Enhanced COI Lost Work Time 3.505 $ 18.47 $ 64.75 Lost Unpaid Work Time 2.183 $ 10.92 $ 23.83 Lost Leisure Time 10.312 $ 10.92 $ 112.56 Subtotal 16.000 Lost Caregiver Day Sum of weighted lost paid and unpaid work and leisure days $ 201.14 Traditional COI Lost Work Day 3.505 $ 18.47 $ 64.75 Lost Unpaid Work Day 2.183 $ 5.4 $ 11.91 Subtotal 5.688 Lost Caregiver Day Sum of weighted lost paid and unpaid work days $ 76.66 Note: Rounded data are shown here, but full precision was used in all calculations. Source: Exhibit L. 9. Economic Analysis for the LT2ESWTR Proposal June 2003 5 48 Total Morbidity Cost of Illness There are two major components of the total value of the morbidity cost of avoiding a case of cryptosporidiosis   direct medical costs and lost time. As discussed above, the total direct medical costs are $ 93.82 per illness. Lost time estimates are derived from the estimate of the average days lost and the value of each day lost. For the Enhanced COI, productivity losses are included. Because patients are only fractionally as productive at work as well people, the loss associated with the less productive days is a portion of the value of a full lost day, specifically 30 percent ( rounded from Harrington 1991). For example, this may be the result of frequent trips to the bathroom, reduced concentration on tasks, or preparation of special meals. Summing the subcategories of total value of lost time yields a weighted cost of $ 651.07 ( Enhanced COI) and $ 150.80 ( Traditional COI) per case of cryptosporidiosis in 2000. Exhibit 5.20 shows these calculations. The total loss per case in 2000$ is $ 744.89 for the Enhanced COI and about a third of that, or $ 244.62, for the Traditional COI. Economic Analysis for the LT2ESWTR Proposal June 2003 5 49 Exhibit 5.20 Total Loss Per Case, Enhanced and Traditional COI, 2000 Loss Category Average Days Lost Per Illness Value Per Day ( weighted by time) Total Loss Per Case Enhanced COI Traditional COI Enhanced COI Traditional COI A B C D= A* B E= A* C Direct Medical Costs $ 93.82 $ 93.82 Lost Paid Work Days 1.697 $ 64.75 $ 64.75 $ 109.88 $ 109.88 Lost Unpaid Work Days $ 23.83 $ 11.91 $ 40.44 $ 20.22 Lost Leisure Time $ 112.56  $ 191.02

Lost Caregiver Days 0.270 $ 201.14 $ 76.66 $ 54.31 $ 20.70 Lost Leisure Productivity 4.233 $ 112.56 x 30%  $ 142.94

Lost Productivity at Work ($ 64.75 + $ 23.83) x 30%  $ 112.49

Lost Time Subtotal $ 651.07 $ 150.80 Total $ 744.89 $ 244.62 Notes: Detail may not calculate to totals due to independent rounding. The Traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The Enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Source: Exhibit L. 10.

The value of lost time can increase or decrease over time, depending on the change in real income. Those annual changes in income growth and, therefore, the value of time, are shown in Exhibit 5.21. These changes ( mostly increases) in income growth mean that the loss due to an illness would increase over time because lost time is recovered by wage rates or their equivalent. In the benefits model, the cases avoided in each year are valued as shown in Exhibit 5.21 ( the model uses unrounded data). Benefits derived from medical costs are not adjusted for changes in income over time, because medical costs do not necessarily have a direct or indirect link with income. Economic Analysis for the LT2ESWTR Proposal June 2003 5 50 Exhibit 5.21 Yearly Total Loss Per Case, Enhanced and Traditional COI Year Annual Percent Change in Income ( Real GDP per Capita) Lost Time Direct Medical Costs Total Loss Per Case Enhanced COI Traditional COI Enhanced COI Traditiona l COI A B=( 1+ A)* previous year C=( 1+ A)* previous year D E= B+ D F= C+ D 2000 Base Year $ 651.07 $ 150.80 $ 93.82 $ 744.89 $ 244.62 2001 0.1% $ 651.67 $ 150.94 $ 93.82 $ 802.61 $ 244.76 2002  0.1% $ 651.02 $ 150.79 $ 93.82 $ 801.81 $ 244.61 2003 3.2% $ 671.74 $ 155.59 $ 93.82 $ 827.32 $ 249.41 2004 2.4% $ 687.90 $ 159.33 $ 93.82 $ 847.23 $ 253.15 2005 2.4% $ 704.55 $ 163.19 $ 93.82 $ 867.74 $ 257.01 2006 2.4% $ 721.69 $ 167.16 $ 93.82 $ 888.85 $ 260.98 2007 2.4% $ 739.31 $ 171.24 $ 93.82 $ 910.55 $ 265.06 2008 2.3% $ 755.96 $ 175.10 $ 93.82 $ 931.06 $ 268.92 2009 2.3% $ 773.04 $ 179.05 $ 93.82 $ 952.09 $ 272.87 2010 2.3% $ 790.55 $ 183.11 $ 93.82 $ 973.66 $ 276.93 2011 2.3% $ 808.49 $ 187.26 $ 93.82 $ 995.75 $ 281.08 2012 2.3% $ 826.81 $ 191.51 $ 93.82 $ 1,018.32 $ 285.33 2013 2.3% $ 845.55 $ 195.84 $ 93.82 $ 1,041.39 $ 289.66 2014 2.3% $ 864.71 $ 200.28 $ 93.82 $ 1,065.00 $ 294.10 2015 2.3% $ 884.34 $ 204.83 $ 93.82 $ 1,089.17 $ 298.65 2016 2.3% $ 904.44 $ 209.49 $ 93.82 $ 1,113.93 $ 303.31 2017 2.3% $ 925.04 $ 214.26 $ 93.82 $ 1,139.29 $ 308.08 2018 2.3% $ 946.16 $ 219.15 $ 93.82 $ 1,165.30 $ 312.97 2019 2.3% $ 967.82 $ 224.16 $ 93.82 $ 1,191.18 $ 317.98 2020 2.3% $ 990.04 $ 229.31 $ 93.82 $ 1,219.36 $ 323.13 2021 2.3% $ 1,012.81 $ 234.59 $ 93.82 $ 1,247.40 $ 328.41 2022 2.3% $ 1,036.11 $ 239.98 $ 93.82 $ 1,276.09 $ 333.80 2023 2.3% $ 1,059.95 $ 245.50 $ 93.82 $ 1,305.45 $ 339.32 2024 2.3% $ 1,084.35 $ 251.15 $ 93.82 $ 1,335.50 $ 344.97 2025 2.3% $ 1,109.31 $ 256.94 $ 93.82 $ 1,366.25 $ 350.76 2026 2.3% $ 1,134.88 $ 262.86 $ 93.82 $ 1,397.74 $ 356.68 2027 2.3% $ 1,161.07 $ 268.93 $ 93.82 $ 1,429.99 $ 362.75 Note: Full precision is used in model calculations. Rounded data are shown here. The Traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The Enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Source: Exhibit L. 1.

The sensitivity of different assumptions on the Enhanced COI was tested and is described in Appendix P. Alternative values for several underlying variables were considered, but only the following two were judged important to test in a sensitivity analysis: Economic Analysis for the LT2ESWTR Proposal June 2003 5 51 ° The hourly value of nonwork time ( nonmarket work and leisure time). The Enhanced COI uses a value of $ 10.92 per hour ( in 2000), but an alternative value of $ 5.46 per hour was used in the " low estimate" sensitivity analysis, and a value of $ 16.37 was used in the " high estimate" sensitivity analysis. These bounds represent the effect of ( 1) assuming that all nonwork time is valued at a rate higher than the best estimate and ( 2) assuming that some of the nonwork time lost is an incomplete loss of utility. The basis for using these bounds at 50 percent and 150 percent of the best estimate is discussed in detail in Appendix P.

° The percent decrease in productivity for days in which work could be performed, but effects of the illness prevented full productivity. The Enhanced COI uses 30 percent, and the bounds for the sensitivity analysis are 20 percent and 40 percent. Related studies and the basis for selecting these levels for a sensitivity analysis is discussed in Appendix P.

The total value of lost time using the Enhanced COI is $ 651.07 ( in 2000$), and using these alternative values in the derivation of that estimate would lower that value to $ 374.06 ( 57 percent of the Enhanced COI) and raise that value to $ 985.82 ( 151 percent of the Enhanced COI). The overall effect on total benefits is less pronounced because of the value of fatalities, and fixed direct medical costs. Appendix P calculates the effect of using these alternatives on the total COI and total benefits.

<IP_ADDRESS> Value of Avoiding Fatal Cases of Cryptosporidiosis Benefits of the LT2ESWTR also derive from avoiding fatal cases of cryptosporidiosis. The Value of a Statistical Life ( VSL) is used to measure the value of these benefits. The VSL represents an estimate of the monetary value of reducing risks of premature death. The VSL, therefore, is not an estimate of the value of saving a particular individual's life. The value of a " statistical" life represents the sum of the values placed on small individual risk reductions across an exposed population. For example, if a regulation were to reduce the risk of premature death from cryptosporidiosis by 1/ 1,000,000 for 1 million exposed individuals, the regulation would " save" one statistical life ( 1,000,000 x 1/ 1,000,000). If each of the 1,000,000 people were willing to pay $ 5 to achieve the individual risk reduction anticipated from the regulation, the VSL would be $ 5 million ($ 5 x 1,000,000).

An EPA study characterized the range of possible VSL values as a Weibull distribution with a mean of $ 4.8 million ( 1990 price level), based on 26 individual study estimates ( USEPA 1997b). This represents the value recommended for use in benefits analyses in EPA's Guidelines for Preparing Economic Analyses ( USEPA 2000e) and endorsed by the Science Advisory Board ( SAB) Arsenic review panel ( USEPA 2001e). For purposes of the LT2ESWTR benefits analysis, the VSL Weibull distribution ( with parameters of location = 0, scale = 5.32, shape = 1.51) was incorporated into the benefits model Monte Carlo simulation. This enables quantification of the uncertainty surrounding benefits estimates derived from the VSL. The VSL was also updated to a year 2000 price level using a CPI adjustment factor ( see Appendix P) and the distribution in 2000 has a mean of $ 6.3 million, median of $ 5.5 million, a 5th percentile value of $ 1.0 million and a 95th percentile value of $ 14.5 million.

<IP_ADDRESS> Measuring Benefits Over the LT2ESWTR Implementation Schedule In order to extract benefits data from the model and present these benefits in comparable terms to a similarly calculated stream of costs, it is necessary to calculate the present value of all benefits over 14 Ideally, income elasticity and income growth measurements would be calculated using real per capita personal income growth. However, real per capita GDP is used as a proxy for real per capita personal income growth due to lack of appropriate data projections for real personal income growth. Historical data suggests that GDP and personal income grow at similar rates ( i. e., Table B 31 of the 2002 Economic Report of the President shows that both real per capita GDP and real per capita disposable personal income grew at an average annual rate of 2.3 percent between 1959 and 2000).

15 See Appendix A of Kleckner and Neumann ( 2000) for additional information on the derivation and application of income elasticity adjustments.

Economic Analysis for the LT2ESWTR Proposal June 2003 5 52 the lifetime of the implementation schedule. LT2ESWTR implementation occurs over several years as States and PWSs learn the requirements, inform their staffs, and perform monitoring. A 25 year horizon was chosen for this analysis because systems have several years to begin treatment associated with LT2ESWTR, and many technologies in this analysis have a 20 year life cycle. Calculations using this time frame allows the analysis to capture all of the period when technologies would be installed and avoids the complications that would be necessary to estimate rehabilitation or replacement costs for installed equipment. This time frame also matches that used in other recent analyses such as the one for the Stage 2 DBPR. A complete schedule of when costs are expected to be incurred and benefits obtained is presented in Appendix O.

<IP_ADDRESS> Adjustment for Income Elasticity Although the price level ( year 2000) is held constant across all benefits projections, values in future years are adjusted to reflect changes in the valuation of avoiding health effects associated with changes in income over time. Estimates of how valuation varies with income growth ( i. e, income elasticities) are available from the economic literature, and in those cases income elasticities are combined with estimates of income growth. Benefits based on potentially fatal health effects, which are based on willingness to pay estimates that vary with income, are adjusted using estimates of income elasticity and income growth. This section describes how this adjustment is carried out.

In the case of avoided death benefits, income elasticity adjustments are applied to values in future years. In general, income elasticity represents changes in valuation in relation to changes in real income. For example, if, for every 1 percent increase in real income, a particular consumer's willingness to pay for a particular item increases by 1 percent, this would be represented by an income elasticity of 1. For most willingness to pay estimates, income elasticity values are less than 1, reflecting slower growth in willingness to pay than in income.

In order to apply the income elasticity values in the benefits model, they must be combined with projections of real income growth over the time frame for analysis. To accomplish this, population and real gross domestic product ( GDP) projections are combined to calculate per capita real GDP values14 ( see Exhibit C. 12). Percent changes in these values over time can then be combined with income elasticity figures to derive a single adjustment factor. 15 Given any two points in time, this factor is calculated as follows:

Income elasticity adjustment factor = ( eI 1  eI 2  I 2  I 1) / ( eI 2  eI 1  I 2  I 1) 16 The distribution of VSL values used in this EA is derived based on a meta analysis of 26 different VSL studies, all representing different year price levels. These price levels were updated to a common 1990 price level as part of the analysis in " The Benefits and Costs of the Clean Air Act, 1970 1990" ( USEPA 1997b), from which the distribution used in this EA is taken.

