economic benefits of coastal zone management an overview : a report

[From the U.S. Government Printing Office, www.gpo.gov]

A:%@ S"T orco'
The Economic Benefits
of Coastal Zone
Management an
'NrESOV Overview

WASHINGTON, D. C.
March 1976

U.S. DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
HT392 Off ice of Coastal Zone Management
.U693
1976
C.2

The Economic Benefits
of Coastal Zone
Management an
Overview

A Report by
Research Division The Urban Land Institute

WASHINGTON, D.C.
March 1976

NOTE: This report was prepared under contract to the U.S. Department
of Commerce as a service of The Research Division of Urban
Land Institute, Donald Priest, Director. The conclusions and re-
commendations are those of the authors and do not necessarily
represent the official views of the Urban Land Institute or U.S.
Department of Commerce.

Property of CSC Library

U.S. DEPARTMENT OF COMMERCE
Elliot L. Richardson, Secretary
National Oceanic and Atmospheric Administration
Robert M. White, Administrator
Office of Coastal Zone Management
Robert W. Knecht, Director

HI692 .U693 1976
H3334941

DEC 05 1996
US Department of Commerce
NOAA Coastal Services Center Library
2234 South Hobson Avenue
Charleston, SC 29405-2413

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I INTRODUCTION

Public attention to coastal zone management issues has focused

mainly on the preservation of the coastal environment, access to recrea-

tional areas and other quality of life issues. The economic dimensions

of coastal zone management programs are less well understood or entirely

overlooked, yet clearly both the potential benefits and the costs of

such programs should be carefully considered in the program development

process. The purpose of this report is to increase awareness of the

types of economic benefits that can be gained through the use of good

management techniques In coastal areas.'

The Coastal Zone Management Act of 1972 states that it is national

policy "to preserve, protect, develop and where possible to restore or

enhance the resources of the nation's coastal zone for this and suc-
ceeding generations."!' Further, the Act requires States receiving

assistance under the Act to give "full consideration to ecological,

cultural, historic and esthetic values as well as to needs for economic
development." 12/ T'he wording of the Act thus provides great flexibility

in approaching coastal zone economic issues in the@context of other

public objectives and standards. Many StatO@s will take advantage of.

this flexi bility by'including in their coastal management programs

provisions to improve the economic welfare of their citizens.

In order to illustrate the options which states and localities may

have in respect to,the latter point, the Urban Land Institute, at the

request of the Administrator of the Federal Coastal Zone Management

Program,,has undertaken a brief review of the potential economic bene-

fits of coastal zone management. Readers should note that this is a

report on the potential benefits of management and not a comprehensive

analysis of both costs and benefits associated with the.particulars of

any onerprogram.- This review-ha's been undertaken at this time because

of the increasing interest in the economic impacts of coastal zone

management, especially in California where the proposed state coastal

zone plan is how under review.

While it is hoped that the general information provided here will

be helpful and stimulating to public decision makers, planners and

citizens in the formulation of objectives and evaluation,of benefits

for coasta] zone management programs, so-called "bottom-line" judgments

regarding the desirability of particular plans can only be made in the

context of complete information on local conditions.

Moreover, it must be noted that there are no "universal" benefits

or costs related to coastal zone management. Neither is it certain

that all management programs will result in net positive impacts. On

balance,,however, it seems conceptually possible in most cases to use

management techniques to generate more benefits than costs, but the.

extent to which that objective is realized will depend on the good

judgment exercised in program development and implementation;- Both

benefits and costs are highly variable and only a systematic, complete

analysis of conservat-ion and development options will ensure a net

benefit result. The following summary assessment of potential bene-

fits is presented as an aide to such analytical efforts.

11. NATURAL RESOURCE VALUE PROTECTION, ENHANCEMENT, AND RESTORATION

Preservation and enhancement of natural resources within the coastal

zone can generate a wide range of economic benefits to the 30 coastal

states and 3 territories and to the total economy of the nation. A principal

benefit of a coastal zone management program is the opportunity it provides

the states to institute an efficient system's management program for the

use of natural resources within the coastal zone. A managemen t,program

facilitates application of an important ecological principal: an ecological

system is comprised of many components, no one of which can be deatt with.

without implications to the total system'since no one part functions

independently. By including a full assessment of the total ecological

system, coastal zone management programs can be designed to maximize the

economic and social benefits represented in the natural resource element.

