WAS Capacity Use Area Study
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Relevance to WAS
North Carolina's Capacity Use Area program is of central interest to the Water Allocation Study because it provides actual examples of what happens when the state takes a more rigorous approach to water allocation than under the traditional riparian rights, common law approach. In particular, North Carolina has required withdrawal permits for significant groundwater users in its capacity use area. It has also begun a long-term program of mandated reductions in withdrawals. Finally, North Carolina's current capacity use rules allow trading of water allocations, thus providing potential insight into the ability of water markets or quasi-markets to work in a riparian rights setting. At least one trade between the town of Farmville and the town of Lagrange has occured, and a temporary transfer of rights between Robersonville and Williamston.
Recent History of the Central Coastal Plain
(This summary is based on the work of Kirsch and Characklis)
The Capacity Use Area program is currently applied to the Central Coastal Plain (CCP), a rural region in the eastern third of North Carolina that is dotted with small towns. A group of formations collectively known as the Cretaceous Aquifers supply the vast majority of water to communities in the CCP. The aquifers have had a reasonable yield and produce high quality water that generally requires little, if any, treatment, resulting in an inexpensive water supply.
As population and water demand have increased in the CCP, water levels within the aquifer have been declining at a rate of more than 1 foot per year in many regions within the CCP. Lower aquifer levels can create problems if wells are not deep enough and, as a result, pumps need to be lowered. Aquifer dewatering, which occurs when the water level drops below the aquifer’s confining layer, can lead to strata compacting and the permanent loss of storage space within the aquifer. Lower aquifer levels also permit salt water intrusion (water with elevated dissolved solids levels) to move inward from the coast. Monitoring data throughout the 1980s and 1990s suggested that the future viability of the formation was at risk and the state invoked the Water Use Act of 1967 G.S. 143-215.11 through .22 , which authorizes the state to declare the affected region (including all or parts of 15 counties) a Capacity Use Area (CUA).
Summary of the Central Coastal Plain Capacity Use Area Rules
Under the final CCPCUA rules, as declared in 15A NCAC 2E .0501-.0507, groundwater withdrawals for users pumping more than 100,000 gallons per day (gpd) are to be reduced beginning in 2002 over a three-phase, sixteen-year period (NC DENR 2000). Depending on whether the user is withdrawing water from the declining water level zone or the salt water intrusion or dewatering zones, users are required to cut back either 10% or 25% relative to an approved base rate in 2002, respectively, at the end of each of the three phases (6 years, 5 years, 5 years), resulting in total reductions of either 30% or 75% by 2018. Since demand may rise over the sixteen-year period, at least some users will be entitled to withdraw even less than 70% or 25% of their demand by 2018. The CCPCUA rules became effective August 1, 2002. As of today, users that are required to cutback withdrawals should have completed a 10% or 25% reduction, since phase II has begun on August 1, 2008.
Who is Affected?
The Division of Water Resources within NC DENR provides permits to all users who withdraw more than 100,000 gpd. This includes public utilities, industries, agricultural and other types of users. Intermittent users, defined by .0507 as users who withdraw water fewer than 60 days a year, are not required to register for a permit. Many agricultural irrigators and fish farmers are, therefore, not affected by the CCPCUA rule.
Permits expire within 10 years (usually fewer) and must be renewed. Only permitted users that withdraw groundwater from the Cretaceous aquifer zones are required to cutback withdrawals over time. An approved base rate of withdrawals prior to 2002 is established, and water allocations are determined from that base rate (after calculating the required cutbacks).
About 107 public water utilities (government owned or not-for-profit private utilities) operate within the 15 county CCPCUA; 79 of which withdraw more than 100,000 gpd and currently have CCPCUA permits. Of that number, 36 water utilities are required to cutback groundwater withdrawals. Here is a map of the 107 water utilities in the CCPCUA, identifying the 36 facing mandated cutbacks.
What are Affected Utilities Doing to Compensate for their Cutbacks?
To make up for the reduced withdrawals, communities will need to use surface water, withdraw water from alternative minor aquifers in the region, or purchase groundwater withdrawal rights from users reducing their withdrawals below the state-imposed maximum. The Neuse and Tar Rivers are thought of as the viable surface water supplies for the area although, prior to the CCPCUA designation, there has been only one surface water treatment plant on each river (Goldsboro on the Neuse; Greenville Utilities Commission on the Tar).