Economic Analysis for the LT2ESWTR Proposal June 2003 5 53 where: e = income elasticity I 1 = real income ( per capita GDP) in the base year I 2 = real income ( per capita GDP) in the year of analysis When applying this formula, income elasticity adjustment factors are calculated from the same base year as the values subject to adjustment. In this case, income elasticity factors for fatal cryptosporidiosis cases are calculated from a 1990 base year ( I 1 = 1990 in the above formula) because that is the base year used in the study from which VSL estimates are derived. 16 Kleckner and Neumann ( 2000) identified published studies from which elasticity values could be derived for potentially fatal health effects. They suggest a triangular distribution with a mode of 0.40, and endpoints at 0.08 and 1.00. In the Monte Carlo simulation that assigns dollar values to benefits, income elasticity values ( e in the above equation) are drawn from this probability distribution. Based on this formula and inputs, income elasticity factors are computed and applied to avoided death benefits in future years. At the average income elasticity value ( 0.49), the income elasticity factors applied range from 1.185 ( 2008) to 1.460 ( 2027). Economic Analysis for the LT2ESWTR Proposal June 2003 5 54 Exhibit 5.22 Mean of Yearly Values for a Statistical Life ($ Million, rounded)

Year Mean of 10,000 Values 2008 $ 7.57 2009 $ 7.66 2010 $ 7.74 2011 $ 7.83 2012 $ 7.92 2013 $ 8.01 2014 $ 8.10 2015 $ 8.19 2016 $ 8.28 2017 $ 8.37 2018 $ 8.46 2019 $ 8.56 2020 $ 8.65 2021 $ 8.75 2022 $ 8.85 2023 $ 8.95 2024 $ 9.05 2025 $ 9.15 2026 $ 9.25 2027 $ 9.35 Source: Exhibit C. 13 The estimates for the value of a statistical life derive from a distribution of the value of statistical life ( discussed in section <IP_ADDRESS>), and adjustments for income elasticity ( discussed in this section). In the benefits model, each year from 2008 to 2027 has a vector of 10,000 values for a statistical life, and each value is used exactly once. The complete distributions ( 200,000 values) are documented in the model, but to illustrate how these distributions are affected by the income elasticity adjustments, the mean of each year's distribution of values is shown above in Exhibit 5.22. The values are shown starting in the year 2008 because that is the first year with benefits. Appendix C has additional discussion of the derivation of these data.

<IP_ADDRESS> Present Value of Future Benefits To allow comparison of future streams of costs and benefits, it is common practice to adjust both streams to a present value ( PV) using a social discount rate. This process takes into account the time preference that society places on expenditures and benefits and allows comparison of cost and benefit 17 See EPA's Guidelines for Preparing Economic Analyses ( USEPA 2000e) for a full discussion of the use of social discount rates in the evaluation of policy decisions.

Economic Analysis for the LT2ESWTR Proposal June 2003 5 55 streams that vary over a given time period. 17 A present value for any future period can be calculated using the following equation:

PV = V( t) / ( 1 + R) t Where: t = The number of years from the reference period ( year 0 of the benefits stream) R = Social discount rate V( t) = The benefits occurring t years from the reference period The present values presented in this EA are the sum of the PVs for each year.

There is much discussion among economists of the proper social discount rate to use for policy analysis. Therefore, for this EA, PV calculations are made using two social discount rates thought to best represent current policy evaluation methodologies, 3 and 7 percent. The rate of 3 percent is based on rates of return on relatively risk free investments, as described in the Guidelines for Preparing Economic Analyses ( USEPA 2000e). The rate of 7 percent is a recommendation of OMB as an estimate of " before tax rate of return to incremental private investment" ( USEPA 1996b). To present results on an annual basis, the total PV of benefits are annualized using the same social discount rates.

<IP_ADDRESS> Summary of Quantified Benefits of LT2ESWTR The risk assessment methodology described in this chapter estimates the quantified benefits of reducing endemic cryptosporidiosis as applied to each of the regulatory alternatives considered for LT2ESWTR. These alternatives   which are described in detail in Chapter 3   were evaluated to provide EPA with information on different approaches for implementation of these regulations. Exhibits 5.23 and 5.24 provide summaries of the cumulative monetary benefits estimated for the Preferred Alternative using three occurrence distribution data sets. Exhibit 5.23 presents benefits calculated using the Enhanced COI and Exhibit 5.24 presents benefits calculated using the Traditional COI. These benefit estimates were compared to costs used by EPA as one criterion ( of many) to decide upon a preferred rule alternative. Costs for rule alternatives are presented in Chapter 6, and cost/ benefit comparisons are evaluated in Chapter 8. Economic Analysis for the LT2ESWTR Proposal June 2003 5 56 Serving < 10,000 Serving > 10,000 All Systems Lower ( 5th % ile) Upper ( 95th % ile) A B C D E 3% Discount Rate Illnesses Avoided ICR 36 $ 648 $ 684 $ 114 $ 1,564 $ ICRSSL 7 $ 165 $ 172 $ 30 $ 376 $ ICRSSM 17 $ 318 $ 335 $ 57 $ 789 $ Deaths Avoided ICR 32 $ 729 $ 761 $ 51 $ 2,340 $ ICRSSL 7 $ 195 $ 202 $ 14 $ 613 $ ICRSSM 15 $ 366 $ 381 $ 25 $ 1,179 $ 7% Discount Rate Illnesses Avoided ICR 29 $ 550 $ 579 $ 96 $ 1,323 $ ICRSSL 6 $ 140 $ 146 $ 26 $ 319 $ ICRSSM 13 $ 270 $ 283 $ 48 $ 668 $ Deaths Avoided ICR 26 $ 624 $ 651 $ 44 $ 2,001 $ ICRSSL 6 $ 167 $ 172 $ 12 $ 524 $ ICRSSM 12 $ 313 $ 325 $ 22 $ 1,010 $ 90% Confidence Bound ( All Systems)

Data Set Mean Exhibit 5.23 Annualized Benefits of Illnesses and Deaths Avoided, Preferred Alternative, Enhanced Cost of Illness [ 1]

($ Millions/ Year, 2000$)

Notes: [ 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Sources: [ A] Appendix C, Exhibits C. 4a and C. 5a, Columns G and J, Row  Small Systems, A3, ICR, ICRSSL, and ICRSSM. [ B] Appendix C, Exhibits C. 4a and C. 5a, Columns G and J, Row  Large Systems, A3, ICR, ICRSSL, and ICRSSM. [ C] Appendix C, Exhibit C. 4a, Columns J and M, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. [ D] Appendix C, Exhibit C. 4a, Columns K and N, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. [ E] Appendix C, Exhibit C. 4a, Columns O and P, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. Economic Analysis for the LT2ESWTR Proposal June 2003 5 57 Serving < 10,000 Serving > 10,000 All Systems Lower ( 5th % ile) Upper ( 95th % ile) A B C D E 3% Discount Rate Illnesses Avoided ICR 11 $ 195 $ 206 $ 34 $ 470 $ ICRSSL 2 $ 50 $ 52 $ 9 $ 113 $ ICRSSM 5 $ 96 $ 101 $ 17 $ 237 $ Deaths Avoided ICR 32 $ 729 $ 761 $ 51 $ 2,340 $ ICRSSL 7 $ 175 $ 202 $ 14 $ 613 $ ICRSSM 15 $ 366 $ 381 $ 25 $ 1,179 $ 7% Discount Rate Illnesses Avoided ICR 9 $ 166 $ 175 $ 29 $ 400 $ ICRSSL 2 $ 42 $ 44 $ 8 $ 96 $ ICRSSM 4 $ 82 $ 97 $ 16 $ 234 $ Deaths Avoided ICR 26 $ 624 $ 651 $ 44 $ 2,001 $ ICRSSL 6 $ 167 $ 172 $ 12 $ 524 $ ICRSSM 12 $ 313 $ 325 $ 22 $ 1,010 $ Mean Data Set 90% Confidence Bound ( All Systems) Exhibit 5.24 Annualized Benefits of Illnesses and Deaths Avoided, Preferred Alternative, Traditional Cost of Illness [ 1]

($ Millions/ Year, 2000$)

Notes: [ 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Sources: [ A] Appendix C, Exhibits C. 4b and C. 5b, Columns G and J, Row  Small Systems, A3, ICR, ICRSSL, and ICRSSM. [ B] Appendix C, Exhibits C. 4b and C. 5b, Columns G and J, Row  Large Systems, A3, ICR, ICRSSL, and ICRSSM. [ C] Appendix C, Exhibit C. 4b, Columns J and M, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. [ D] Appendix C, Exhibit C. 4b, Columns K and N, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. [ E] Appendix C, Exhibit C. 4b, Columns O and P, Row  All Systems, A3, ICR, ICRSSL, and ICRSSM. Economic Analysis for the LT2ESWTR Proposal June 2003 5 58 5.3.2 Monetization of Benefits to Sensitive Subpopulations The infectivity estimates used in this analysis are derived from clinical studies performed on healthy adults and are applied to all populations. No separate monetization of benefits for sensitive subpopulations was therefore performed. The morbidity estimates are based on a large population   those affected by the Milwaukee outbreak   that included a mix of the general population and sensitive subpopulations. By using morbidity factors from that outbreak, the monetization of benefits to sensitive subpopulations is included, but could not be separately itemized. The mortality rates used in this study are derived from data from the Milwaukee outbreak, where 46 of the 54 deaths were persons with AIDS; the other fatalities were elderly and some had other illnesses. For normally healthy adults, cryptosporidiosis is not considered a fatal disease. Therefore, all the mortality benefits estimated for this rule are deaths avoided within sensitive subpopulations. Avoided illnesses and deaths were not separately quantified for children, so monetization of these benefits is not shown separately. Further discussion of the impact of the rule on sensitive populations is in Chapter 7, section 7.9.

5.4 Other Benefits of LT2ESWTR Provisions Section 5.4 describes qualitative benefits of the LT2ESWTR provisions. Although sufficient information was not available to quantify these benefits of LT2ESWTR implementation, the benefits   in terms of both health and monetary value   are thought to be significant.

5.4.1 Reduction in Outbreak Risk Besides reducing the endemic risk of cryptosporidiosis, the LT2ESWTR will reduce the likelihood of major outbreaks, such as occurred in Milwaukee. The economic value of reducing the risk of outbreaks could be quite high when the magnitude of potential costs is considered. For example, if the $ 745 COI per cryptosporidiosis infection estimate is applied to the estimated 2,000 cases attributed to a sewage contaminated well in Braun Station, Texas ( Craun et al. 1998), health damages could reach $ 1.5 million. Other costs associated with outbreaks include spending by Local, State, and national public health agencies; emergency corrective actions by utilities; and possible legal costs if liability is a factor. Affected water systems and local governments may incur costs through provision of alternative water supplies and issuing customer water use warnings and health alerts. Commercial establishments ( e. g., restaurants) and their customers may incur costs due to interrupted and lost service. Local businesses, institutions, and households may incur costs associated with undertaking averting and defensive actions. To the extent that LT2ESWTR reduces the likelihood of waterborne disease outbreaks, avoided response costs are potentially numerous and significant.

During outbreaks, consumers and businesses may use alternative water sources or may adopt behaviors to reduce risk, such as boiling water. If the rule reduces the need for these risk averting behaviors, an economic benefit will accrue. To give a source of the possible scale, during an outbreak of giardiasis, a disease with gastrointestinal symptoms similar to cryptosporidiosis, expenditures on averting behaviors, such as hauling in safe water, boiling water, and purchasing bottled water, were estimated ( in 2000$) between $ 1.74 to $ 5.53 per person per day during the Milwaukee outbreak ( Harrington et al. 1991). If these figures are applied to a small drinking water system serving 10,000 customers, total expenditures on risk averting behavior during a Cryptosporidium outbreak could range between $ 17,400 and $ 55,300 per day ( 2000$). Determining the reduction in outbreak risk and the resulting benefits from Economic Analysis for the LT2ESWTR Proposal June 2003 5 59 avoiding averting behaviors is not possible given current information, but potential benefits are expected to be substantial.

Five studies were identified that used the averting cost approach to estimate household and other costs attributable to short term contamination of drinking water supplies ( Abdalla 1990; Abdalla et al. 1992; Harrington et al. 1991; Sun et al. 1992; Van Houtven et al. 1997). The most relevant of these for the LT2ESWTR analysis is a study by Harrington et al. ( 1991), that analyzes the costs associated with drinking water contamination by Giardia in Luzerne County, Pennsylvania. The December 1983 outbreak resulted in 366 confirmed giardiasis cases resulting from sewage leaking into the unfiltered source water. The total affected population was 75,000 individuals across Pittston Borough and 17 other municipalities. The Harrington study also developed a theoretical and empirical example of how outbreak costs are incurred, based on the Luzerne County example.

The four steps associated with a waterborne outbreak that may impose costs on society are discovery, survey and testing, reaction, and aftermath. ( Harrington et al. 1991). These are described below:

° Discovery. Health care providers or State, Local, or hospital laboratory technicians send reports to State authorities notifying them of the need for further investigation when the rate of new cases suddenly increases above the normal rate.

° Survey and testing. Epidemiological surveys may be conducted, along with tests of the water supply, once a few cases are confirmed.

° Reaction. Local authorities and the water system may issue boil water advisories or other warnings to reduce exposure once a link is made between the drinking water supply and the disease outbreak. Businesses, as well as households, may be affected by such action, requiring government agencies to begin surveillance and enforcement activities and, in some cases, provide alternative water sources.

° Aftermath. Long term solutions to the problem are discussed, as well as how the costs of the outbreak and prevention of future ones may be shared. These discussions can only take place once the outbreak is contained by actions taken during the previous phase.

In the Luzerne County outbreak, individuals took actions to avoid exposure to the contaminated water and those actions resulted in estimated losses between $ 20.8 million and $ 61.8 million ( 2000$). The predominant cost was due to the need to boil water and the associated time lost. Losses due to averting actions for restaurants, bars, schools and other businesses during the outbreak exceeded $ 1.0 million. The burden for government agencies was $ 230,000 and the outbreak cost the water supply utility $ 1.8 million. These costs are in year 2000$ and do not include legal fees, adverse effects on businesses ( which were not investigated), leisure activities, or net losses due to substituting more expensive beverages for tap water. Economic Analysis for the LT2ESWTR Proposal June 2003 5 60 5.4.2 Costs to Households to Avert Infection In addition to averting actions taken with regard to outbreaks, a reduction of everyday averting behaviors can be achieved. Many households may undertake on a daily basis the same averting actions that they take during an outbreak ( e. g., buying bottled water, boiling water, installing point of use ( POU) filtration). To the extent that the LT2ESWTR can be expected to reduce a household's perceptions of the health risks associated with drinking water, regulatory action may reduce the frequency of such averting actions and their costs.

5.4.3 Enhanced Aesthetic Water Quality Some treatment improvements resulting from the implementation of the rule are likely to improve the aesthetic quality of the drinking water. Consumers, presumably, would be willing to pay to protect the aesthetic quality of drinking water, and therefore, these benefits should result in an economic benefit. However, the benefits from such water quality improvements due to the rule are not quantified for this analysis.