Economic returns from proper management programs can be recognized

in the value of commercial and sport fisheries, and the recreation/

tourism industry; additional econ omic benefits can be realized, from more

efficient mineral extraction, fresh water mining,- waste treatment absorp-

tion, and agricultural production.

Fisheries

The most easily quantifiable economic benefit associated with the

natural resource element in the coastal zone is the production of

'commercial and sport fisheries.

Some 70 percent or more of Atlantic and Gulf Coast species of fish

are dependent on coastal areas, such as the estuarine zone. In some

speci.fic locations between 90 and 97 percent of locally valuable fish

species are dependent,on the coastal zone during o ne or more critical
3/
stages of life.-

The value of the commercial harvest is variously estimated but
generally figured at $900 million (1973 dollarsOl -This is projected

to increase to between 2 and 4 billion by the year 2000. Considering

the U.S. move toward a 200 nile fisheries zone, these projections could

well be exceeded. In addition to the dockside value, the economic

worth of nearly 500,000 man-years of employment (1973) and the value

added in processing, distribution, and marketing must be factored to
calculate the full economic benefit of the commercial fishery. �/ Some

researchers place the total worth of commercial fisheries at $6.7 billion
annually (1973 dollars)Y

The coastal fishery is a dominant economic influence in several

coastal regions such as the Gulf Coast and sections of the Pacific

Northwest, Northeast, and Atlantic states areas. In these regions

commercial fishing is rated among the top five commercial activities.

The maintenance of.a healthy, productive habitat is critical to

the fisheries industry. Loss of important breeding, feeding, and pro-

tective areas, such as tidal wetlands, will destroy'the majority of

commercially valuable fish species faster and more irrevocably t.han

intense competitive harvesting from foreign vessels. The decline of

.many important fisheries follows a parallel decline in the quantity

and qua] ity of specie-related coastal areas. An important benefit 6f

planning in the coastal zone will be the maintenance and, where feasible,

the.restoration of these fragile areas and, hence, the fisheries they

support.

The sport fishing industry is closely.rela.ted to commercial

fishing in this regard. The majority,of preferred species is coastal

dependentland vulnerable to the near-shore or on-shore activities of

man. It is estimated that sport fishing in the coastal zone stimulates

(approximately) $5 billion in economic activity annually, and this is

expected to increase substantially as more Americans seek water-based
recreation. 8/

Recreation

Sport fishing is but one form of recreation familiar to the coastal

zone: swimming (the most popular water sport); boating (expected to

account for $1 billion in coastal business in 1975), waterfowl hunting,

camping, and leisure driving are other important activities. The total
economic value of all these activ'ities is variously-estimated to be
9/
around $5.5 billion in 1975- and expected to increase to $8 billion
by 1985. 10/,

In many coastal regions, recreation and tourism are the most im-

portant industries. For example, it is estimated that these activities

contribute at least $2.5 billion annually to the California economy
and provide for over 280,000 jobs.H/ By comparison, recreation and

tourism, is.the largest industry in the coastal region of New Jersey,
generating approximately $3 billion annually in goods and services.12/

This can only be expected to continue (and increase in many areas)

given consumer trends toward water-based leisure.

Two major constraints on the recreational benefits of the coastal

zone are public access to the shore and availability of recreational

support facilities.

A major potent ial benefit of planning in the coastal zone, in terms

of maximizing economic benefits of recreation, will be the further reso-

lutio-n of public versus private access issues.- Likewise, the systematic

provision of desired levels of recreational support facilities planned

for in harmony w1th natural resource constraints is a potential benefit

of coastal zone management.

Mineral Extraction

Of the mineral extraction industries in the coastal zone, oil and

gas are by far the most important, constituting 9P percent of the.total

mineral extraction value.

A recent study of the oil and gas resources in the coastal zone

estimated that between 10 and 48 billion barrels of oil and 33 to 19 1
t rill,ion cubic feet of gas exist at off-shore locations. 13/ According to

estimates by Robert R. Nathan Associates, the value of offshore oil

and gas production was $3.2 billion in 1973, and based on projections of'

future output, the production value will increase to $15.4 billion in

1985 and $18A billion by the year 2000. Cumulative production from

1973 to 2000 would amount to nearly $400 billion in 1973 dollars. These

figures are subject to frequent changes-given the nature of the market,

however, it is unlikely that values will decrease given increasing

demand and the unlikelihood of significant development of alternatives

to oil and gas within principal markets.

