EPA Likely Underestimating Costs of Florida Water Nutrient Restrictions

The U.S. Environmental Protection Agency (EPA) is claiming that recently announced nutrient restrictions applying to Florida waters will cost the state economy between $130 million and $200 million (or roughly $30 per Florida household). State and local officials, as well as the state’s agricultural sector, claim the cost will be more than $1 billion per year (at least $170 per household per year). While the costs are formidable either way, is EPA likely telling the truth?

In 2007 EPA released a report analyzing whether its cost estimates for various environmental programs cost the states more, less, or about the same amount of money as EPA had estimated. The report, A Framework for Reviewing EPA's State Administrative Cost Estimates: A Case Study (http://yosemite.epa.gov/ee/epa/eerm.nsf/vwGA/B83C2D0421278972852573930077BE5B), showed that in 47 percent of the cases analyzed, the costs for states to comply with EPA environmental mandates was more than double what EPA had initially estimated.

Given EPA’s track record of seriously underestimating the compliance costs for its environmental mandates, it seems quite possible that EPA’s estimate of “only” $30 per Florida household to meet the proposed nutrient restrictions is wishful thinking.