5.4.4 Risk Reduction from Co occurring and Emerging Pathogens While the benefits analysis for the LT2ESWTR only includes reductions in illness and mortality attributable to Cryptosporidium, the rule is expected to reduce exposure to other pathogens ( e. g., Giardia or other waterborne bacterial or viral pathogens such as Cyclospora and Microsporidium). For example, membrane processes that remove Cryptosporidium are also shown to achieve equivalent log removal of Giardia under worst case and normal operating conditions, and nanofiltration also shows similar removal of Giardia as Cryptosporidium ( USEPA 2003c). Goodrich and Lykins ( 1995) evaluated bag filters and concluded that any microbe or object greater than 4.5 microns in size would be subject to 0.5 to 2.0 log removal. Strengthened regulatory requirements will translate into increased removal of additional pathogens and a resulting reduction in risk. This may prove valuable in reducing overall risk because the impact of emerging pathogens, although not well established, could be significant.

5.4.5 Benefits from Other Rule Provisions The benefit estimates discussed in this chapter result from increased treatment requirements that improve the consumers' water quality. However, other provisions of the LT2ESWTR not directly involving changes to treatment practices will also provide benefits to water consumers. Due to data constraints, EPA was not able to quantify these benefits. Instead, a qualitative discussion of these benefits is provided below.

Benefits of Source Water Monitoring While source water monitoring does not provide any direct monetary benefits, the information gained from turbidity, Cryptosporidium, and E. coli testing may provide benefits to the water systems and ultimately to their customers. Although some large systems currently monitor their source water for these contaminants, many do not. Most small systems do not monitor source water. Monitoring allows systems to better understand variations in their source water and to adjust their operations accordingly. For example, if a system discovers that pathogen levels are elevated in the spring, they could plan to add Economic Analysis for the LT2ESWTR Proposal June 2003 5 61 more coagulant or bring another sedimentation basin online during that period. Systems that find little or no Cryptosporidium will be able to boost consumer confidence in their water, providing benefits through fewer home treatment devices and less time spent in dealing with customer complaints. Systems that detect Cryptosporidium can use that information for public education about source water protection and watershed management. These can help bring about changes in watershed protection that will ultimately result in better source water quality. Improved source water quality can produce cost savings for treatment.

Benefits of Covered Finished Water Reservoirs The quality of water in finished water reservoirs is subject to similar environmental influences as surface water, including deposition of airborne chemicals, surface water runoff, animal carcasses, animal or bird droppings, and growth of algae and other aquatic organisms. In one study, gulls contaminated a 10 million gallon reservoir and increased bacteriological growth; in another, waterfowl were found to elevate coliform levels in small recreational lakes by 20 times their normal levels ( Morra 1979). Algal growth increases the biomass in the reservoir, which reduces dissolved oxygen and thereby increases the release of iron, manganese, and nutrients from the sediments. This, in turn, supports more algal growth ( Cooke and Carlson 1989). Algae can cause taste and odor problems. Further, uncovered finished water reservoirs may be subject to contamination by illegal swimming and dumping. Documented water quality problems in open finished water reservoirs include increased algal cells; heterotrophic plate count ( HPC) bacteria; turbidity; color; particle counts; biomass; and decreased chlorine residuals ( Pluntze 1974; AWWA 1983; Silverman et al. 1983; LeChevallier et al. 1997b).

Finished water is usually not treated or tested again prior to consumption, so any contamination in the uncovered reservoir may be passed directly to the customer. Therefore, requirements to cover all finished water reservoirs or to treat the effluent, unless other adequate risk management measures can be demonstrated, will reduce the risk of contamination and result in positive health benefits. Covering reservoirs or providing additional treatment of finished water will also provide some additional protection from possible acts of terrorism. Data are not available, however, to quantify the benefits associated with covering all finished water reservoirs.

5.4.6 Summary of Nonquantified Benefits As explained above, several types of potential benefits were not included in the quantitative analysis. Exhibit 5.25 shows how the rule provisions that have not been quantified would be expected to affect the overall benefits derived from LT2ESWTR. Economic Analysis for the LT2ESWTR Proposal June 2003 5 62 Exhibit 5.25 Summary of Nonquantified Benefits Benefit Type Potential Effect on Benefits Comments Reducing outbreak risks and response costs Increase Some outbreaks are caused by human or equipment failures that may occur even with the proposed new requirements; however, by adding barriers of protection for some systems, the rule will reduce the possibility of such failures leading to outbreaks.

Reducing averting behavior ( e. g., boiling tap water or purchasing bottled water) Increase / No Change Averting behavior is associated with both out ofpocket costs ( e. g., purchase of bottled water) and opportunity costs ( e. g., time required to boil water) to the consumer. Reductions in averting behavior are expected to have a positive impact on benefits from the rule.

Improving aesthetic water quality Increase Some technologies installed for this rule ( e. g., ozone) are likely to reduce taste and odor problems.

Reducing risk from co occurring and emerging pathogens Increase Although focused on removal of Cryptosporidium from drinking water, systems that change treatment processes will also increase removal of pathogens that the rule does not specifically regulate. Additional benefits will accrue.

Increased source water monitoring Increase The greater understanding of source water quality that results from monitoring may enhance the ability of plants to optimize treatment operations in ways other than those addressed in this rule.

Covering all finished water reservoirs Increase Although insufficient data were available to quantify benefits, the reduction of contaminants introduced through uncovered finished water reservoirs would produce positive public health benefits.

5.5 Summary of Uncertainties As described in previous sections within this chapter, many sources of uncertainty in the benefits analysis were incorporated in the risk assessment model. Exhibit 5.26 summarizes those uncertainties and describes how they may affect the benefit analysis. It is not known whether most of these uncertainties would lead to an underestimation or over estimation of benefits.

5.6 Comparison of Regulatory Alternatives Although the models were run separately for combinations of PWS type and size and different Cryptosporidium occurrence data sets, all four regulatory alternatives ( and the baseline) were always Economic Analysis for the LT2ESWTR Proposal June 2003 5 63 computed within a given model run. This method effectively " blocked" the variability and uncertainty from other sources so that direct, more precise comparisons could be made among all the regulatory alternatives in a given simulation.

The five modeled regulatory conditions are ( see Chapter 3 for descriptions of these):

° Pre LT2 Baseline ( Regulatory Alternative A0)

° Regulatory Alternative A1 ° Regulatory Alternative A2 ° Regulatory Alternative A3 ( the Preferred Regulatory Alternative)

° Regulatory Alternative A4 Exhibit 5.27 summarizes the estimated number of illnesses and deaths avoided by filtered and unfiltered systems for each regulatory alternative. Exhibit 5.28 follows with the monetization by regulatory alternative. Quantified benefits do not vary substantially among alternatives for two reasons. First, roughly half of the benefits are attributed to the unfiltered systems and the requirements for those systems are the same for each alternative. Second, UV is the least expensive technology for most systems ( thus the most selected technology) and provides 3 log treatment regardless of the treatment requirements. Economic Analysis for the LT2ESWTR Proposal June 2003 5 64 Exhibit 5.26 Summary of Uncertainties Affecting LT2ESWTR Benefits Estimates Uncertainty Section with Discussion of Uncertainty Effect on Benefits Estimates Underestimate Overestimate Under or Over Estimate Quantifying only cases of endemic illness of cryptosporidiosis 5.2.3 X Infectivity for C. parvum estimated from three known isolates 5.2.3 X Morbidity based on triangular distribution 5.2.3 X Mortality based primarily on deaths of patients with AIDS 5.2.3 X Source water concentrations estimated using three data sets, calculation of central tendencies and bounds <IP_ADDRESS> X Proportion of measured oocysts that were infectious, represented by triangular distribution <IP_ADDRESS> X Binning assignments 4.5.6, Appendix B X Estimate of plant implementation of enhanced filtration <IP_ADDRESS> X Pre LT2 removal/ Inactivation using triangular distributions ( with uncertain modes) <IP_ADDRESS> X LT2 treatment log reduction achieved <IP_ADDRESS> X Morbidity benefits based on COI data 5.3.1 X Benefits from other rule provisions EPA was not able to quantify 5.4.5 X Economic Analysis for the LT2ESWTR Proposal June 2003 5 65 Systems Serving < 10,000 Systems Serving > 10,000 All Systems Lower ( 5th % tile) Upper ( 95th % tile) 9,547,374 162,723,506 172,270,879 A B C D E A1 63,866 984,717 1,048,583 172,409 2,410,265 A2 62,168 969,548 1,031,716 170,643 2,367,993 A3  Preferred Alt. 59,994 958,921 1,018,915 169,358 2,331,467 A4 51,723 888,847 940,570 161,366 2,084,877 A1 20,919 302,996 323,915 53,589 757,802 A2 16,027 259,589 275,616 47,681 619,109 A3  Preferred Alt. 12,601 243,572 256,173 45,292 560,648 A4 9,786 209,034 218,820 41,215 457,470 A1 36,026 527,904 563,930 92,474 1,367,370 A2 31,647 488,854 520,501 87,782 1,244,961 A3  Preferred Alt. 27,791 470,572 498,363 84,724 1,177,415 A4 23,006 410,514 433,520 78,386 984,238 A1 7 137 144 25 316 A2 7 135 142 25 311 A3  Preferred Alt. 7 134 141 25 308 A4 6 127 133 24 282 A1 2 42 44 8 99 A2 2 37 39 7 84 A3  Preferred Alt. 1 36 37 7 78 A4 1 32 33 7 67 A1 4 73 77 14 177 A2 4 69 73 13 164 A3  Preferred Alt. 3 67 70 13 157 A4 3 61 64 12 136 90% Confidence Bound for All Systems Illnesses Avoided Population at Risk Mean ICR Data ICRSSL Data Deaths Avoided ICR Data Regulatory Alternative Regulatory Alternative ICRSSM Data Regulatory Alternative ICRSSM Data Regulatory Alternative Regulatory Alternative Regulatory Alternative ICRSSL Data Exhibit 5.27 Annual Cases of Illness and Deaths Avoided from the LT2ESWTR for Regulatory Alternatives Sources: [ A] Appendix C, Exhibit C. 4, Columns A and D, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ B] Appendix C, Exhibit C. 4, Columns A and D, Row  Large Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ C[ Appendix C, Exhibit C. 4, Columns A and D, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ D] Appendix C, Exhibit C. 4, Columns B and E, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ E] Appendix C, Exhibit C. 4, Columns C and F, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. Economic Analysis for the LT2ESWTR Proposal June 2003 5 66 A B C D E F G A1 38 $ 666 $ 704 $ 34 $ 744 $ 778 $ 1,482 $ A2 37 $ 656 $ 693 $ 33 $ 735 $ 768 $ 1,461 $ A3  Preferred Alt. 36 $ 648 $ 684 $ 32 $ 729 $ 761 $ 1,445 $ A4 31 $ 601 $ 632 $ 28 $ 689 $ 717 $ 1,349 $

A1 12 $ 205 $ 217 $ 11 $ 228 $ 239 $ 457 $ A2 10 $ 176 $ 185 $ 9 $ 204 $ 212 $ 397 $ A3  Preferred Alt. 7 $ 165 $ 172 $ 7 $ 195 $ 202 $ 374 $ A4 6 $ 141 $ 147 $ 6 $ 175 $ 180 $ 328 $

A1 21 $ 357 $ 378 $ 19 $ 398 $ 418 $ 796 $ A2 19 $ 331 $ 349 $ 17 $ 376 $ 393 $ 742 $ A3  Preferred Alt. 17 $ 318 $ 335 $ 15 $ 366 $ 381 $ 715 $ A4 14 $ 278 $ 291 $ 13 $ 331 $ 344 $ 635 $

A1 31 $ 565 $ 596 $ 28 $ 637 $ 665 $ 1,260 $ A2 30 $ 556 $ 586 $ 27 $ 630 $ 657 $ 1,243 $ A3  Preferred Alt. 29 $ 550 $ 579 $ 26 $ 624 $ 651 $ 1,230 $ A4 25 $ 510 $ 535 $ 23 $ 590 $ 613 $ 1,148 $

A1 10 $ 174 $ 184 $ 9 $ 196 $ 205 $ 389 $ A2 8 $ 149 $ 157 $ 7 $ 174 $ 182 $ 338 $ A3  Preferred Alt. 6 $ 140 $ 146 $ 6 $ 167 $ 172 $ 318 $ A4 5 $ 120 $ 125 $ 5 $ 150 $ 154 $ 279 $

A1 17 $ 303 $ 320 $ 16 $ 341 $ 357 $ 677 $ A2 15 $ 280 $ 296 $ 14 $ 322 $ 336 $ 632 $ A3  Preferred Alt. 13 $ 270 $ 283 $ 12 $ 313 $ 325 $ 609 $ A4 11 $ 235 $ 247 $ 10 $ 284 $ 294 $ 541 $ 3% Discount Rate 7% Discount Rate Total Value, All Systems Rule Alternative Data Set All Systems ICR Estimated Value of Cases of Illnesses Avoided ($ Millions) Estimated Value of Deaths Avoided ($ Millions)

ICRSSL ICR ICRSSL ICRSSM Serving > 10,000 Serving < 10,000 Serving > 10,000 All Systems Serving < 10,000 ICRSSM Exhibit 5.28a Summary of Estimated Present Values of Annual Illnesses and Deaths Avoided from LT2ESWTR for Regulatory Alternatives, Enhanced Cost of Illness [ 1] ($ Millions, 2000$)

Notes: 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Sources: [ A] Appendix C, Exhibits C. 4a and C. 5a, Column G, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ B] Appendix C, Exhibits C. 4a and C. 5a, Column G, Row  Large Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ C] Appendix C, Exhibits C. 4a and C. 5a, Column G, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ D] Appendix C, Exhibits C. 4a and C. 5a, Column M, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ E] Appendix C, Exhibits C. 4a and C. 5a, Column M, Row  Large Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ F] Appendix C, Exhibits C. 4a and C. 5a, Column M, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ G] Appendix C, Exhibits C. 4a and C. 5a, Column P, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. Economic Analysis for the LT2ESWTR Proposal June 2003 5 67 A B C D E F G A1 11 $ 200 $ 212 $ 34 $ 744 $ 778 $ 989 $ A2 11 $ 197 $ 208 $ 33 $ 735 $ 768 $ 977 $ A3  Preferred Alt. 11 $ 195 $ 206 $ 32 $ 729 $ 761 $ 967 $ A4 9 $ 181 $ 190 $ 28 $ 689 $ 717 $ 907 $

A1 4 $ 62 $ 65 $ 11 $ 228 $ 239 $ 305 $ A2 3 $ 53 $ 56 $ 9 $ 204 $ 212 $ 268 $ A3  Preferred Alt. 2 $ 50 $ 52 $ 7 $ 195 $ 202 $ 253 $ A4 2 $ 43 $ 44 $ 6 $ 175 $ 180 $ 225 $