So too, further extraction of minerals, such as magnesium and

manganese modules, may be considered as alternative sources of supply

dwindle. The potential adverse impacts on marine ecosystems or

mine ral extraction, however, places significant constraints on develop-

ment of this indu5try. In the case of oil and natural gas production,

overriding national concerns for development of domestic supplies could

be a dominant influence in resource allocation decisions.

Was te Treatment

Further use of the coastal zone as a repository of municipal and

industrial effluent is likely to be tightly co ntrolled. The economic

value of an acre of salt march in tertiary treatment is estimated to be
$2,500-15/ However, the ability of these areas to assimilate waste

is decreasing in many areas because of overload. Hence, rather than

contributing an absolute'value, the presence of effluent in the coastal

zone is regarded as causing a net loss in rent dollars when the negative

impact on biomass.productivity is considered. Some rent value can be

realized, however, through proper measurement of absorption capacities

and control of effluent levels.

Aqua culture

The aquaculture resources of the coastal zone that are of current

economic significance are the giant kelp located along the Southern

California Coast, and Irish moss, found mostly along the New England

Coast. California Kelp has been harvested since 1910 and is used, in

processed form (algin), by such industries as pharmaceuticals, textiles,

dairy products, adhesives, paper, and rubber. Kelp is also used as a

blend in certain animal feeds. As an infant industry, the kelp 'harvest

was valued at approximately $1 million in 1970. Added to that was t.he

processed value of agar, algin, carrageenin and animal feeds worth

nearly $28 million (1970). Considerable research is 'Currently investi-

gating other potential uses'of these botantical resources and there is
considerable pote .ntial for growth in harvesting activity. 16/

Also of increasing importance is the "farming" of oysters, clams,

and shrimp. These industries are expected to contribute an increasing

percentage of the total harvest as technology develops. The decline

of natural productivity, due to pollution and loss of habitat, is

generating interest in the further development of these industries.

-Summary

in sum, the level of edonomi c activity, or output, represented by

development of U.S. controlled ocean resources is roughly estimated at

$23 to $26 billion (1973 dollars) for 1985 and $33 to $44 billion
(1973 dollars) for the year 2000.111 Because many of the demands for

coastal resources are competing demands for scarce non-priced and no n-

e [email protected],,however, the-maxi'mum net benefits-can-only be'

achieved through careful planning and regulation.

111. AGRICULTURE IN THE COASTAL ZONE

Agriculture is an important commercial activity in ma ny coastal

zone regions.

In California, for example, it is estimated that 3.5 million acres

of agricultural land are located within the coastal counties. These

acres provide for 350,000 jobs (within five miles of the coast) and the

value of the 24 principal crops is placed at nearly $500 million (1969
dollars).18/ The coast provides ideal soil and climate conditions for

a number of specialty crops such as avocados, artichokes, cranberries,

blueberries, and seed flowers.

The expansion of urban areas within@the coastal zone has resulted

in the loss of thousands of acres of prime agricultural land. California,

has lost an estimated one out of 12 acres of cropland in the coastal
zone in the 1960'sJ2/ Concern over the disappearance of productive

lands has spurred several coastal states to legislate programs designed

to preserve farml-and.

Actions to support coastal-dependent agriculture may be compatible

with other natural resource maintenance goals of coastal zone management.

Importantly, coastal zone management provides an opportunity for multi-

jurisdictional consideration. The experience of many decades demonstrates

that local governments have been relatively ineffective in preserving

farmland for the benefit of the population as a whole. As described in
the California Coastal Plan, 20/ "Retention of agricultural land, whether

for specialty.crops or less intensive grazing, not only helps provi de

food but can-also guide urban growth, reduce public expenditures for

urban growth, reduce public expenditures for urban service e@tensions,

preserve open space and wildlife habitats, provide beneficial use of

land that is hazardous or inappropriate for other types of development,

and maintain future land use options, such as conversion of graz-ing-

lands to more intensive crops.11

IV. NATURAL HAZARDS AND THEIR MITIGATION

Coastal zon es are particularly haza rdous areas subject to damage

from a variety of natural phenomena such as flooding, (including flooding

induced by hurricanes) subsidence, erosion, land slides, earthquakes

tsunami, salt water encroachment, pollution of substraction and high

levels of soil and atmospheric salinity. Damages and related economic

costs include loss of life; rescue, emerg ency treatment and evacuation

costs; replacement and rehabilitation costs; insurance premiums and

losses; and the costs of protective works.

