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Version 1.3
Janet Herman
Department of Environmental Sciences
University of Virginia
Mark White
McIntire School of Commerce
University of Virginia
Melissa Kenney
Nicholas School of the Environment
Duke University
An Adaptive Cost-Benefit Model:
The Potential of Ecosystem Services
in the Reuse of Superfund Sites
„
In the context of a “value-based” model
„
… implying a return on “natural capital”
Residual income / economic profit framework
Explore alternative treatment types
„
„
Incorporate ecosystem services
„
Model the remediation and reuse decision
of Superfund sites
Motivation
Framework
„
Market discount rate
„
Case study
Literature-based data
Value-based model
(economic profit)
„
„
Cost-benefit analysis
Multiple redevelopment
methods
Multiple reuse possibilities
„
„
„
„
Superfund Adaptive Reuse and
Redevelopment (SARR) Model
„
Soil and groundwater
Volatile organic
compounds (VOCs)
Pine barrens, 38 acres
„
„
Galloway Township, NJ
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Emmell’s Septic Landfill
Flexible structure, simulation analysis
„
„
Sensitivity, simulation analysis using Crystal Ball
Recreated model in Excel
Influence diagrams
„
Created “value-based” model in Analytica
Objective: Identify remediation-reuse combination
with the highest net present value
„
„
What Did You Actually Do?
Groundwater
Remediation
Method
Excavation
Treatment 2
Treatment 4
Phytoremediation
Treatment 1
Treatment 3
Air Stripper
Surfactant
Soil Remediation Method
Exhibit 1. Overview of Superfund Adaptive Reuse and Redevelopment (SARR)
Model
Treatment
Cap
Water
Disposal
Extraction
Land
Vegetation
External
Costs
Monitoring &
Reporting
Soil
Groundwater
Input
Productivity Loss
Medical Costs
Total Population
Excess Cancer Risk
Probability of Survival
Cost per Case (death)
Birth Rate
Population - Contaminated Groundwater
Excess Cases
Cost per Case
Excess Cases
Cost per Case
Cost of
Pineland,
Grassland, &
Wildlife
Habitat
Module
Redevelopment
Cancer
Cancer
Cancer
Cancer
Cancer
Cancer
Birth Defects
Birth Defects
Birth Defects -- cardiovascular
Birth Defects
Birth Defects -- central nervous
Birth Defects
Remediation
Value
13,420
51,400
21,281
0.0001
0.5900
6,070,000
0.0142
9,334
0.0047
356,000
0.0009
350,000
ANALYTICA DEMO
Create
model
Sensitivity
analysis
(tornado charts)
CRITICAL
INPUTS
Parameterize
model
NUMERICAL
RESULTS
Simulation
analysis
118 variables total
REMEDIATION COSTS
Air stripper (5)
„
Surfactant injection (5)
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Phytoremediation (5)
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Excavation (7)
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EXTERNAL COSTS
Cancer costs (5)
„
Birth defects (16)
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Misc health conditions (17)
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RESIDENTIAL VARIABLES (40)
Fees and permits
„
Earthwork
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Water & sewage management
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Infrastructure
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Lot sales
„
Discount rate
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ECOLOGICAL VARIABLES (19)
Carbon sequestration
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Timber
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Nonconsumptive wildlife use
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Hunting
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Aesthetics
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Water quality improvement
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Modules and Input Variables
Treatment (air)
Birth rate
Cost per renal disease case
Excess renal disease cases
Susceptible population (%)
Exposed Population
Discount rate
Value of Human Life
Excess cancer risk
Probability of survival
$
$
$
442,581
0.02
9,955
0.04
28%
10,267
9.0%
2,970,000
$
0.03
23%
$
64.9%
$(35,000,000)
$
362,112
8,145
2,430,000
0.000099
11.0%
8,401
0.01278
$(40,000,000)
Ecological Reuse - Treatment 1
0.000121
53.1%
Ecological Reuse
Treatment 1 $(45,000,000)
Upside
Downside
$(30,000,000)
Treatment (air)
Birth rate
Cost per renal disease case
Excess renal disease cases
Susceptible population (%)
Exposed Population
$
$
442,581
0.02
9,955
0.04
28%
10,267
2,970,000
Value of Human Life
$
0.000121
9.0%
53.1%
$(45,000,000)
$
8,145
$
2,430,000
0.000099
11.0%
64.9%
$(40,000,000)
362,112
0.01278
$
0.03
23%
8,401
Residential Reuse - Treatment 1
Excess cancer risk
Discount rate
Probability of survival
Residential Reuse
Treatment 1 $(50,000,000)
Upside
Downside
$(35,000,000)
Simulation Analysis
„
„
„
„
Returns probabilities
of occurrence
Repeated sampling
… computers
Calculating with
distributions
Monte Carlo analysis
1/36
2/36
3/36
4/36
5/36
6/36
3
1/16
2/16
3/16
4/16
1
2
4
1
1
2
3
5
2
1
1
2
3
4
6
3
2
1
1
2
3
4
5
7
4
3
2
1
Range of possible outcomes … -6 to +10
Most likely outcome … 2
2
2
3
4
6
8
4
3
2
10
4
3
7
3
4
4
8
4
12
mean = 5
11
mean = 7
Expenses …
9
Sales …
($32,905,536)
($19,924,354)
0
.000
($45,886,718)
37.25
.004
($58,867,900)
74.5
.007
($71,849,082)
111.7
.011
9,858 Displayed
149
Frequency Chart
Forecast: Ecological Reuse - Treatment 1
.015
10,000 Trials
Ecological Reuse
Treatment 1
„
„
„
„
„
„
-$45.7 million
RESIDENTIAL REUSE
-$47.6 million
-$44.0 million
Treatment 2
Air Stripper and
Excavation
-$45.4 million
-$41.8 million
Treatment 3
Surfactant and
Phytoremediation
Excavation is slightly preferred over phytoremediation for soil remediation if surfactants are
used
Phytoremediation is slightly preferred over excavation for soil remediation if air strippers are
used
-$41.2 million
-$37.6 million
Treatment 4
Surfactant and
Excavation
Similar magnitudes for all remediation-reuse alternatives
Overall BEST RESULTS are achieved using Treatment 4 (excavation and surfactant
injection) to achieve an ecological reuse
For groundwater remediation, surfactant injection is preferred over air strippers
„
„
For soil remediation,
Ecological reuse results in less negative NPVs than residential reuse,
regardless of treatment type
NPV is negative for both reuse alternatives
-$42.1 million
ECOLOGICAL REUSE
Treatment 1
Air Stripper and
Phytoremediation
Ecological > residential
Case study
„
Importance of considering
means and ends together
Value of ecosystem services
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„
„
PROXIMATE
Implications
Probability of survival
Excess cancer risk
Value of human life
Discount rate
Exposed population
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Uncertainty analysis
Parameter estimates
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Natural capital
Structural modeling tool
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ULTIMATE