A1 6 $ 107 $ 114 $ 19 $ 398 $ 418 $ 531 $ A2 6 $ 99 $ 105 $ 17 $ 376 $ 393 $ 498 $ A3  Preferred Alt. 5 $ 96 $ 101 $ 15 $ 366 $ 381 $ 481 $ A4 4 $ 83 $ 88 $ 13 $ 331 $ 344 $ 432 $

A1 9 $ 171 $ 180 $ 28 $ 637 $ 665 $ 845 $ A2 9 $ 168 $ 177 $ 27 $ 630 $ 657 $ 834 $ A3  Preferred Alt. 9 $ 166 $ 175 $ 26 $ 624 $ 651 $ 826 $ A4 7 $ 154 $ 162 $ 23 $ 590 $ 613 $ 775 $

A1 3 $ 53 $ 56 $ 9 $ 196 $ 205 $ 260 $ A2 2 $ 45 $ 47 $ 7 $ 174 $ 182 $ 229 $ A3  Preferred Alt. 2 $ 42 $ 44 $ 6 $ 167 $ 172 $ 216 $ A4 1 $ 36 $ 38 $ 5 $ 150 $ 154 $ 192 $

A1 5 $ 91 $ 97 $ 16 $ 341 $ 357 $ 454 $ A2 5 $ 85 $ 89 $ 14 $ 322 $ 336 $ 425 $ A3  Preferred Alt. 4 $ 82 $ 86 $ 12 $ 313 $ 325 $ 411 $ A4 3 $ 71 $ 74 $ 10 $ 284 $ 294 $ 369 $ 7% Discount Rate ICR ICRSSL 3% Discount Rate ICR ICRSSL Total Value, All Systems Serving < 10,000 Serving > 10,000 All Systems Serving < 10,000 Serving > 10,000 All Systems ICRSSM ICRSSM Data Set Rule Alternative Estimated Value of Cases of Illnesses Avoided ($ Millions) Estimated Value of Deaths Avoided ($ Millions) Exhibit 5.28b Summary of Estimated Present Values of Annual Illnesses and Deaths Avoided from LT2ESWTR for Regulatory Alternatives, Traditional Cost of Illness [ 1] ($ Millions, 2000$)

Notes: 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Sources: [ A] Appendix C, Exhibits C. 4b and C. 5b, Column J, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ B] Appendix C, Exhibits C. 4b and C. 5b, Column J, Row  Large Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ C] Appendix C, Exhibits C. 4b and C. 5b, Column J, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ D] Appendix C, Exhibits C. 4b and C. 5b, Column M, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ E] Appendix C, Exhibits C. 4b and C. 5b, Column M, Row  Large Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ F] Appendix C, Exhibits C. 4b and C. 5b, Column M, Row  All Systems, A1 A4, ICR, ICRSSL, and ICRSSM. [ G] Appendix C, Exhibits C. 4b and C. 5b, Column P, Row  Small Systems, A1 A4, ICR, ICRSSL, and ICRSSM. Economic Analysis for the LT2ESWTR Proposal 6 1 June 2003 6. Cost Analysis 6.1 Introduction This chapter presents estimates of the total national costs for the four LT2ESWTR regulatory alternatives. Total national costs include the costs of rule implementation, monitoring for bin classification, additional treatment, and future monitoring. These costs are summarized first, and then individual methodologies and cost details are provided. This chapter also summarizes per household costs for all systems covered by the rule.

The estimated costs of this rule, as presented in this chapter, are highly dependent on the estimated occurrence of Cryptosporidium in source water. As discussed in Chapter 4, EPA has three different occurrence data sets, the ICR, ICRSSL, and ICRSSM. Each has uncertainties surrounding its applicability to nationwide occurrence. The occurrence distributions modeled from these data sets and their underlying uncertainties are discussed in more detail in Chapter 4. As there is no clearly superior occurrence data set, separate cost analyses were conducted using each of them. Additionally, section 6.12 presents a sensitivity analysis of occurrence distributions, using distributions outside the ranges of the highest ( ICR) and lowest ( ICRSSL) data sets. Costs are also presented for each of the four regulatory alternatives evaluated, denoted as A1 through A4 ( described in Chapter 3).

Section 6.1.1 describes the assumptions used to estimate national costs of the LT2ESWTR. The remaining sections detailed below present the estimated costs of the LT2ESWTR.

6.2 Summary of the National Costs of the LT2ESWTR 6.3 Rule Implementation Costs 6.3.1 PWSs 6.3.2 States and Other Primacy Agencies 6.4 Source Water Monitoring for Initial Bin Classification Costs 6.4.1 PWSs 6.4.2 State and Other Primacy Agency Costs 6.5 Treatment Costs 6.5.1 Toolbox Options and Unit Costs 6.5.2 Compliance Forecast and Technology Selection 6.5.3 Capital and Annual Costs 6.6 Costs of Treatment for Unfiltered Plants 6.7 Costs for Benchmarking and Technology Reporting Requirements 6.8 Costs of Treatment for Uncovered Finished Water Reservoirs 6.8.1 Unit Costs 6.8.2 Compliance Forecast and Technology Selection 6.8.3 Total Annual Treatment Costs 6.9 Future Source Water Monitoring 6.10 Household Costs 6.11 Unquantifiable Costs 6.12 Summary of Uncertainties and Sensitivity Analyses 6.12.1 Cryptosporidium Occurrence Data Sets 6.12.2 Sensitivity Analysis of Influent Bromide Levels on Technology Selection for Filtered Plants 1 For purposes of analyses in this EA, all present value figures are presented at a year 2000 price level. Present value calculations are performed to the expected year of rule implementation ( 2003).

2 See EPA's Guidelines for Preparing Economic Analyses ( USEPA 2000e) for a full discussion of the use of social discount rates in the evaluation of policy decisions.

Economic Analysis for the LT2ESWTR Proposal 6 2 June 2003 6.13 Comparison of Regulatory Alternatives Appendix D offers a comprehensive explanation of the laboratory and labor costs for rule implementation, E. coli and Cryptosporidium monitoring for initial bin classification, and future monitoring. Appendices E, F, G, H, and Q support the cost estimates ( unit costs, methodology for technology selection, summary of technology selection, and summary of treatment costs, respectively). In addition, Appendices G and H provide results for sensitivity analyses and regulatory alternatives. Appendix I presents unit costs for uncovered finished water reservoirs, and Appendix J summarizes the per household cost estimation methodology.

6.1.1 Cost Description and Assumptions To estimate the total national costs of the rule, EPA estimated costs to be incurred by public water systems ( PWSs) and States or other Primacy Agencies. For PWSs, these include the costs of installing treatment, the costs to administer the program and understand the rule, and monitoring costs. State and Primacy Agency costs include estimates of the labor burdens that these agencies will face, such as training employees on the requirements of the LT2ESWTR, reviewing PWS reports and responding to inquiries, and recordkeeping.

EPA estimated costs for these activities using cost models, equipment price lists and quotes, wage rates from the Bureau of Labor Statistics, stakeholder inputs, and assumptions used in economic analyses performed for earlier drinking water rules. This section discusses the assumptions on discount rates, wage rates, laboratory fees, and uncertainty parameters. Section 6.5.1 describes calculations of technology costs. More details on cost assumptions and results are in Appendices D through J. EPA expresses costs as annualized values over 25 years, based on the present value of the stream of costs that occur over time. All cost estimates are expressed in year 2000 dollars.

Scheduling and Discounting Assumptions for National Costs Nominal cost estimates for both non treatment and treatment activities are of two kinds: ( 1) onetime costs that occur near the beginning of the rule implementation period, and ( 2) annual " steady state" costs that systems and States/ Primacy Agencies will incur after systems have made necessary changes to treatment and/ or monitoring to comply with the LT2ESWTR. For the purposes of this Economic Analysis ( EA), one time and steady state costs were projected over a 25 year time period to coincide with the estimated life span of capital equipment ( typically estimated as 20 years for most technologies) and an average time lag of up to five years for technology installation after rule promulgation. The projected schedules for all rule activities are summarized in Appendix O.

As described previously in the Chapter 5 discussion of benefits, it is common practice to adjust benefits and costs to a present value1 using a social discount rate so that they can be compared to one another. This process takes into account the time preference that society places on expenditures and allows comparison of cost and benefit streams that are variable over a given time period. 2 Similar to Economic Analysis for the LT2ESWTR Proposal 6 3 June 2003 calculating the present value of benefits ( see section <IP_ADDRESS>), the present value of costs for any future period can be calculated using the following equation:

PV = V( t) / ( 1 + R) t Where: t = The number of years from the reference period R = Social discount rate V( t) = The cost occurring t years from the reference period The present values presented in this EA are the sum of the PVs for each year.

There is much discussion among economists of the proper social discount rate to use for policy analysis. Therefore, for LT2ESWTR cost analyses, present value calculations are made using two social discount rates thought to best represent current policy evaluation methodologies, 3 and 7 percent. Historically, the use of a 3 percent is based on rates of return on relatively risk free investments, as described in the Guidelines for Preparing Economic Analyses ( USEPA 2000e). The rate of 7 percent is a recommendation of the Office of Management and Budget ( OMB) as an estimate of " before tax rate of return to incremental private investment" ( USEPA 1996b). For any future cost, the higher the discount rate, the lower the present value. Specifically, a future cost ( or stream of costs) evaluated at a 7 percent social discount rate will always result in a lower total present value cost than the same future cost evaluated at a 3 percent rate.

To allow evaluation on an annual basis, the total present value costs are annualized using the same social discount rates ( 3 and 7 percent) over 25 years. Unlike the total present value, the relationship between annualized costs at 3 and 7 percent is dependent on the time frame for annualization, as well as when the costs are incurred ( as set forth in the schedule of rule activities, Exhibit O. 2). When applying social discount rates to annualize costs, a higher discount rate will yield lower annualized cost in the earlier years. Given a long enough time frame, the 7 percent annualized value will eventually be greater than the 3 percent annualized value.

Labor Rates EPA estimates the labor needs and hourly labor rates of systems and States or Primacy Agencies, for two labor categories: managerial and technical. For PWSs, all analyses use labor rates representative of national averages as reported by the Bureau of Labor Statistics ( BLS). For technical labor, the year 2000 mean hourly wage rate of $ 15.60 for Standard Occupational Classification ( SOC) 51 8031, " Water and Liquid Waste Treatment Plant and System Operators" is used. For managerial labor, the year 2000 mean hourly wage rate of $ 28.07 for SOC 17 2051, " Civil Engineers" is used. To account for the cost of fringe benefits, a 60 percent loading factor is applied to each of the BLS rates, resulting in a technical rate of $ 24.96 per hour and a managerial rate of $ 44.91 per hour.

EPA recognizes that there may be significant variation in labor rates among PWSs. However, data are not currently available that would allow statistically valid assignment of labor rates to specific PWSs based on characteristics such as size, classification, or geographical region. In the absence of such data and because analyses in this EA are performed on a national level, the BLS data are used.

PWS cost estimates presented in this EA for implementation and for E. coli and Cryptosporidium monitoring reflect the labor rates given above. Treatment technology costs as Economic Analysis for the LT2ESWTR Proposal 6 4 June 2003 Laboratory Cost Per Sample Total Range Laboratory Microorganism Average Min Max Cost per Plant A B C D Cryptosporidium 530 $ 389 $ 713 $ E. coli Utility Analysis 21 12 38 Commercial Lab 70 60 85 $ 1,820 $ 546 $ 13,767 summarized in the EPA document, " Technologies and Costs for Control of Microbial Contaminants and Disinfection By Products" ( T& C document) ( USEPA 2003a), include operational and maintenance ( O& M) costs and, therefore, also use the BLS rates listed above.

Labor costs attributable to States or other Primacy Agencies are estimated based on an average annual full time equivalent ( FTE) labor cost, including fringe benefits, of $ 55,000 ( 1997$). This rate was established based on State input during the development of the State Workload Model in 1997. For use in the LT2ESWTR EA analyses, the $ 55,000 annual rate was updated to a year 2000 price level ($ 60,086) and converted to an hourly basis ( 1 FTE = 2,080 hours) to establish a State/ Primacy Agency rate of $ 28.89 per hour. ( This is a salary rate that includes fringe benefits; therefore, no additionalloading factor was applied as with the PWS rates.)

Laboratory Fees A laboratory fee, expressed as a cost per sample, is associated with E. coli and Cryptosporidium monitoring and future monitoring for bin reclassification. Exhibit 6.1 summarizes the range of laboratory fees estimated from a survey of laboratories and EPA's experience during the ICR and ICRSSs. Cost calculations for this EA used the average laboratory costs for water sample analyses. Costs are calculated on a per plant basis to be consistent with costs for treatment. Appendix D provides a more detailed derivation of the laboratory costs.

Some of the factors that could cause the cost per sample to differ from one system to another are regional variations in laboratory fees, the number of samples processed ( quantity discounts), and laboratory capacity for Cryptosporidium analysis.

Exhibit 6.1 E. coli and Cryptosporidium Laboratory Costs Source: Appendix D, described in sections D. 4.1 and D. 4.2. [ A] Cryptosporidium  Exhibit D. 14a, column F; E. coli  Exhibit D. 12, columns F and I. [ B] and [ C] Cryptosporidium  DynCorp ( 2002); E. coli  DynCorp ( 2000). [ D] Column [ A] multiplied by the number of samples ( 26) ( biweekly samples for E. coli, and 24 regular samples for Cryptosporidium plus 2 spiked samples).

Modeled Uncertainty Parameters As noted throughout this EA, EPA recognizes that there is variability among many of the input parameters to the LT2ESWTR cost model ( e. g., plants per system, population served, flow per population, labor rates, occurrence distributions). In most cases, there is insufficient information to fully characterize Economic Analysis for the LT2ESWTR Proposal 6 5 June 2003 the distribution of variability on a national scale. EPA believes that mean values for the various input parameters are adequate to generate EPA's best estimate of national costs for the rule.

EPA also recognizes that there is uncertainty in the national cost estimates, and has characterized the uncertainty around the mean unit technology costs ( as described in section <IP_ADDRESS>) in the LT2ESWTR cost model. Thus, national costs of treatment ( initial capital and operational and maintenance ( O& M)) are presented with confidence bounds in this EA. Another dimension of uncertainty is reflected in the presentation of costs separately for each of the three modeled occurrence distributions.