The extent of damages will vary greatly with the strength and dura-

tion of the phenomena. Hurricanes for example have an immediate and

devastating effect.. In Rhode Island a 1954 hurricane caused $200 milli on-
of damage, mostly in the immediate vicinity of the beaches.?i/ Hurricane
Carla in 1961 caused $850 million in damages along the Texas Gul.f Coast. 22/

Hurricane Agnes in 1972 caused over $3 billion in damage, much of it in
coastal regions.?3/

Earthquakes and tsunami (sea waves caused by seismic disturbances)

are special problems along the Pacific coasts. Earthquake. damages in
California are estimated to be $21 billion between 1970 and 2000.24/

Most of the fault lines and exposed population are located on the coast,

thus much of this damage will occur in the coastal zone. Tsunami have a

devastating effect on coast areas. Cresent City, California suffered
25/
extensive loss of life and $7 million.in damages in 1964. Hawaii has

had four major tsunami disa sters. The probable.frequency of these d,is-

asters is not well understood; however, limited data indicate California
may exp erience a significant tsunami once every-25 years. 26/

Landslides are a common problem especially along the westcoast.

The Portuguese Bend slide in Los Angeles in the 1960's caused an esti-

mated $10 million in damage to improvements constructed ina known- risk
area.27/

The less dramatic phenomena of eros-ion and subsidence are no less

important in economic terms, T:rosion is estimated to cause damages up
28/
to $200 million annually a]-Ong U.S. coasts. Erosion losses in the

Long Island Sound coastal area w,ill approach $14 m;illion annually by
199 0 without further remedial measures.?2/ Erosion losses for the entire

.State of California are estimated to be as high as $565 million over the
next 30 years.39/ With 86 percent of the California coast subject to

significant erosion, it is probable that an important portion of the

statewide loss estimate should be assigned to the coast.

Subsidence is also costly. Diking and drainage of land in the New

Orleans area results in subsidence which in turn necessitate large ex-

penditures for pumping and dike maintenance. Subsidence due to,ground

water removal is being experienced in Texas with the resulting inundation

and flooding threatening high value land uses. In California subsidence

due to.oil and gas removal has cost millions in damages and remedial

Costs. Future subsidence costs for the state are expected to'reach
$26 million by the year 2000.311

Much of the damage caused by hazardous, natural phenomena can be

ameliorated through use of coastal zone management techniques. The major

benefit of coastal zone management program is th'at it encourages and

facilitates a coordinated a nd comprehensive consideration of risks in

relation to Ian d use objectives. By considering all risk costs (to all

persons, agencies and jurisdictions and all types of control and mitiga-

tion actions), the probability of making better land uses decisions from

an economic point of view is greatly increased.

Coastal zone m anagemen t can especially lead to effective use of

land use controls to:

9 reduce unnecessary occupancy of hazardous areas.

reduce expenditures forevacuation, relief and rebuilding.

reduce reliance on protective works.

The economic benefits of such actions are demonstrated in "a Plan

for Long Island Sound". Plan measures would reduce flood losses by

$1 billion over the n ext fifty years. Erosion and sedimentation losses
would be reduced by $360 million over the sa Ime period. 32/

Total elimination of risk and associated losses is not practical,

however, many unnecessary losses could be avoided. The Portuguese Bend

slide damage assessed at $10 million, for example, could have been pre-

vented by proper application of land use controls. Multi-mill ion dollar

hurricane damages along the Gulf and Atlantic coasts can also be reduced

by limiting unnecessary building in exposed areas. Earthquakes, tsunami,

subsidence, and other hazard costs could be reduced by proper iden tifi-

cation of risk areas and the imposition of land controls in combination

with other measures. Given the high cost of damages and loss.of life,

the economic benefits of coastal zone management for damage control and

mitigation can be substantial.

V. ENERGY FACILITY PLANNING BENEFITS

One of the more important set of potential benefits of:CZM from a

purely economic point of view are those which derive from the role that

CZM can play in planning for and regulating the development of energy

facilities in the coastal zone. Energy facilities pose particularly

important management problems because of their importance to the general

economy, high dependency on coastal locations, and their potential impact

on the surrounding environment and coastal communities in which they are

located.

There are a variety of energy facilities which often depend to some

extend on coastal locations, including the following:

- Nuclear power plants (electricity)

- Fbssil-fuel power plants (electricity)''

- Oil and gas wells (Federal lands)

Oil and gas wells (State lands)

Onshore support fac ilities for offshore oil and gas exploration
and production

Oil term inals (onshore)

Deepwater ports (for oil)

Oil refineries

Liquid Natural Gas (LNG) transfer facilities

Transmission lines for electricity, oil and natural gas

The present system of decision-making on t he siting, design and

development of energy facilities generally consists of a highly organized

set of producers who seek to develop facilities, under a complex array of

federal, state and local agencies operating under avariety of objectives,

rules, and regulations. The government agencies tend to be relatively

independent of one another, single-purpose, and without a great deal of

coordination. As a result the system generally tends to work against

the broader p ublic interest as well as the private interests involved

in energy facility development.

