The Paradox of Bureaucratic Discretion: Use of Wetland Value

Estimates by Federal Regulators

Gwen ArnoldIndiana University-Bloomington

June 4-8, 2011ISSRM, Madison, Wisconsin

Support from EPA NNEMS Fellowship U-91706801-0.All content entirely the responsibility of author and not USEPA.

Presentation Outline• Section 1: Introduction and Research Questions

• Section 2: Theory

• Section 3: Methods

• Section 4: Data Analysis

• Section 5: Discussion

• Section 6: Thank You and Questions

1.0 Introduction

• The U.S. Environmental Protection Agency and U.S. Army Corps of Engineers regulate impacts to wetlands under Section 404 of the Clean Water Act.

• EPA Section 404 regulators have opportunities to use monetary estimates of wetland value in regulatory activities and appear to have incentive to do so.

• What are monetary estimates of wetland value?

1.0 Introduction

A research study of Long Point Marsh on Lake Erie employed user surveys, travel costs, and prices of goods and services to estimate that the marsh had a recreational value to the public (in terms of nature viewing, fishing, and waterfowl hunting) of $205 per acre in 2010 dollars (Kreutzwiser 1981).

Survey respondents in New England said that the flood protection, water supply, and pollution control services of a wetland in that region were worth $117 per wetland acre in 2010 dollars (Stevens et al. 1995).

An investigation of the potential societal benefit of riparian vegetative buffer strips in the watershed encompassing Elkhorn Slough (salt marsh wetlands) in California calculated that one acre of buffer provided $3,404 (2010 dollars) of wetland protection (Rein 1999).

1.0 Introduction

• Methods for calculation include travel cost, contingent valuation, hedonic pricing, production function, replacement cost, market price, and net factor income analyses.

• Academic and gray literatures seeking to quantify wetland values are expanding. Summer 2010 literature review: 113 studies specifically examining wetland values, 410 value observations.

• Research on ecosystem service estimation is an EPA priority. The U.S. Environmental Protection Agency Ecosystem Services Research Program (ESRP) has operated for more than a decade and in 2008 had a budget of $68 million.

1.0 Research Questions

Anecdotal evidence suggests that EPA Section 404 regulators rarely use monetary estimates of the societal value of wetlands in regulatory activities.

1) To what extent is this supposition supported empirically?

2) To the extent this supposition is supported, why do regulators do not use such estimates?

3) What factors would make regulators who do not use such estimates more likely to do so?

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2.0 Theory: Policy Utilization Literature

The research question is situated in the scholarly literature concerned with why policymakers do or do not use scientific information. Reasons for a science-policy disconnect include:

• Scientists prefer basic over applied research (Cortner 2009).

• Scientists are concerned that their work could be tainted by political concerns (Gascoigne 2008, Ritter 2008, Sarewitz 2004, Beyer and Harrison 1982).

• Policy users and scientists often have different preferences about what information scientists should be providing users (Janse 2008).

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2.0 Theory: Policy Utilization Lit

• Policy users may assume that scientific data will not be useful for them and so do not seek it (Landry 2003, Beyer and Harrison 1982).

• Policy users are busy and pressed for time (Metze 2010).

• Users may not have the knowledge or skills to interpret and use relevant data (Walker and Gibson 2004, Wildavsky 1983).

• Usage might require policy users to break from “safe” standard operating procedures (March and Olsen 1984).

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3.0 Methods

• Eleven-item email survey; one month, two reminders

• Exhaustive rather than probabilistic sample of EPA Section 404 field regulators

• ~32% response rate; normal for internet surveys and likely fairly good given the season

• Per-question response rates of ~77-100%

• Quantitative and qualitative (thematic) analysis

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4.0 Data Analysis

• EPA regulators involved in Clean Water Act Section 404 permit review, commenting, and enforcement rarely use monetary estimates of the societal value of wetlands in these activities. 48% have never used estimates. Only 5% report using them frequently or always.