6.2 Summary of the National Costs of the LT2ESWTR This section presents estimates of the number of systems expected to incur costs as a result of the LT2ESWTR and the national cost of the rule. Costs are broken out in several ways, including by type of system or plant subject to rule provisions, system size, and nature of cost ( one time or annual). All costs presented in this section are for the Preferred Regulatory Alternative for the LT2ESWTR. Cost estimates for the other regulatory alternatives are presented in section 6.13.

Systems Subject to Rule Provisions and Activities The LT2ESWTR applies to all surface water and ground water under the direct influence of surface water ( GWUDI) systems that are classified as community water systems ( CWSs), nontransient noncommunity water systems ( NTNCWSs), or transient noncommunity water systems ( TNCWSs), as described in Chapter 4. Unfiltered and filtered systems are subject to different rule provisions, as are systems with uncovered finished water reservoirs. It is estimated that all unfiltered systems will add treatment to meet rule requirements, and all systems with uncovered finished water reservoirs will cover their reservoirs or treat the discharge to inactivate viruses. See Chapter 4, sections 4.4 and 4.6 for baseline numbers of unfiltered systems and uncovered finished water reservoirs subject to the rule.

Exhibit 6.2 shows the estimated number of systems and plants that are subject to rule implementation, source water monitoring, treatment, and benchmarking costs. All nonpurchased plants will incur rule implementation costs. Plants achieving 5.5 log treatment of Cryptosporidium will not incur treatment costs nor, possibly, source water monitoring costs, depending on when they meet the 5.5 log treatment with respect to LT2ESWTR promulgation.

EPA assumes no unfiltered plant currently achieves 2 log inactivation of Cryptosporidium as required by the LT2ESWTR; therefore, all unfiltered plants will incur costs for adding treatment. Filtered plants with source water monitoring results of 0.075 oocysts/ L or greater will be required to provide additional treatment for Cryptosporidium. All systems with uncovered finished reservoirs must cover or treat the effluent. Purchased systems do not have direct treatment costs and, thus, are not included in Exhibit 6.2 ( unless they have uncovered reservoirs; however EPA recognizes that they will likely incur indirect costs through rate increases by the seller). Economic Analysis for the LT2ESWTR Proposal 6 6 June 2003 Dataset Initial E. Coli Monitoring Initial Crypto Monitoring Future E. coli Monitoring Future Crypto Monitoring A B C D E F G < 10,000 5,682 5,792 2,016 5,122 1,782 2,251 32 > 10,000 1,384 1,774 1,774 1,273 1,273 733 106 Total 7,066 7,565 3,789 6,395 3,056 2,984 138 < 10,000 1,295 5,409 1,209 1,463 > 10,000 1,774 1,453 1,453 481 Total 3,069 6,862 2,662 1,944 < 10,000 1,575 5,347 1,454 1,768 > 10,000 1,774 1,386 1,386 578 Total 3,349 6,733 2,840 2,346 Systems with Uncovered Reservoirs Nonpurchased Systems and Plants System Size ( population served) Systems Incurring Implementation Costs Source Water Monitoring  Plants Plants Adding Treatment ICR Same as ICR ICRSSL ICRSSM Same as ICR Exhibit 6.2 Number of Systems and Plants Expected to Incur Costs, Preferred Alternative Note: Detail may not add to totals due to independent rounding. Plants adding treatment in column F include purchased unlinked plants ( see section 4.3.2). Sources: [ A] Appendix D, Exhibit D. 4, column A. [ B] Appendix D, Exhibit D. 4, column D. [ C] ICR   Appendix D, Exhibit D. 4, column F; ICRSSL   Appendix D, Exhibit D. 6, column F; ICRSSM   Appendix D, Exhibit D. 5, column F. [ D] ICR   Appendix D, Exhibit D. 4, column I; ICRSSL   Appendix D, Exhibit D. 6, column I; ICRSSM   Appendix D, Exhibit D. 5, column I. [ E] ICR   Appendix D, Exhibit D. 4, column J; ICRSSL   Appendix D, Exhibit D. 6, column J. [ F] ICR   Appendix G, Exhibits G. 37 G. 39, column A; ICRSSL   Appendix G, Exhibit G. 43 G. 45, column A; ICRSSM   Appendix G, Exhibit G. 49 G. 51, column A. All include Exhibit 4.5, column C. [ G] Exhibit 4.22 and assuming one reservoir per system.

One Time Activity Costs Total national costs incurred by PWSs include costs for rule implementation, E. coli and Cryptosporidium monitoring, and adding treatment. Implementation costs arise from reading the rule and training employees on its provisions. E. coli and Cryptosporidium monitoring costs include laboratory sample analysis and labor for collecting the samples. Monitoring costs are incurred at two stages   initial monitoring and future reassessment of bin assignment. Treatment costs represent the capital infrastructure requirement ( O& M costs are continuous and not included in one time activity costs).

State/ Primacy Agency costs include those associated with rule implementation, E. coli monitoring, Cryptosporidium monitoring, benchmarking, and future monitoring for bin reclassification. Costs associated with rule implementation are attributable to regulation adoption and program development; training State or Primacy Agency staff, and PWS staff; providing technical assistance; and updating the data management system. E. coli and Cryptosporidium monitoring activities that generate one time costs for States or other Primacy Agencies include analyzing PWS monitoring reports, making determinations based on the reports, responding to PWSs, and monitoring recordkeeping, which includes data entry of results and decisions. These costs are also expected to be small because States will gain Primacy after medium and large systems complete their initial monitoring ( EPA is managing the data collection for medium and large systems directly). Economic Analysis for the LT2ESWTR Proposal 6 7 June 2003 Exhibit 6.3 summarizes the estimated total initial capital and one time costs of the LT2ESWTR, which include costs of rule implementation and all monitoring activities. This summary exhibit ( and Exhibits 6.4a and 6.4b) contain costs derived from ICR and ICRSSL occurrence distributions to show the estimated range of costs. The remainder of exhibits show costs for all three occurrence distributions ( ICR, ICRSSL, and ICRSSM). Economic Analysis for the LT2ESWTR Proposal 6 8 June 2003 Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR A B C D E = A + C F = B + D G H I J K = G + I L = H + J Treatment Mean $ 68.72 $ 122.30 $ 951.14 $ 1,469.50 $ 1,019.86 $ 1,591.80 $ 45.49 $ 132.02 $ 643.23 $ 1,597.51 $ 688.72 $ 1,729.52 Treatment Uncertainty Bound [ 2] $ 59.87 $ 135.98 $ 805.46 $ 1,690.02 $ 865.33 $ 1,826.00 $ 39.48 $ 146.63 $ 542.26 $ 1,840.04 $ 581.74 $ 1,986.67 Uncovered Reservoirs Mean $ 0.07 $ 0.07 $ 64.28 $ 64.28 $ 64.35 $ 64.35 $ 0.07 $ 0.07 $ 64.28 $ 64.28 $ 64.35 $ 64.35 Uncovered Reservoirs Uncertainty Bound [ 2] $ 0.05 $ 0.08 $ 52.09 $ 76.56 $ 52.15 $ 76.65 $ 0.05 $ 0.08 $ 52.09 $ 76.56 $ 52.15 $ 76.65 Implementation $ 1.23 $ 1.23 $ 0.33 $ 0.33 $ 1.56 $ 1.56 $ 1.23 $ 1.23 $ 0.33 $ 0.33 $ 1.56 $ 1.56 Monitoring $ 28.90 $ 39.05 $ 26.88 $ 26.88 $ 55.78 $ 65.93 $ 21.67 $ 42.07 $ 26.88 $ 26.88 $ 48.55 $ 68.95 Future Monitoring $ 26.99 $ 34.54 $ 22.01 $ 19.29 $ 49.01 $ 53.83 $ 20.46 $ 37.02 $ 23.80 $ 18.55 $ 44.26 $ 55.57 Benchmarking $ 0.02 $ 0.06 $ 0.05 $ 0.08 $ 0.08 $ 0.14 $ 0.02 $ 0.06 $ 0.03 $ 0.09 $ 0.05 $ 0.15 State Implementation $ 6.68 $ 6.68 $ 6.68 $ 6.68 State Monitoring $ 10.45 $ 10.45 $ 10.45 $ 10.45 State Benchmarking $ 0.04 $ 0.07 $ 0.03 $ 0.08 $ 1,207.79 $ 1,794.80 $ 864.63 $ 1,937.30 System [ 3] $ 125.93 $ 197.24 $ 1,064.70 $ 1,580.37 $ 1,190.63 $ 1,777.60 $ 88.93 $ 212.47 $ 758.55 $ 1,707.63 $ 847.48 $ 1,920.10 $ 17.17 $ 17.20 $ 17.15 $ 17.20 Total Total Serving < 10k Range of Occurrence Means [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$)

Serving < 10k Serving > 10K Serving > 10K Bounds of Occurrence Range [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$)

Type of Cost TOTALS National ( System + State)

State/ Primacy Agency [ 4] Exhibit 6.3 Initial Capital and One Time Nominal Costs, Preferred Alternative ($ Millions, 2000$)

Notes: Detail may not add to totals due to independent rounding. [ 1] The ICR ( highest occurrence) and ICRSSL ( lowest occurrence) represent the ranges of occurrence means for all three data sets. The bounds of occurrence range are the 5th percentile of the ICRSSL data set and the 95th percentile of the ICR data set. Appendix O ( page O 1) describes the cost distributions derived from both the ranges and bounds of occurrence. [ 2] The Treatment Uncertainty Bound and Uncovered Reservoirs Uncertainty Bound represent the 5th percentile ( shown in the ICRSSL columns) and 95th percentile ( shown in the ICR columns) of " Range of Occurrence Means" and " Bounds of Occurrence Range." Appendix O ( Exhibit O. 1) describes these cost distributions, labeled as " low" and " high." [ 3] Total system cost is the sum of treatment mean, uncovered reservoir mean, implementation, monitoring, future monitoring, and benchmarking. [ 4] Total State/ Primacy Agency cost is the sum of State implementation, State monitoring, and State benchmarking. Sources: All data from Appendix O, and from Alternative A3. Implementation, Monitoring, and Benchmarking data from Exhibit O. 3a. Treatment and Uncovered Reservoir data from Exhibit O. 4a, ` Range of Occurrence Means' uses ICRSSL and ICR rows, and ` Bounds of Occurrence Range' uses Low and High rows. " Treatment Mean": ( All columns from Exhibit O. 4a, A3, Row Mean; Listed in order of ICRSSL, ICR, Low, and High) [ A], [ B], [ G], and [ H]  Sum of columns A and C [ C], [ D], [ I], and [ J]  Sum of columns G and I " Treatment Uncertainty Bound": ( All columns from Exhibit O. 4a, A3, Row 5th and 95th; Listed as ICRSSL, ICR, Low, and High, respectively) [ A], [ B], [ G], and [ H]  Sum of columns A and C [ C], [ D], [ I], and [ J]  Sum of columns G and I " Uncovered Reservoirs Mean": ( All columns from Exhibit O. 4a, A3, Row Mean; Listed as ICRSSL, ICR, Low, and High, respectively) [ A], [ B], [ G], and [ H]  Column E [ C], [ D], [ I], and [ J]  Column K " Uncovered Reservoirs Uncertainty Bound": ( All columns from Exhibit O. 4a, A3, Row 5th and 95th; Listed as ICRSSL, ICR, Low, and High, respectively) [ A], [ B], [ G], and [ H]  Column E [ C], [ D], [ I], and [ J]  Column K State data from Exhibit O. 5a. Economic Analysis for the LT2ESWTR Proposal 6 9 June 2003 Annualized Costs Exhibits 6.4a b display annualized costs for systems and States or other Primacy Agencies at 3 and 7 percent discount rates. The present values of implementation, monitoring ( E. coli and Cryptosporidium), benchmarking, compliance reporting, capital, and O& M cost ( treatment and uncovered finished reservoir costs include O& M) are annualized at the 3 and 7 percent discount rates over 25 years. For States/ Primacy Agencies, implementation, monitoring, benchmarking, and compliance reporting costs are also annualized to estimate total annual State or Primacy Agency costs. PWS and State/ Primacy Agency annualized costs are added together to estimate total national annualized costs for the rule ($ 74 to $ 108 million at a 3 percent discount rate and $ 81 to $ 118 million at a 7 percent discount rate, based on ICRSSL and ICR modeled Cryptosporidium occurrence distributions). Sections 6.3 through 6.8 provide detailed cost estimates for systems and States/ Primacy Agencies according to activity. Economic Analysis for the LT2ESWTR Proposal 6 10 June 2003 Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR A B C D E = A + C F = B + D G H I J K = G + I L = H + J Treatment Mean $ 5.32 $ 9.56 $ 56.79 $ 88.82 $ 62.10 $ 98.38 $ 3.48 $ 10.33 $ 38.40 $ 96.48 $ 41.88 $ 106.81 Treatment Uncertainty Bound [ 3] $ 4.83 $ 10.29 $ 49.69 $ 99.56 $ 54.51 $ 109.85 $ 3.15 $ 11.12 $ 33.46 $ 108.26 $ 36.62 $ 119.38 Uncovered Reservoirs Mean $ 0.01 $ 0.01 $ 5.40 $ 5.40 $ 5.40 $ 5.40 $ 0.01 $ 0.01 $ 5.40 $ 5.40 $ 5.40 $ 5.40 Uncovered Reservoirs Uncertainty Bound [ 4] $ 0.00 $ 0.01 $ 4.60 $ 6.20 $ 4.61 $ 6.20 $ 0.00 $ 0.01 $ 4.60 $ 6.20 $ 4.61 $ 6.20 Implementation $ 0.07 $ 0.07 $ 0.02 $ 0.02 $ 0.09 $ 0.09 $ 0.07 $ 0.07 $ 0.02 $ 0.02 $ 0.09 $ 0.09 Monitoring $ 1.48 $ 1.99 $ 1.48 $ 1.48 $ 2.95 $ 3.46 $ 1.11 $ 2.14 $ 1.48 $ 1.48 $ 2.59 $ 3.62 Future Monitoring $ 1.06 $ 1.34 $ 0.94 $ 0.82 $ 2.00 $ 2.16 $ 0.81 $ 1.44 $ 1.02 $ 0.79 $ 1.82 $ 2.24 Benchmarking $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 State Implementation $ 0.38 $ 0.38 $ 0.38 $ 0.38 State Monitoring $ 0.47 $ 0.47 $ 0.47 $ 0.47 State Benchmarking $ 0.00 $ 0.00 $ 0.00 $ 0.00 State Technology Reporting $ 0.09 $ 0.15 $ 0.07 $ 0.15 $ 73.48 $ 110.50 $ 52.70 $ 119.16 System [ 5] $ 7.92 $ 12.96 $ 64.62 $ 96.54 $ 72.54 $ 109.51 $ 5.48 $ 13.98 $ 46.31 $ 104.17 $ 51.79 $ 118.16 $ 0.94 $ 0.99 $ 0.92 $ 1.00 Type of Cost TOTALS National ( System + State)