Coastal zone management can be of significant benefit to both the

private energy industry and the general public by introducing the com-

prehensive planning and management required to balance and coordinate

the-decision-making process for energy facility development. Generally,

coastal zone management can have beneficial effects by:

1. reducing the chances that unnecessary energy facilities
will be built;

2. reducing the demand for energy by encouraging more energy
efficient land use patterns;

3. ensuring that energy facilities which have the most depe ndency
on coastal sites are accommodated;

4. ensuring that facilities are sited at locations which maximize
the economic benefits and minimize adverse effects;

5. reducing the uncertainties and delays associated with the
regulatory process for energy facility development.

Influenc ing Decisions on Facility Needs

Currently projections of general energy needs and the derivative
projections of facility needs are made by' firms, utiliti .es, or government

agencies that tend to be development oriented because of the almost

chronic ''shortages" of energy supplies that have been experienced in

parts of the U.S. in recent years. Such projections need to be balanced

by those who are likely to take a more conservative approach in assessing

energy and energy facility requirements. Since the state coastal zone

management programs must balance energy facility needs against other

potentia-Ily conflicting needs, CZM agencies are likely to take a more

conservative view of energy-facility needs. The need for a cautious

approach to energy-need projections is particularly accute at the cur-

rent time because, as one economist has noted, "There are significant

economic forces tending towards reducing the rate of growth in energy

demand, and possibly even leading to declining consumption.rates for a
number of years.11W Since it may take some time for these forces

(primarily the high er price of energy) to change the pattern of energy

consumption, there is danger that facilities may be constructed which

will be unnecessary at lower consumption levels.

Reducing Energy Consumption

Further, CZM programs can reduce the demand for energy by encouraging

more energy efficient land-use patterns. Several recent studies have

demonstrated that substantial energy savings can result from the clustered
form of land development.@@/ The effectuation of such development paT-

terns requires the application of planning and management processes such

as those contemplated by the Federal CZM program.

Accommodating Coastal Dependent Facilities

The Coastal Zone Management Act of 1972 requires assisted states, as

part of their management program, provide "for adequate consideration of

the national interest involved in the siting of facilities necessary
to meet requirements which are .other than local in nature."35/ Further-

more, the Act requires that coastal zone management programs provide

"for a method of assuring that local land and water use regulations
with-in the coastal zone do not reasonably restrict or exclude land and

water uses of regional benefits." These sections of the Coastal Zone

Management Act, and the programs the States create, should assure that

suitable locations should be available without unreasonable and arbitrary

constra ints.

The new guidelines for the coastal area of New Jersey provide for

the consideration of electric power plants, LNG facilities, onshore sup-

port facilities for offshore oil and gas exploration and production, and

associated transmission lines. Oil refineries are excluded from the

guidelines because the managed coastal area does not include the urbanized,
industrialized portions of the New Jersey coast where oil' refineries are

currently loc ated. The California Coastal Plan, proposed to the State

legislature this year, states that "the land and water of California

coastal zone is now used, and can be used more to contribute to the State's

energy supply in five principal ways:

� To provide sites and ocean cooling water for power plants
that generate electricity;

� To provide sites for drilling, production, treatment,
storage, and pipeline faci.lities for oil and gas
operations onshore and on submerged lands.beneath
State and Federal offshore waters;

� To provide terminals to moor and offload tankers and
barges bringing crude oil and refined products to
California, the region, and the nation;

� To provide sites for oil refineries; and

� To provide special terminals and onshore plant facili-
ties for liquefied natural gas imports."

Whether energy facilities should be located within the coastal zone

can only be determined by considering and balancing the needs and bene-

fits of all potential land and water uses against the environmental

suitability for these uses and activities. The Coastal Zone Management

Program provides a process, and in many cases the only process, to

consider and balance this broad range of concerns.

Determining The Best Location for Needed Energy Facilities

Determining the suitability of lands and waters for any type of use

requires a major effort to collect and analyze data on the.entire coastal

zone. This data collection and analysis is generally beyond the resources

of local governments, private companies, public interest groups and

especially citizens to accomplish. By doing suitability analyses, CZM

will assure that the entire coastal zone and indeed suitable inland

areas'as well, are considered at the same time and in the same format',

and will provide substantial savings in time and money for local govern-

ments, citizen groups and energy companies who will have access to the

findings of the suitability analysis.