• Regulators who have used estimates choose most frequently those that approximate the value of a wetland service, followed by estimates of the total value of a wetland, then estimates of wetland function.

• When regulators seek estimates, they appear most likely to rely on academic and gray literatures, followed by information provided by experts within the federal government, then outside (non-industry) experts, and finally, from applicants and consultants.

4.0 Data Analysis

• When regulators do not use estimates, the most frequently cited reason was information barriers (36%). Second-most-cited were uncertainties about the scientific validity of the estimates (32%), and third were concerns over legal and scientific defensibility (27%).

• Respondents said the biggest inducement for them to use estimates would be indications that the estimates were sanctioned by relevant agencies (32%). Second-most-compelling would be sufficient preparation (e.g., training) (27%).

• Regulators placed lesser and roughly equal emphasis on scientific (15%) and other characteristics of estimates (13%). Most respondents concerned with specific characteristics wanted estimates to be region-, area-, or site-specific. Regulators concerned with science generally expressed interest in peer review or specifically noted areas in which they thought science would have to progress, pre-usage.

4.0 Data Analysis

• Logit, ordered logit, and marginal effects analysis used to infer:

• Being employed in EPA Region 4 or 5 appears to increase the probability of using an estimate (p<0.093).

• Longer tenure in the Section 404 program also appears to increase probability of using an estimate (p<0.12). EPA regulators with 11+ years of experience in the program are predicted to be more likely to use estimates than those with less experience, though as tenure increases, predicted likelihood of use declines slightly.

4.0 Data Analysis

• Section 404 program tenure also appears to predict frequency of estimate usage (p<0.096).

• Among regulators who use estimates (p<0.060), they appear to use them more frequently when they get them from industrial sources (p<0.005), use them in non-enforcement tasks, and express use-related reservations other than the main ones for which this research coded (p<0.131).

5.0 Discussion

• The data largely supported claims in the literature about why policy users might not use scientific information.

• Regulators’ uncertainty about the scientific validity of available estimates could be linked to scientists failing to package their findings in ways that make them easy for users to understand and use.

• This uncertainty, as well as concerns about defensibility of estimates, also may be related to the differences in languages and even worldviews separating regulators from scientists.

5.0 Discussion

• Scientists may be more interested in refining sophisticated estimation methodologies rather than providing policy users more “back of the envelope” estimates that could be used in a site-specific permit review or violation investigation.

• EPA regulators certainly have heavy permit loads and often do not have time to seek data on wetland valuation approaches; they are also unsure whether such effort would yield information truly useful to them.

• But . . . Is there a more fundamental story here?

5.0 Discussion

• To navigate the large amount of discretion they have in the Section 404 regulatory process, regulators infrequently rely on estimates; instead, they tend to prioritize “best professional judgment” (BPJ).

• Regulators most frequently reported that they could be induced to use estimates if they were more assured that such usage was sanctioned by their administrative superiors. Regulators also say they do not use estimates because, in part, they are concerned about estimates’ defensibility.

• However, one regulator’s BPJ arguably is less defensible than estimates published in peer-reviewed academic journals or calculated by research centers. And it is arguably less likely to win official agency approval.

5.0 Discussion

• Are the survey-indicated information gaps, uncertainties, and lack of sufficient preparation to use extant valuation estimates really all that stands between EPA regulators and their potential use of these estimates in Section 404 activities? Or . . .

• Does best professional judgment hold some special sway this analysis has not captured?

• Is agency inertia and fidelity to standard operating procedures perhaps so strong that regulators cannot break from the status quo, even to embrace practices that could be more desirable to regulators and beneficial to the resource?

5.0 Discussion

• Do regulators in fact shy away from using estimates of wetland values because they fear using such estimates will limit their discretion to intervene in policy situations, effectively denying themselves and wetland resources a potentially powerful protection strategy (in the form of quantified value estimates) in order to preserve opportunities for interventions which are themselves intended to achieve positive environmental outcomes, albeit in less formal ways?

• And if so: Is it worth it?

6.0 Thank You and Questions