State/ Primacy Agency [ 6] Range of Occurrence Means [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$)

Serving < 10k Serving > 10K Total Bounds of Occurrence Range [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$)

Serving < 10k Serving > 10K Total Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR Mean ICRSSL Mean ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR 5th Percentile ICRSSL 95th Percentile ICR A B C D E = A + C F = B + D G H I J K = G + I L = H + J Treatment Mean $ 5.07 $ 9.10 $ 62.26 $ 97.13 $ 67.33 $ 106.24 $ 3.33 $ 9.83 $ 42.10 $ 105.53 $ 45.43 $ 115.36 Treatment Uncertainty Bound [ 3] $ 4.58 $ 9.84 $ 54.11 $ 109.46 $ 58.69 $ 119.30 $ 2.99 $ 10.63 $ 36.44 $ 119.06 $ 39.43 $ 129.69 Uncovered Reservoirs Mean $ 0.01 $ 0.01 $ 6.41 $ 6.41 $ 6.42 $ 6.42 $ 0.01 $ 0.01 $ 6.41 $ 6.41 $ 6.42 $ 6.42 Uncovered Reservoirs Uncertainty Bound [ 4] $ 0.01 $ 0.01 $ 5.41 $ 7.42 $ 5.41 $ 7.43 $ 0.01 $ 0.01 $ 5.41 $ 7.42 $ 5.41 $ 7.43 Implementation $ 0.09 $ 0.09 $ 0.03 $ 0.03 $ 0.12 $ 0.12 $ 0.09 $ 0.09 $ 0.03 $ 0.03 $ 0.12 $ 0.12 Monitoring $ 1.90 $ 2.54 $ 2.08 $ 2.08 $ 3.99 $ 4.63 $ 1.44 $ 2.74 $ 2.08 $ 2.08 $ 3.53 $ 4.82 Future Monitoring $ 0.97 $ 1.22 $ 0.96 $ 0.84 $ 1.93 $ 2.06 $ 0.74 $ 1.31 $ 1.04 $ 0.81 $ 1.78 $ 2.12 Benchmarking $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.00 $ 0.01 State Implementation $ 0.55 $ 0.55 $ 0.55 $ 0.55 State Monitoring $ 0.52 $ 0.52 $ 0.52 $ 0.52 State Benchmarking $ 0.00 $ 0.00 $ 0.00 $ 0.00 State Technology Reporting $ 0.08 $ 0.12 $ 0.06 $ 0.13 $ 80.94 $ 120.67 $ 58.41 $ 130.05 System [ 5] $ 8.04 $ 12.97 $ 71.74 $ 106.50 $ 79.78 $ 119.47 $ 5.61 $ 13.98 $ 51.66 $ 114.86 $ 57.28 $ 128.84 $ 1.15 $ 1.20 $ 1.13 $ 1.21 Serving > 10K Total Type of Cost State/ Primacy Agency [ 6] Range of Occurrence Means [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$) Bounds of Occurrence Range [ 1] with Cost Uncertainty [ 2] ($ Millions, 2000$)

Serving > 10K TOTALS National ( System + State) Serving < 10k Serving < 10k Total Exhibit 6.4a Annualized Total Costs, Preferred Alternative, at 3 Percent ($ Millions, 2000$)

Exhibit 6.4b Annualized Total Costs, Preferred Alternative, at 7 Percent ($ Millions, 2000$) Economic Analysis for the LT2ESWTR Proposal 6 11 June 2003 Notes for 6.4a and 6.4b: Detail may not add to totals due to independent rounding. [ 1] The ICR ( highest occurrence) and ICRSSL ( lowest occurrence) represent the ranges of occurrence means for all three data sets. The bounds of occurrence range are the 5th percentile of the ICRSSL data set and the 95th percentile of the ICR data set. Appendix O ( page O 1) describes the cost distributions derived from both the ranges and bounds of occurrence. [ 2] The Treatment Uncertainty Bound and Uncovered Reservoirs Uncertainty Bound represent the 5th percentile ( shown in the ICRSSL columns) and 95th percentile ( shown in the ICR columns) of " Range of Occurrence Means" and " Bounds of Occurrence Range." Appendix O ( Exhibit O. 1) describes these cost distributions, labeled as " low" and " high." [ 3] Includes O& M and systems technology reporting costs. [ 4] Includes O& M costs. [ 5] Total system cost is the sum of treatment mean, uncovered reservoir mean, implementation, monitoring, future monitoring, and benchmarking. [ 6] Total State/ Primacy Agency cost is the sum of State implementation, State monitoring, State benchmarking, and State technology reporting. Sources: All data from Appendix O, and from Alternative A3. Implementation, Monitoring, and Benchmarking data from Exhibits O. 3d and O. 3e. Treatment and Uncovered Reservoir data from Exhibits O. 4d and O. 4e, ` Range of Occurrence Means' uses ICRSSL and ICR rows, and ` Bounds of Occurrence Range' uses Low and High rows. " Treatment Mean": ( All columns from Exhibits O. 4d and O. 4e, A3, Row  Mean; Listed in order of ICRSSL, ICR, Low, and High) [ A], [ B], [ G], and [ H]  Sum of columns A, B, C, and D. [ C], [ D], [ I], and [ J]  Sum of columns G, H, I, and J. " Treatment Uncertainty Bound": ( All columns from Exhibits O. 4d and O. 4e, A3, Row  5th and 95th; Listed in order of ICRSSL, ICR, Low, and High) [ A], [ B], [ G], and [ H]  Sum of columns A, B, C, and D. [ C], [ D], [ I], and [ J]  Sum of columns G, H, I, and J. " Uncovered Reservoirs Mean": ( All columns from Exhibits O. 4d and O. 4e, A3, Row  Mean; Listed in order of ICRSSL, ICR, Low, and High) [ A], [ B], [ G], and [ H]  Sum of columns E and F [ C], [ D], [ I], and [ J]  Sum of columns K and L. " Uncovered Reservoirs Uncertainty Bound": ( All columns from Exhibits O. 4d and O. 4e, A3, Row  5th and 95th; Listed in order of ICRSSL, ICR, Low, and High) [ A], [ B], [ G], and [ H]  Sum of columns E and F [ C], [ D], [ I], and [ J]  Sum of columns K and L. State data from Exhibits O. 5d and O. 5e.

6.3 Rule Implementation Costs This section presents the estimated costs for PWSs and States/ Primacy Agencies to perform administrative activities associated with the LT2ESWTR. These cost estimates are the same for all regulatory alternatives.

6.3.1 PWSs All nonpurchased surface water and GWUDI systems subject to the LT2ESWTR ( including filtered and unfiltered systems) will incur one time costs that include time for staff to read the rule and become familiar with its provisions and for training employees on rule requirements. The technical and managerial labor rates, as presented in section 6.1.1, were used along with estimates of labor hours to generate rule implementation costs for all systems. Labor rates used to estimate implementation costs vary by activity and system size. Costs for systems serving up to 1,000 people are based on only the Economic Analysis for the LT2ESWTR Proposal 6 12 June 2003 System Size ( population served) 3% 7% A B £ 10,000 1,155,166 $ 1,070,413 $ > 10,000 332,404 $ 332,404 $ Total 1,487,570 $ 1,402,817 $ technical rate ($ 24.96 per hour). For those systems serving at least 1,000 people, costs are based on an assumed 80/ 20 split between technical and managerial labor rates ( the respective rates are $ 24.96 per hour and $ 44.91 per hour). Labor hour estimates are based on EPA's experience with previous rules.

Exhibit 6.5 summarizes the estimated implementation costs for PWSs to comply with the LT2ESWTR. Implementation costs are the same for all rule options. In Appendix D, Exhibit D. 10 provides detailed estimates of hours and calculations for system implementation costs by system size ( Appendix D costs are undiscounted; discounted costs are shown in Appendix O).

Exhibit 6.5 Present Value of System Implementation Total Costs by System Size, Preferred Alternative ( 2000$)

Note: Detail may not add to totals due to independent rounding. Large systems' implementation costs entirely occur in year 0, therefore, no discount is applied. Sources: [ A] Appendix O, Exhibit O. 3b, Rows  A3, ICR and ICRSSL; Columns A and G. [ B] Appendix O, Exhibit O. 3c, Rows  A3, ICR and ICRSSL; Columns A and G.

6.3.2 States and Other Primacy Agencies State and other Primacy Agency implementation activities include:

° Adopting the regulation and developing the program ° Training State or other Primacy Agency staff ° Training PWS staff and providing technical assistance ° Updating the data management system To estimate implementation costs to States/ Primacy Agencies, the number of full time equivalent employees ( FTEs) per activity is multiplied by the number of labor hours per FTE, the cost per labor hour, and the number of States/ Primacy Agencies.

EPA estimates the number of FTEs required per activity based on previous experience with other rules. In estimating State/ Primacy Agency costs, a labor rate of $ 28.89 is assumed ( see section 6.1.1). The number of States and territories is estimated as the sum of the 50 states, six territories ( American Samoa, Commonwealth of the Northern Marianas, Guam, Palau, Puerto Rico, and the Virgin Islands), and the Navajo Nation. Economic Analysis for the LT2ESWTR Proposal 6 13 June 2003 Appendix D ( Exhibit D. 11) presents estimates of hours and calculations of implementation costs by activity. Based on the labor rate and FTE estimates, total State/ Primacy Agency present value costs at 3 percent for rule implementation are $ 6.6 million ( Exhibit O. 5b, column A).

6.4 Source Water Monitoring for Initial Bin Classification Costs 6.4.1 PWSs Source water monitoring costs are estimated on a per plant basis. Purchased plants are assumed not to treat source water and not to have any monitoring costs, as with rule implementation activities. There are three types of monitoring that plants may be required to conduct   turbidity, E. coli, and Cryptosporidium. Source water turbidity is a water quality parameter that most plants measure frequently for operational control. Also, to meet the SWTR, IESWTR, and LT1ESWTR requirements, most water systems have turbidity analysis equipment in house and their operators are experienced in its use. Thus, EPA assumes that the incremental turbidity monitoring burden associated with the LT2ESWTR is negligible.

For large and medium systems, all are required to conduct monthly E. coli and Cryptosporidium monitoring for 2 years to determine initial bin classification. If systems achieve 5.5 log Cryptosporidium removal/ inactivation prior to rule promulgation, then they are not required to conduct source water monitoring. ( See Exhibits 4.5 and 4.11 for the baseline number of unfiltered and filtered plants conducting monitoring, respectively.)

Small systems, except those achieving at least 5.5 log Cryptosporidium removal/ inactivation, must conduct bi weekly E. coli monitoring for 1 year. Systems exceeding the following levels must monitor semi monthly for Cryptosporidium.

° Annual mean > 10 E. coli/ 100 mL for lakes and reservoirs ° Annual mean > 50 E. coli/ 100 mL for flowing streams To estimate source water monitoring costs for small systems, this EA assumes all systems ( except those achieving 5.5 log treatment) will conduct E. coli monitoring and only those predicted to require additional treatment ( from the binning prediction discussed in section 4.5.4) will monitor Cryptosporidium in their source water ( see Appendix D, Exhibit D. 4 for a calculation of plants conducting E. coli and Cryptosporidium monitoring). EPA will continue to investigate the use of a surrogate for determining source water microbial quality, in order to reduce the cost burden on these systems. If a reliable indicator is identified, EPA will issue guidance for system monitoring. The costs in this chapter may, therefore, be an overestimate of actual costs.

From the modeled Cryptosporidium occurrence distributions, EPA estimated the percentage of plants that would fall into treatment bins for each rule option. Exhibit 6.6 presents the annualized monitoring costs based on the modeled Cryptosporidium occurrence distributions. Appendix D provides an explanation of how these costs are developed. Economic Analysis for the LT2ESWTR Proposal 6 14 June 2003 System Size ICR ( 3%) ICR ( 7%) ICRSSL ( 3%) ICRSSL ( 7%) ICRSSM ( 3%) ICRSSM ( 7%) A B C D E F £   10K 34.6 $ 29.7 $ 25.7 $ 22.2 $ 29.2 $ 25.1 $ > 10k 25.7 $ 24.3 $ 25.7 $ 24.3 $ 25.7 $ 24.3 $ Total 60.3 $ 54.0 $ 51.4 $ 46.5 $ 54.9 $ 49.4 $ £   10K 4.5 $ 3.8 $ 4.5 $ 3.8 $ 4.5 $ 3.8 $ > 10k  $  $  $  $  $  $ Total 4.5 $ 3.8 $ 4.5 $ 3.8 $ 4.5 $ 3.8 $ Systems State/ Primacy Agency 6.4.2 State and Other Primacy Agency Costs Because EPA will manage the data collection for large and medium initial source water monitoring directly, States/ Primacy Agencies are not predicted to incur any costs for these activities. They will, however, incur costs from the small system initial monitoring requirement. The delayed start of small system monitoring will allow some States to assume Primacy for small system monitoring. To estimate State/ Primacy Agency costs, the number of FTEs required per activity is multiplied by the number of labor hours per FTE, the State/ Primacy Agency labor hour cost, and the number of States or Primacy Agencies. Exhibit 6.6 presents the estimated total cost incurred by States/ Primacy Agency for initial source water monitoring ( see Appendix D, Exhibit D. 17, for the derivation of costs).

Exhibit 6.6 Initial Source Water Monitoring Present Value Costs at 3 and 7 Percent, Preferred Alternative, by System Size ($ Millions, 2000$)

Notes: Detail may not add to totals due to independent rounding. Includes laboratory costs, labor costs, and reporting costs. There are no State costs for large systems ( EPA assumes no State will obtain Primacy before or during large system source water monitoring). Sources: [ A] and [ C] Systems data from Appendix O, Exhibit O. 3b; Rows  A3, ICR and ICRSSL; Columns B, C, and H. State data from Appendix O, Exhibit O. 5b; Rows  A3, ICR and ICRSSL; Columns B and C. [ B] and [ D] Systems data from Appendix O, Exhibit O. 3c; Rows  A3, ICR and ICRSSL; Columns B, C, and H. State data from Appendix O, Exhibit O. 5b; Rows  A3, ICR and ICRSSL; Columns B and C.

