sizable source of nutrient loading to the Bay. With an increase in the problem has come an increase in the need for funding.

Maryland is about two-thirds of the way toward funding programs needed to clean up Chesapeake Bay tributaries. According to natural resource experts, full funding will make possible the 40% reduction of nutrients necessary to turn the tide for the Bay's health.

The Funding Dilemma

According to many mayors and planners in small communities, there are two major funding difficulties connected with nutrient reduction. The first is the drying up of federal construction grants - especially for waste treatment facilities - and the second is how to finance projects to stem nonpoint pollution, such as stormwater runoff from urban and suburban lands and the runoff of fertilizer from agricultural fields.

"People don't realize that these [nonpoint problems] are structural problems," says Donald Outen, Chief of the Bureau of Water Quality and Resource Management in Baltimore County. "These problems will become more expensive if we ignore them. This is something the locals will get stung by."

Outen points to erosion and the channelizing of stream beds, for example. Though the state's Tributary Strategies aim at restoring waterways for environmental reasons, channelized stream beds can, Outen says, cause mechanical problems, exposing pipe lines running beneath the streams, such as sewer lines. Stream erosion can also cause problems for bridges and other infrastructure.

"It's a massive problem that is not in the public consciousness yet," says Outen. "It's like taking care of a cavity, before it rots your teeth."

In Baltimore County, according to Outen, his department has adapted a watershed approach, working environmental mandates and a special restoration fund into their normal capital budgeting process. "Some people raised their eyebrows," he says, when these environmental projects were made part of the capital budget. "But I talked to the budget committee," Outen says. "They understand the need. Paying for water quality is no less important than paying for potholes."

Outen and others often point out that funds are frequently available from Federal and other sources, if one looks hard enough. In Baltimore County, for example, they are taking advantage of opportunities to work with the Army Corps of Engineers, the Fish and Wildlife Service and others who can help fund environmental projects. "We are not waiting for funds to be passed down through the usual channels," Outen says. "We are working directly with the Feds."

Despite the availability of some money for nutrient-reduction efforts, Outen expects that their current budget will not be enough, as Baltimore County, like other counties, continues to focus on nonpoint issues. And beyond this, there are often "institutional problems," according to Outen, which can make money harder to get from the State.

"I see two problems," says Outen. "One is that many state programs have a cost share element. And many small counties and localities just can't afford their share of the cost." This means, according to Outen, that many such programs end up primarily reaching the larger, richer counties.

The second problem, he says, is that projects are often constrained by the state fiscal year. "The state expects the locals to spend funds in a year, which locals often cannot do," Outen says. "It usually takes a minimum of two years for a capital project," he says.

Outen is not alone in wondering whether there could be more flexibility in the way funds are used to address environmental problems. The Blue Ribbon Panel convened by Governor Schaefer has also been examining ways in which state and local governments could more easily shift funds or otherwise adapt sometimes rigid budget regimes to the more holistic approach appropriate to watershed-wide management.

In order to attack this problem, a number of resource managers and others are teaming up with investment bankers, private financial consultants and bond experts to explore the answer. At a recent meeting at the University of Maryland, for example, an unusual mixture of financial experts and environmental analysts came together to discuss the problem and urge each other on in the quest for some creative solutions. Although some have used funding shortfalls created by federal environmental laws (so-called "unfunded mandates") to push the elimination of various environmental programs, others have taken the funding issue as a challenge. Innovative approaches to finance could help di-fuse what may become an increasingly polarized debate. (please see Environmental Finance and the Ennvironmental Finance Center (EFC) for more information.)

Economies of Scale

One question confronting the Blue Ribbon Panel (and others in the state who are puzzling over ways in which to fund nutrient-reduction programs) is whether there are economies of scale - or economies of cooperation - which could loosen constraints on funding or make funding more efficient.

Currently under discussion by the Panel are a range of possibilities for different groups or even individuals to join together to seek funds. Farmers in a given region could, for example, jointly fund the building of, say, animal waste containment structures. Rural counties in a given watershed could pool resources to address the most pressing runoff problems in their river basin. Counties or municipalities could join together to form "watershed districts" that could charge fees for nonpoint programs, just as they do for more conventional "point-source" projects. If these or similar ideas found their way into practice, a solution to the funding of nonpoint pollution programs could be much closer at hand.

Regardless of what ideas may emerge, most Panelists argue that local, state and even federal governments should begin thinking more seriously about funding projects on a watershed basis. "We need to emphasize this thinking about watersheds," said panelist Deborah Jennings at a recent meeting. "This should be our most important recommendation."

At least some who work at the county level agree that a watershed funding approach - which accounts for nonpoint sources of nitrogen - would be a step in the right direction. "It does not help us to have access to funds for improving a waste treatment plant," says one planner from Queen Anne County, "if our biggest nutrient problem is coming from farm fields."

New approaches could help relieve the potential burden to farmers of nutrient-reduction programs. For example, at the recent Environmental Finance Conference at the University of Maryland a roundtable comprised of farmers, economists and financial experts concluded that even though agricultural lands need special attention, this does not mean that farmers should have to foot the bill alone.

The formation of some form of authority or district, with the power to collect fees and take out loans, could target areas most in need of funding. Such a district could, some observers have pointed out, enable funds from the State Revolving Fund (SRF) to be more easily used for nonpoint pollution projects.

The Panel is expected to issue its report in November. The report will contain a menu of funding mechanisms which state and local government and others involved in the Tributary Strategies can use to support nutrient-reduction projects. "While no one will escape at least some of the responsibility," says Cecily Majerus, "these ideas may help more equally spread the pain."

Top of Page

		Contents of this issue	Other Issues

The Cost Of Cleanup: Footing The Bill

The Nutrient Problem

The Funding Dilemma

Economies of Scale

The Cost Of Cleanup:
Footing The Bill