CZM could, in principle, also direct energy facilities toward

economically depressed areas which need the jobs and income and which

have underutilized facilities.

Reducing Uncertainties and Delays in The Development-Process
Under the current situation, t-he developers of energy facilities

are faced with uncertain public policy and unclear public guidelines for

development, yet with substantial public re gulatory authority over siting

and design decisions. As a result, much time and money it wasted-in

obtaining decisions-..on energy projects. Also, s-ponsors are never certain

of the outcome regardless of the amount of planning that has gone with

the project. CZM, on the other hand, can establish a public policy with

regard to energy facility development that should result in clearer

guidelines and increased predictability for such development. Thus,

resources will not be wasted on projects which are not in accord with

policy and guidelines and the review process on projects should be much

shorter and less costly.

The benefits from reduction of delay can be substantial. It has

been estimated that the cost of inflation and increased construction

prices of one year's delay in the construction of 6 1,000HW nuclear
power plant is in the range of $50 million. 36/ The price of this delay,

if the plant is ultimately approved and built, will be passed on to the

consumer. CZM can provide a high economic benefit by reducing delay which

is often caused by regulatory confusion, rather than the substance of the

application.

V I COST EFFICIENCIES IN DEVELOPMENT

An objective of coastal zone man agement should be the minimization

of increases in the public and private costs of development in the coastal

zone. Steps tak en to protect natural resource values which would other.-

wise be reduced or destroyed by development will obviously reduce the

environmental impact of development. Beyond this, however, CZM should.

lead to an increased clustering of development, both at the community
37/
and project scale.--

There are several reasons to expect such clustering to result. First,

the step s taken to protect-natural areas (acquisition, TDR, conservation

zoning) are likely to reduce the land available for urban use. S econdly,

increased planning is likely to result in more attention to the general

development pattern and action to increase the efficiency of the pattern.

Increased planning and capital improvemen ts programming should also lead

to a better coordination of public facility development, which should

also improve the efficiency of both public and private investment.

While it is difficult to estimate the probable development cost

savings benefit from increased clustering of urban uses in the coastal

zone! an idea of the potential scale of such benefits on the per unit

basis is provided by a number of studies which have compared the-costs

of a clustered form of development to the costs of low density, spread

form of development. The Real Estate Research Corporation in its "CGsts

of Sprawl" study found a capital cost savings of $14,600 per unit in
38/
clustered development versus a low density sprawl form of development.--

Seventy-three percent of this savings ($10,620) was accounted for by a

switch to a smaller and cheaper dwelling type (townhouse and garden

apartments owner single-family detached). Another 19.7 percent ($2875)

was accountable for'by.a savings in utility installation costs and 7.5

percent or $1090 was in reduced street construction costs.
A-1967 studyW by Howard County, Maryland comparing selected

public costs of low-density spread development versus a clustered form

of development (for the same number of dwelling units) found that a planned

clustered form of development saved the County $3000 per unit and resulted

in the development of less than half of the land required under the more
conventional approach to development. 4o/ A later study (1971) comparing

the costs of cluster and existing forms of development in Charles County,

Maryland, resulted in similar findings. Total public facility costs were

found to be $9780 per unit under the existinq form of development versus

$6770 per unit in a clustered development form, for a savings of 30 per-

cent, or roughly $3000 per unit.

Other studies have evaluated these forms of development from the point

of view of the private developer and concluded that simila,r

cost savings result to the private developer even when the private developer

of.cl,ustered projects-is required to inves:t more@in amenit@ies-and'other
facilities than conventional projects. @1/ One study estimated a savings

of approximately $5000 per unit in site development costs for a 170 acre

PUD developed at 8 units per acre as compared to a conventional subdivision

development at 2 units per acre. Savings in land costs, utilities, and

street more than offset higher cost for amenities, schools,-and fees.

Another study estimated a savings of approximately.$3000 per unit
42/
in land and site improvement costs.-- Both of these studies assumed a

substantial increase in density and a shift from single family to multi-
family.dwelling. The third study, 43/ however, held density constant

and compared a clustered lot pattern with a conventional pattern. Still

there were substantial savings in street, sewer, and storm drain costs,

although recreation facilities cost were substantially greater because

of the cluster. development included substantially more recreation facili-

ties. Even with the higher recreation facility costs, overall site de-

velopment costs were still lower in the cluster model by $1000 per unit.