6.5 Treatment Costs As shown in Chapter 4, filtered plants make up the majority of surface water and GWUDI plants subject to the LT2ESWTR. Costs of treatment associated with these plants make up the majority of the costs associated with the LT2ESWTR. This section reviews the cost methodology and total costs for the Preferred Regulatory Alternative as follows:

6.5.1 Discusses the technologies and describes how plant unit costs ($/ plant) are derived.

6.5.2 Presents the compliance and technology selection forecasts.

6.5.3 Describes how total capital investment and annualized costs are estimated for each size category and rule option.

Treatment costs are calculated by estimating the number of plants that will be adding treatment technologies, then multiplying these estimates by the unit costs ($/ plant) of the selected technologies. Although individual information is not available on every plant, assumptions are made on the percentages Economic Analysis for the LT2ESWTR Proposal 6 15 June 2003 of plants nationwide that will select each technology. Capital improvement costs are converted to present values and are then annualized using the discount rates presented in section 6.1.1. Exhibit 6.7 provides an overview of the methodology used to generate national treatment costs. Economic Analysis for the LT2ESWTR Proposal 6 16 June 2003 1 Baseline information is discussed in Chapter 4. 2 Capital unit costs, annual O& M costs, and number of plants selecting technologies are also used in the derivation of household cost distributions. See section 6.9 and Appendix J for further discussion. Average Daily Flows per Plant 1 Technology Cost Equations ( O& M) Point Estimates of Annual O& M Costs ($/ plant) 2 Calculations discussed in section 6.5.1 Cost Uncertainty of +/ 15% by Technology Total Annual O& M Costs Total Capital Costs Present Value of Costs Annualized Value of Costs Calculations discussed in section 6.5.3 Number of Plants Selecting Technologies 2 Compliance Treatment Forecasts Baseline Number of Plants 1 Design Flows per Plant 1 Technology Cost Equations ( Capital) Point Estimates of Capital Unit Costs ($/ plant) 2 Calculations discussed in section 6.5.1 Calculations discussed in section 6.5.2 Cost Uncertainty of +/ 30% by Technology Technology Selections Compliance Schedule Discount Rates Shading scheme:

Inputs Data produced from inputs Results Exhibit 6.7 Methodology for Estimating Treatment Costs Economic Analysis for the LT2ESWTR Proposal 6 17 June 2003 6.5.1 Toolbox Options and Unit Costs Under the LT2ESWTR, systems will have a " toolbox" of treatment and management options to select from to meet their bin requirements. This section describes those options that plants will most likely select to meet the LT2ESWTR requirements and the typical conditions under which the selected technologies may be installed. The derivation of capital unit costs ( cost per plant) and annual O& M unit costs ( annual cost per plant) for each technology is also discussed. Unit cost data for each technology for CWS plants are presented in Appendix E.

Exhibit 6.8 summarizes the technologies considered for estimating benefits and costs of the LT2ESWTR. EPA recognizes that, to meet all or part of the LT2ESWTR requirements, some plants may select toolbox options that are not listed in this exhibit. The following section briefly describes each of the options not included and provides reasons why they were not considered. Section <IP_ADDRESS> discusses the technologies that were considered for this EA.

<IP_ADDRESS> Toolbox Options Not Considered Changing Sources Plants may avoid adding treatment by connecting to a nearby water system or changing to a source of water that has lower Cryptosporidium concentrations. EPA estimates that approximately 22 percent of small systems are located in metropolitan areas where distances between potential connecting water systems may allow interconnection at reasonable costs ( USEPA 2000f). Changing source water may also be possible, although EPA has no information on the number of systems that may have less contaminated sources available to them. Even if EPA could estimate how many systems might choose these options, the costs for both are highly variable. Costs for connecting to another system involve costs for new pipes and facilities, and for those consolidating with another water system, costs associated with merging management capabilities as well. Costs for changing to another source water would depend on the new source and the system. Costs could include such items as drilling a new well, installation of new piping, and new treatment facilities or adaptation of existing ones to handle different source quality. The costs for both of these options would be highly system dependent and are difficult to predict. For these reasons, these toolbox options were not considered in these cost estimates.

Intake Changes Relocating the intake and managing the timing or level of withdrawal are all toolbox options. The purpose of these options is to change the location or timing of withdrawal of water from the source in order to draw from those parts of the source and at those times when Cryptosporidium concentrations are lower. These options may cost little compared to adding treatment, especially for systems drawing from reservoirs. The costs would depend on the existing intake structures and the nature of the source. It is unknown how many systems could likely take advantage of such strategies and how much reduction they might achieve. Because of this uncertainty, these options were not considered in this LT2ESWTR analysis.

Performance Studies Some plants may have filtration processes that achieve a higher level of Cryptosporidium removal across their treatment train than assumed by the LT2ESWTR. Plants may conduct performance Economic Analysis for the LT2ESWTR Proposal 6 18 June 2003 studies of their overall treatment process to demonstrate to the State that the required level of Cryptosporidium treatment is being achieved. It is unknown, but likely very low, as to the number of systems that could demonstrate a higher level of treatment on a consistent basis. Also the cost of such studies could be higher than implementing another toolbox option.

The toolbox options that were omitted from the costs analysis may be less expensive than the technologies considered and, therefore, the costs presented here may be overestimated. Cost uncertainties for this analysis are summarized in section 6.12.

<IP_ADDRESS> Technologies Considered for the LT2ESWTR Cost Analysis Exhibit 6.8 shows technologies that were included in the cost analysis for the LT2ESWTR. The second column summarizes the condition( s) under which the technology use is constrained in this EA. Plants may be constrained from installing a technology for various reasons. During the Small Surface Water Delphi process, industry experts and the Technical Work Group ( TWG) identified limitations in the use of several technologies. A more extensive explanation of these groups and their conclusions can be found in the Stage 2 DBPR Economic Analysis ( USEPA 2002b).

The third column in Exhibit 6.8 identifies the conditions for which cost estimates are developed. To capture the range of costs, many technologies are evaluated over a range of possible influent water qualities and operating conditions. For the purposes of estimating the costs of the LT2ESWTR, the TWG selected the water quality and operating parameters to capture the " normal" circumstances under which plants may use the technology. EPA does not assume that all systems would operate under these conditions, but that the cost equations generate capital and O& M costs that are typical for the range of system types and sizes. While these assumptions simplify the true variety of operating conditions, EPA believes they capture reasonable estimates of national costs.

EPA recognizes that similar systems may experience different capital or O& M costs due to site specific factors. Inputs to unit costs such as water quality conditions, labor rates, and land costs can be highly variable and increase the system to system variability in unit costs. In developing the unit cost estimates, there is insufficient information to fully characterize what the distribution of this variability will be on a national scale for all of the treatments and all possible conditions.

Instead, the unit costs are developed as average or representative estimates of what these unit costs will be nationally. That is, in developing unit costs, design criteria for the technologies are selected to represent typical, or average, conditions for the universe of systems. As a result, there is uncertainty inherent in these unit cost estimates reflecting the fact that they are based on independent assumptions with supporting data and vendor quotes, where available, rather than on an detailed aggregation of State, regional, or local estimates based on actual field conditions. In this EA, uncertainty in these national average unit costs factors is characterized as follows:

° Capital costs: +/ 30%

° O& M costs: +/ 15%

These estimates were developed by EPA and reflect information presented by the National Drinking Water Advisory Council ( 2001) in their review of the national cost estimation methodology for Economic Analysis for the LT2ESWTR Proposal 6 19 June 2003 the Arsenic Rule. EPA believes that the uncertainties in capital and O& M costs for a given technology are independent of one another, and that uncertainties across all technologies are independent.

The final column in Exhibit 6.8 provides the source for the unit costs. Many unit costs are derived from equations and other information in the Technology and Cost document ( USEPA 2003a). For other technologies, unit costs were provided by the FACA committee and its TWG in June 2000 as part of the Stage 2 M DBP negotiation process or are estimated from earlier EPA rules.

In most cases, technology unit costs are specified for single average daily and design flows for nine system size categories. In reality, there will be a range of unit costs for a category, relative to the range of flows. EPA believes, however, that using a mean unit cost ($/ plant) per category, derived from mean flow data, provides an accurate representation of total national costs. For technologies that are a combination of two or more unit processes ( e. g., cartridge filters with ozone), the technology unit costs are simply assumed to be the sum of the costs for each unit process. This may result in the overestimation of certain unit costs since some economies of scale are expected when such " combined" technologies are implemented. Economic Analysis for the LT2ESWTR Proposal 6 20 June 2003 Exhibit 6.8 Advanced Technologies Considered for the LT2ESWTR Technology Constraints [ 1] Water Quality and Operational Parameters Source of Unit Cost [ 2]

Bag Filtration Not practical for systems serving more than 10,000 people Bag replacement four times per year Figures D 19 and D 20 from T& C Document Cartridge Filtration Not practical for systems serving more than 10,000 people Cartridge replacement twice per year Figures D 21 and D 22 from T& C Document Chlorine Dioxide ( ClO2) Not practical for systems serving 500 people or fewer Concentration = 1.25 mg/ l No additional contact basins Figures D 5 and D 6 from T& C Document Combined Filter Performance None None Figures D 30 and D 31 from T& C document Individual Filter Performance None None Not Costed Bank Filtration ( In Bank) Not practical for systems serving fewer than 10,000 people None Figure D 23 from T& C document Microfiltration/ Ultrafiltration ( MF/ UF) None 0.3 NTU, 10 ° C, disposal of reject stream to sewer Figures D 17 and D 18 from T& C Document Ozone ( O3) Not practical for systems serving 500 people or fewer Concentration and contact time to achieve 0.5, 1.0, and 2.0 log of Cryptosporidium inactivation based on 3 dimensional regressions of concentration, flow, and cost. Concentration is the mean concentration from SWAT analysis. Figure D 11 through Figure D 16 from T& C Document Secondary Filter ( SF) Not practical for systems serving 500 people or fewer None Figures D 24 and D 25 from T& C document Economic Analysis for the LT2ESWTR Proposal 6 21 June 2003 Exhibit 6.8 ( continued) Advanced Technologies Considered for the LT2ESWTR Technology Constraints [ 1] Water Quality and Operational Parameters Source of Unit Cost [ 2]

UV [ 3] None Median water quality parameters: UV 254 = 0.051cm 1, turbidity = 0.1 NTU, alkalinity = 60mg/ L as CaCO3, hardness = 100mg/ L as CaCO3 Figures D 7 and D 8 from T& C Document Watershed Control ( WC) Not practical for systems serving 10,000 people or fewer None Figures D 28 and D 29 from T& C document [ 1] Constraints identified by the TWG and the Small Surface Water Delphi Group. [ 2] Unit costs ($/ plant) for CWSs provided in Appendix E for each technology shown. [ 3] Patent fee of $ 0.015/ 1,000gallons included for household costs, see section 6.10 for rationale. Economic Analysis for the LT2ESWTR Proposal 6 22 June 2003 6.5.2 Compliance Forecast and Technology Selection Three key inputs are required to estimate the technologies plants will add to comply with LT2ESWTR:

1. The percent of plants that must make a treatment change to meet the LT2ESWTR requirements.

2. The treatment technologies these plants have in place prior to implementation of the rule.

3. The treatment technologies these plants are predicted to select to comply with the rule.

These inputs, coupled with baseline data presented in Chapter 4, provide an estimate of the total number of filtered plants using specific technologies to meet the requirements of the LT2ESWTR. Input 1 above is largely a result of system " binning," the treatment bin into which the system is classified based on initial source water Cryptosporidium monitoring. The ICR, ICRSSL, and ICRSSM modeled Cryptosporidium occurrence distributions are used to determine the binning for all size systems, resulting in three possible binning scenarios for each rule alternative.

The second input accounts for plants that already have some of the toolbox technologies in place and will be able to obtain credit for Cryptosporidium treatment without any additional costs or obtain a portion of their required treatment credit. Therefore, the existing technologies cannot be considered as a possible technology selection for these plants. To accommodate the two treatment baseline scenarios, two separate technology selection forecasts are used for plants with existing toolbox technologies and those without. These two forecasts follow the same methodology as described below, with the former omitting the existing technologies from the selection process.

The overall methodology used to develop the technology selection forecast in the third input is based on " least cost." EPA assumes that the cost of the rule is best estimated by assuming that drinking water plants will select the least expensive technology or combination of technologies available to meet the treatment requirements of a given action bin. The technology selections are constrained by maximum use percentages, which recognize that all plants may not be able to implement certain technologies because of site specific conditions. Appendix F details the methodology for developing the technology selection forecast and the assumptions involved.

Technology selection results ( i. e., the number of plants adding specific technologies) are derived using mean distributions drawn from models of the ICR, ICRSSL, and the ICRSSM Cryptosporidium occurrence data sets. Exhibit 6.9 shows the selections for the Preferred Alternative, derived from the ICR ( high) and ICRSSL ( low) occurrence distributions. Appendix G provides results for all regulatory alternatives and sensitivity analyses. Many plants end up selecting technologies that achieve greater removal than required by their bin assignments. In many cases, the least costly technology results in higher levels of Cryptosporidium inactivation or removal than required for that bin ( this is always the case when UV is selected). Although direct filtration plants have 0.5 log higher bin requirements than conventional and other filtration plants, no additional treatment is estimated for them. The 0.5 log higher requirement for those plants are adequately addressed by the higher levels of Cryptosporidium treatment achieved by the selected technologies. Economic Analysis for the LT2ESWTR Proposal 6 23 June 2003 ICR ICRSSL ICRSSM ICR ICRSSL ICRSSM Bag Filter 1.0 Log 1,545 1,236 1,441 O3 0.5 Log 26 17 21 Cartridge Filter 2.0 Log 190 17 52 O3 1.0 Log 24 18 21 CLO2 0.5 Log 77 60 70 O3 2.0 Log 9 1 2 Combined Filter Performance 0.5 Log 16 12 14 Secondary Filter 1.0 Log 0 0 0 In bank Filtration 1.0 Log 5 3 4 UV 2.5 Log 998 490 632 MF/ UF 2.5 Log 10 3 5 WS Control 0.5 Log 0 0 0 Total Plants Selecting Technologies [ 2] 2,893 1,852 2,255 Technology Selections [ 1] Data Set Data Set Technology Selections [ 1] Exhibit 6.9 Technology Selection Forecast for Filtered Plants Notes: [ 1] Selection includes non purchased plants in CWSs, NTNCWSs, and TNCWSs adding treatment and purchased plants that could not be linked with their sellers. [ 2] Some plants select more than one technology to meet the bin requirements: therefore, total technologies selected is more than the number of plants adding treatment. Source: Appendix G. ICR Data from Exhibits G. 37 39. ICRSSL Data from Exhibits G. 43 45. ICRSSM Data from Exhibits G. 49 51.