The CCPCUA has also created the incentive for Greenville to invite local communities to purchase excess capacity from its existing 22.5 mgd surface water treatment plant. Two communities, Farmville and Greene County, have signed 40-year contracts in which Greenville agrees to provide them water on an interruptible basis. The agreement has Greenville supplying substantial quantities of water to these communities during periods when it has excess capacity, but it reserves the right to withhold that water up to 36 days per year when it faces peak demands in its own service area. Farmville and Greene County’s annual permitted groundwater capacity following the cutbacks will be adequate to meet their demand when Greenville interrupts the service. At present, all parties seem satisfied with this agreement and other local water systems are now in discussion with Greenville about entering into similar contracts.
The CCPCUA regulations make provisions for the trading of regulated groundwater capacity among permitted users, subject to approval from the North Carolina Department of Environment and Natural Resources. It is unclear to what extent communities will use this provision but research that examines the potential benefits of combining regional surface water systems with tradable groundwater permits (Kirsch and Characklis, 2005) suggests that sales of groundwater permits would both offset the costs of joining a regional surface water treatment system and provide a means of augmenting supply for cities located further from surface water sources for whom joining a regional surface water system would be very costly. Results of this research indicate that the inclusion of regional surface water systems and tradable groundwater permits can reduce the estimated cost of meeting the new restrictions in the region by as much as 35% in present value cost terms.
It should be noted that the uregulated trading of groundwater permits across the region assumes that local aquifer levels will not be affected by the spatial distribution of withdrawals when, in fact, it might be the case that shifting the bulk of withdrawals to fewer communities could cause unacceptable local depressions in aquifer levels. In light of concerns over localized areas of more severe aquifer drawdown (and the consequent effects of aquifer dewatering and saltwater intrusion) rules might be developed to limit the transfer of pumping capacity from less affected locations (those currently subjected to a 30% withdrawal reduction) to those in danger of drawing water levels down to more damaging depths (those currently subjected to a 75% withdrawal reduction). These rules would be better informed by research into the hydrology of the aquifer and the economic effects of limiting permit trading.
Research questions
1. What changes in the system of water delivery have occurred because of the N.C. Central Coastal Plain CUA? In particular, what changes in:
- institutions for withdrawing, treating and distributing water? (Alicia wrote a memo on this. Shadi is editting it and will upload it into the Wiki in the next few days. We know of creation of surface water systems and systems withdrawing from other aquifers, e.g.: castle haynes and peedee).
- interconnections or other devices for regionalization of water delivery? (Shadi mapped out interconnections before (2002) and will try to map out interconnections after (2008) the CCPCUA rule implementation to show changes in interconnections)
- water supply planning?
- prices of water? (Sean Hughes is reporting on this)
The Environmental Finance Center (Eskaf, Thorsten, and Hughes, 2007) looked at rate structures for communities in the CCPCUA and concluded that not all utilities with strong conservation needs utilize strong price signals.
From the town administrator: "The Town of Grifton will purchase 75% of its water supply from the NRWASA. The Town of Grifton must originate a $2.00 surcharge that will be added to the monthly utility bill in order to fund Grifton’s continued participation in NRWASA. The surcharge will be added on long enough to complete the construction of the NRWASA water treatment plant, and then removed."
2. How have these changes been financed? (Alicia wrote some notes about this is the memo that Shadi is editting at the moment)
3. What do the results thus far of the N.C. Capacity Use Area program suggest for the costs, benefits and implementation approaches for a statewide withdrawal permit program in North Carolina? How do these results compare with policy outcomes and advice for water permits from the literature and other places?
Information on the time, cost, and other resources expended on setting up the CCPCUA is being collected here.
Bibliography
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Clark, R. M., and Morand, J. M. (1981). "Cost of Small Water Supply Treatment Systems." 107, 1051-1064.
Converse, A. O. (1972). "Optimum Number and Location of Treatment Plants." Journal WPCF, 44(8), 1629-1636.
Deininger, R. A., and Shaw, Y. S. (1973). "Modelling regional waste water treatment systems." Water Research, 7, 633-646.
Easter, K. W., and et al. (1998). Markets for Water: Potential and Performance, Kluwer Academic Publishers, Boston.
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Golder, and Associates. (2002). "North Carolina Central Coastal Plain Capacity Use Area Regional Water Resource Study." The Rural Center.
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