CZM can also reduce development costs by reducing the waste and in-

efficiency associated with the present unpredicatble maze of reg ulatory

authorities and policies which face the private developer. Although

we do not have adequate information to assess the amount of resources

which are wasted in either planning or regulatory delays, scattered

Information suggests that the waste runs into the millions of dollars
each year-@@/ One-'study of the costs of delay (holding costs of land,

inflation in construction costs, and overhead costs) estimated that
costs,increase on the average by about 1.5 percent per mont05/ On a

$30,000 house, this would amount to a $5500 increase if the project is

delayed one year. To the extent that the issues that are raised in the

current permitting process can be resolved through planning and the

formulation of clear development guidelines, a substantial portion of

the delay costs and costs of planning projects that do not prove feasible

Jor policy reasons can be avoided.

VII. GENERAL ASSESSMENT

The coastal areas of the U.S. are rich in valuable resources in

the form of moderate climates, dramatic scenic qualities, good soil's,

water, fish, wildlife and minerals. These resources are valuable for

a variety of competing uses active and passive recreation, habitation,

manufacturing, mineral extraction, transportation,agriculture, aquacul-

ture, natural processes, and other activities.

The private system of allocating coastal resources amongst these

various uses is largely through private - market initiative and decisions

which are regulated in a somewhat haphazard fashion by a complicated and

uncoordinated array of feder a], state, and local regulations. Individual

regulation s tend to address a fairly narrow scope of activities, purposes,

and interests. Beyond regulations, government often takes a more direct

role in coastal resource allocation by acquiring lands and dictating

their use.an.d by providing certain services.

The existing system fails to maximize the economic benefits of coastal

resources for a number of reasons:

1. Many coastal resource users have a detrimental effect on otheracti-

vities without considering the "costs" of these "external" effects in de-

ciding whether or not to undertake their activity. Thus, the developer

(public or private) of a facility which destroys or obstructs a scenic

view, is not required to compensate all the people who would have other-

wise received visual satisfaction In effect, the private market does not

properly value such common property resources as wetlands, natural beauty,

clean water or clean air.

2. The jurisdictional structure of regulations in many states enable

local governments to obstruct projects which are beneficial from-the state

ornational viewpoint. The city which refuses. to accommodate energy or

port facilities on sites which would facilitate the most efficient opera-

tion of those facilities may impo se Uncreased costs on the rest of the

population..'-.

3. The private market tends to value present consumption much higher

than future consumption and thus places a high discount rate on future

needs. Th.is makes sense to the-private consumer because in the long term

future he will no.,longer be around.- Thu-s, the present system tends to

understate the value of-scarce non-replaceable natural resources that will

continue to be demanded by fut.ure-generations.

4. The complexity of the inter-relationships among activities, the

lack of comprehensive planning which attempts to correct the inadequacies

of the privat e market allocating system, the uncoordinated regulations,

and the conflicts in constitutional rights combine to create a confusing,

uncertain, ineffective and inefficient decision process for both the

general public and the private investor.

The only way to correct the misallocation of resources resulting

from the pre-sent system is through carefully reasoned and coordinated

public intervention. This essentiallyis the objective of the federal

and state coastal zone program.

We have attempted in this brief paper to suggest the type and magni-

tude of the major economic benefits that are possible under a coastal

zone management program. It is impossible to estimate or- measure in

dollar te rms the improvement in social welfare that will result from an

improved allocation of coastal resources because many of the resources

considered most valuable cannot be adequately priced. Neverthe-less i-t is

clear that the economic benefits should be substantial - on the order of

many billions of dollars nationally over the next 25 years.

To repeat an earlier caution: these are potential benefits. Their

attainment de2ends on the s, pecific nature of state and local conditions

and of the particular coastal zone management programs at i@sue. But

given the magnitude of benefit potential it is reasonable to predict

that programs can be designed to yield a net economic and social benefit,

if sufficient care is given to the inclusion of fair and equitable means

to allocate both the benefits and associated costs.

Footnotes

1. Coastal Zone Management Act of 1972 (86 Stat, 1280, 16 U.S.C. 1451-1464).

2. Ibid.

3. Ketchum, Bostwick, The Wat er's Edge, The MIT Press, Cambridge, Mass.: 1972.

4. -Tihansky, D., and Meade, N., Estimating the Economic Value of Estu-
aries to U.S. Commercial Fisheries, U.S. Environmental Protection
Agency, Washington, D.C.,: 1974.

5. U.S. Committee on Commerce, The Economic Value of Ocean Resources to
the United States, U.S.G.P.O.: 1974.

6. Fishery Management Under a 200-Mile Jurisdictional Limit, U.S.G.P.O.:
1975.

7. Ibid.

8. Ibid.

9. Ketchum, The Water's Edge.

10. U.S. Committee on Commerce, The Economic Value of Ocean Resources to
the United States.

11. California Coastal Zone Commissions, California Coastal Zone Plan: 1975.

12. New Jersey Department of Environmental Protection, An Inventory of the
New jprsey Coastal Area: 1975.

13. U.S. Geologic Suryey (Thomsen), Off Shore, Undiscovered, Recoverable.
Crude Oil and Natural Gas: June, 1975. Note: The researchers
estimate a 75 percent probability that 10 billion barrels of oil
and 33 trillion cubic feet of natural gas exist.; they allow a
25 percent probability that 48 billion barrels of oil and 191
trillion cubic feet of gas exist in offshore locations.

14. U.S. Committee on Commerce, The Economic Value of Ocean Resources to
the U.S.: 1974.

15. Odum, E., Gossclink, J., and Pope, R., The Value of the Tidal Marsh,
University of Georgia: 1975.

16. U.S. Committee on Commerce, The Economic Value of Ocean Resources to
the U.S.: 1974.

17. Ibid.

16'. California Coastal Zone Conservation Commissions, California Coastal
Plan: 1975.

19. ibid.

20. Ibid,

91. Olsen, S.B. and Grant, M.J.; Rhode Island's Barrier Beaches (Kingston,
Rhode Island: Coastal Resources Center, University 6-f7hode Island),
Marine Technical Report No.4 , (2 vols.), Volume 1. (undated).

22. Bolt, B.A., et al, Geological Hazar ds (New York: Springer-Verlag,
1975), P. 239.

23. Ibid, p. 277.

24. Ibid, p. 285.

2 5 . Ibid, p. 139.

26. Ibid, p. 133-139.

27. Ibid, p. 194.

28. Sorenson and Mithchell, Coastal Erosion Hazards in the U -S.: A Research
Assessemnt, (Boulder, Colo: University of Colorado, 1975).

29. New England River Basin Commission, A Plan for long Island Sound.

30. Bolt, op.cit., p. 285'.

31. State of California, Urban Geology-Master Plan for California.

32. New England River Basin Commission, op.cit.

33. Robert F. Rooney, "The Economic Context of The California Coastal Plan,"
(unpublished), November, 1975.

34. See, for example, James S. Roberts, "Energy and Land Use: A'nalysis of
Alternative Development Patterns," Urban Land, Sept. 1975.

35. Coastal Zone Management Act of 1972.

36. Interviews with U.S. Federal Energy Administration official, February, 1976.

37. For example, the proposed California Coastal Plan adopts a policy of
concentrating additional development in existing urban areas. See
California Coastal Zon Conservation Commission, California Coastal
Plan, December, 1975, p. 79.

38. Real Estate Research Corpora tion, The Costsof Sp r-awl (Washington, D.C.:
U.S. Government Printing Office, 1974).

39. Howard County, Maryland Howard County 19,035, (Howard County Planning
Commission, 1967).

40. Barton-Aschnan Associates, Inc., Comparative Evaluation o f New Community
Growth versus Tmnd'DeWopmeh@ Growth, August, 1975.

41. Sachs, "The Zoning Scene," House and Home, June, 1971, p. 26.

42. Burchell, Planned Unit Development: flew Community American Style,
(New 3runswich, J.J.: Center for Urban Policy Research, 1972).

43. Lederman, "New Ideas in Land Planning--Cluster Plan Cuts Costs by
One-Third," Journal of Home Building, May, 1962, p. 76.

44. See: (a) Bish, et al, Coastal Resoruce Use : Decisions on Puget Sound,
(Seattle: University of Washington Press, 1975); (b) Thomas Muller,
State-mandated Impact Evaluation: A Preliminary Assessment, (Wash-
ington, D.C.: The Urban Institute, February, 1976); (c) "Construction
Delays Costing Developers (and public) Thousands," The Appraiser,
January, 1976; (d) Construction Industry Research Board, "Cost of
Delay Prior to Construction," Los Angeles, California, March, 1975.

45. Construction Industry Research Board, op. cit.

3 66.68 00000 1885