6.5.3 Capital and Annual Costs To estimate the treatment costs for filtered plants, the technology unit costs ( capital and O& M) are multiplied by the number of plants predicted for each technology and size category. The O& M costs are costs that systems incur yearly to maintain system performance. The capital costs are adjusted to account for the life span of the capital equipment ( assumed to be 20 years) that is not included in the time period of this economic analysis ( years 2003 through 2027). Appendix O, Exhibit O. 2 shows the schedule of implementation used to determine when systems will install the equipment. For example, 10 percent of large systems are estimated to begin incurring capital costs for treatment in year 2007. For these systems the capital costs were reduced by a factor of 4/ 20.

The treatment costs for CWS, NTNCWS, and TNCWS plants are calculated separately since each type has different population per system averages, producing different mean flows ( see Exhibit 4.4a) and, thus, different mean plant unit costs. These costs are summed across technologies and size categories to estimate the total treatment costs for LT2ESWTR. They are incorporated into the rule schedule ( Appendix O), converted to 2000 dollars, and annualized using discount rates of 3 and 7 percent. Exhibit 6.10 shows the results for the Preferred Alternative based on the ICR, ICRSSL, and ICRSSM occurrence distributions. Economic Analysis for the LT2ESWTR Proposal 6 24 June 2003 Data Set System Size ( population served) Present Value Capital Costs at 3% Present Value Capital Costs at 7% Annualized O& M Costs at 3% Annualized O& M Costs at 7% Total Annualized Costs at 3% Total Annualized Costs at 7% A B C D E F ICR £ 10,000 $ 76.1 $ 56.0 $ 5.2 $ 4.3 $ 9.6 $ 9.1 > 10,000 $ 1,092.4 $ 868.0 $ 26.1 $ 22.7 $ 88.8 $ 97.1 TOTAL $ 1,168.5 $ 924.0 $ 31.3 $ 26.9 $ 98.4 $ 106.2 ICRSSL £ 10,000 $ 42.8 $ 31.5 $ 2.9 $ 2.4 $ 5.3 $ 5.1 > 10,000 $ 707.1 $ 561.8 $ 16.2 $ 14.0 $ 56.8 $ 62.3 TOTAL $ 749.8 $ 593.3 $ 19.0 $ 16.4 $ 62.1 $ 67.3 ICRSSM £ 10,000 $ 52.6 $ 38.7 $ 3.5 $ 2.9 $ 6.6 $ 6.2 > 10,000 $ 842.4 $ 669.3 $ 19.4 $ 16.9 $ 67.8 $ 74.3 TOTAL $ 894.9 $ 708.0 $ 23.0 $ 19.8 $ 74.4 $ 80.6 Exhibit 6.10 Treatment Costs for Filtered and Unfiltered Plants, Preferred Alternative ($ Millions, 2000$)

Note: Detail may not add to totals due to independent rounding. Sources: Appendix O. [ A] Exhibit O. 4b; Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns A, C, G, and I. [ B] Exhibit O. 4c; Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns A, C, G, and I. [ C] Exhibit O. 4d; Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns B, D, H, and J. [ D] Exhibit O. 4e, Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns B, D, H, and J. [ E] Exhibit O. 4d; Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns A, B, C, D, G, H, I, and J. [ F] Exhibit O. 4e; Rows  Mean, A3, ICR, ICRSSL, and ICRSSM; Columns A, B, C, D, G, H, I, and J.

6.6 Costs of Treatment for Unfiltered Plants As summarized in Chapter 1, the LT2ESWTR requires all unfiltered plants to achieve 2 log Cryptosporidium inactivation if their source water concentration is less than or equal to 1 oocyst per 100 liters, and 3 log inactivation if it is greater than 1 oocyst per 100 liters. UV is the least expensive technology that can achieve the required log inactivation of Cryptosporidium and, therefore, most likely to be installed. However, as with filtered systems, EPA estimated that a small percentage of plants would elect to install a technology more expensive than UV due to the configuration of existing equipment or other factors. Ozone is the next cheapest technology that will meet the inactivation requirements, and therefore, is estimated to be used by plants that cannot use UV. Due to the high concentrations of ozone necessary to inactivate Cryptosporidium, EPA estimated that ozone can achieve only 2.0 log inactivation and all systems that are required to obtain 3.0 log inactivation are assumed to use UV. Although the toolbox lists UV as achieving 2.5 log inactivation, studies have shown that it can achieve much greater inactivation at the standard drinking water dose of 40 mJ/ cm2 used in the cost analysis ( Clancy et al. 2000; Craik et al. 2001). MF/ UF was considered as a substitute for UV in this analysis, but is much more expensive than these technologies, especially for larger systems.

Unit costs for UV and ozone and the conditions under which they can be used are the same as for the filtered plants ( section 6.5). Ozone unit costs are for an ozone concentration that provides 2.0 log of Cryptosporidium inactivation. Economic Analysis for the LT2ESWTR Proposal 6 25 June 2003 All unfiltered plants must meet the requirements of the LT2ESWTR; therefore, the percent of such plants adding technology is 100 percent. The following assumptions were used in developing the technology selection forecast for plants needing 2.0 log Cryptosporidium inactivation:

° 100 percent of very small systems will use UV.

° 90 percent of other plants will be able to install UV ( the least expensive of the two technologies).

° 10 percent of other plants will add ozone.

Consistent with assumptions for filtered systems, very small plants were also assumed to be unable to use ozone. This was because of the high level of operator attention and training required to operate and maintain an ozone system. Because of the high costs for alternatives like MF/ UF for very small plants, the analysis assumes that all these plants would find a way to use UV. EPA believes this to be a reasonable assumption because small plants have less existing infrastructure that might limit their technology selection. Exhibit 6.10 summarizes the present value and annualized treatment costs at 3 and 7 percent discount rates.

6.7 Costs for Benchmarking and Technology Reporting Requirements The benchmarking requirement was introduced in the IESWTR and LT1ESWTR. For the LT2ESWTR, it requires any system proposing a change to its disinfection process to complete an evaluation of the existing process and consult with the State/ Primacy Agency about how the proposed change will affect the current disinfection performance. Estimated costs for both systems and States reflect the time to conduct an evaluation and consult with the State. This EA assumes benchmarking costs will be incurred for only those systems estimated to make changes in treatment and by the States/ Primacy Agencies. The present value of cost at a 3 percent discount rate using the modeled ICR occurrence distribution is estimated to be $ 59,000 and $ 115,000, for States and systems, respectively ( Appendix O, Exhibit O. 3b   systems and Exhibit O. 5b   States). At a 3 percent discount rate using the modeled ICRSSL occurrence distribution the values are $ 32,000 and $ 64,000 for States and systems, respectively. Appendix D, Exhibits D. 25   D. 27 for systems and Exhibits D. 28 for States/ Primacy Agencies, show the derivation of system and States/ Primacy Agency costs for benchmarking.

Systems required to meet additional Cryptosporidium treatment will also have to report compliance monitoring data, depending on the toolbox option implemented. Appendix D, Exhibits D. 21   D. 24 for systems and Exhibits D. 18   D. 20 for States/ Primacy Agencies, show the derivation of system and States/ Primacy Agency costs and total for technology compliance reporting.

6.8 Costs of Treatment for Uncovered Finished Water Reservoirs As part of the LT2ESWTR, systems with uncovered finished water reservoirs have the options to cover the reservoirs, to provide disinfection downstream of the reservoir, or to implement a Stateapproved risk management plan. Disinfection alternatives must achieve at least 4 log of virus inactivation. To develop national cost estimates for systems to comply with this provision of the LT2ESWTR, unit costs for each treatment alternative and the percentage of systems selecting each alternative are Economic Analysis for the LT2ESWTR Proposal 6 26 June 2003 estimated for the inventory of systems having uncovered finished water reservoirs ( presented in Chapter 4). This section describes the methodology for developing the unit costs of reservoir covers and disinfection. The basis for estimating the number of systems that select each alternative is then discussed. A full description of the unit costs, along with assumptions, is presented in Appendix I.

6.8.1 Unit Costs There are two types of reservoir covers   fixed and floating. The unit costs for both types are estimated from information provided in the Uncovered Finished Water Reservoirs Guidance Manual ( USEPA 1999c).

Fixed covers are commonly constructed of concrete, steel, or aluminum. Floating covers are flexible membrane structures generally made of polypropylene or similar material. Unit costs are based on the estimated surface area of each reservoir and the average cost of materials. Appendix I summarizes the unit costs.

Systems have the option to add a disinfectant after the reservoir instead of installing a cover. A review of available disinfection options showed that gas chlorine is the least cost disinfectant that can achieve at least 4 log of virus inactivation ( USEPA 2001d). Unit costs of gas chlorination presented in Appendix I are a function of flow and include the costs of typical process equipment and the chemical building. Note that unit costs for the smallest size category are high due to fixed ( size independent) equipment costs.

6.8.2 Compliance Forecast and Technology Selection EPA conservatively assumed that every system having an uncovered finished water reservoir will install a cover or treat its discharge. Some systems with uncovered finished water reservoirs may be allowed to implement a risk management plan instead of treating or covering. It is quite likely that many systems, perhaps even most, would be able to obtain State approval of a risk management plan. If so, estimated costs could be well below actual costs or even negligible if this approach is widely used. EPA had no basis, however, for making an assumption about how many States could or would take this approach.

The technology selection methodology for the uncovered finished water reservoirs also uses a least cost approach. For systems with reservoir capacities of 5 million gallons ( MG) or less, covering is the least expensive alternative. Although chlorination is the least expensive approach for the remaining systems, the ability of a system to use booster chlorination depends on its current residual disinfectant type. Approximately 50 percent of all surface water systems are predicted to use chloramination following implementation of the Stage 2 DBPR. Adding chlorine to water treated with chloramines can cause quality problems; therefore, a maximum of 50 percent of systems were assumed to add booster chlorination after the reservoir. UV was not considered a practical option because the dose requirements for virus inactivation are high, making the capital and O& M costs higher than for chlorine. The technology selection for uncovered finished water reservoirs is presented in Exhibit 6.11. Economic Analysis for the LT2ESWTR Proposal 6 27 June 2003 Exhibit 6.11 Technology Selection for Uncovered Finished Water Reservoirs Size Category ( MG) Number of Uncovered Reservoirs Floating Cover (%) Booster Chlorination (%)

0 0.1 25 100

0.1 1 7 100

> 1 5 44 100

> 5 10 12 100

> 10 20 10 100

> 20 40 9 50 50 > 40 60 4 50 50 > 60 80 4 50 50 > 80 100 6 50 50 > 100 150 6 50 50 > 150 200 2 50 50 > 200 250 4 50 50 > 250 1,000 4 50 50 > 1,000 1 50 50 Source: Appendix I, Exhibit I. 7.

Because the technology selection is based on least costs, and fixed cover costs are the most expensive treatment option considered, no systems were assumed to install fixed covers. EPA recognizes that some systems may select fixed covers for other reasons, but these incremental costs are not attributable to this rule.

6.8.3 Total Annual Treatment Costs Total annual treatment costs are calculated by multiplying the number of reservoirs in a category by the percent selecting a technology and the unit cost of that technology. Exhibit 6.12 summarizes costs for all reservoirs for each size category. Economic Analysis for the LT2ESWTR Proposal 6 28 June 2003 Capital O& M Total Capital O& M Total   £ 10,000 $ 3,520 $ 1,649 $ 5,169 $ 4,713 $ 1,552 $ 6,264 > 10,000 $ 3,349,320 $ 2,046,425 $ 5,395,745 $ 4,483,927 $ 1,925,203 $ 6,409,129 Total $ 3,352,840 $ 2,048,074 $ 5,400,915 $ 4,488,639 $ 1,926,754 $ 6,415,393 Annualized Cost at 3% Annualized Cost at 7% System Size ( Population Served)

System Size ICR ( 3%) ICR ( 7%) ICRSSL ( 3%) ICRSSL ( 7%) ICRSSM ( 3%) ICRSSM ( 7%) A B C D E F £   10K 23.5 $ 14.3 $ 18.4 $ 11.3 $ 20.7 $ 12.6 $ > 10k 14.4 $ 9.8 $ 16.4 $ 11.2 $ 15.6 $ 10.7 $ Total 37.8 $ 24.1 $ 34.8 $ 22.5 $ 36.3 $ 23.3 $ Exhibit 6.12 Total Annualized Cost for Uncovered Finished Water Reservoirs ( 2000$)

Note: Detail may not add to totals due to independent rounding. Source: Appendix O. Annualized Cost at 3% from Exhibit O. 4d; Row  Mean, A3, ICR; Columns E, F, K and L. Annualized Cost at 7 % from Exhibit O. 4e; Row  Mean, A3, ICR; Columns E, F, K and L.

6.9 Future Source Water Monitoring Six years after initial bin classification, filtered plants will be required to conduct a second round of monitoring to reassess source water conditions for bin assignments. EPA will evaluate new analytical methods and surrogate indicators of Cryptosporidium in the interim. While the costs of monitoring are likely to change in the 6 years following rule promulgation, it is difficult to predict how they will change. In the absence of any other information, it was assumed that the laboratory costs would be the same as for the initial monitoring. All plants that conducted initial monitoring were assumed to conduct future monitoring as well, except for those systems that achieve 5.5 log Cryptosporidium treatment credit. Exhibit 6.13 shows the costs for future monitoring. Costs vary among the Cryptosporidium occurrence data sets because the numbers of plants that add technologies and achieve 5.5 log treatment credit differ. Also, different numbers of small plants are triggered into monitoring for Cryptosporidium. Appendix D, Exhibits D. 31 D. 34 show the calculations for the cost estimates.

Exhibit 6.13 Present Value Costs for Future Monitoring, Preferred Alternative Note: Detail may not add to totals due to independent rounding. Sources: Appendix O. [ A] and [ C] Exhibit O. 3b; Rows  A3, ICR and ICRSSL; Columns D and E, and I. [ B] and [ D] Exhibit O. 3c; Rows  A3, ICR and ICRSSL; Columns D and E, and I. Economic Analysis for the LT2ESWTR Proposal 6 29 June 2003 6.10 Household Costs EPA assumes that systems will pass some or all of the costs of a new regulation on to their customers in the form of rate increases. Household costs, which are in units of $ per household per year, are estimated in this chapter to provide a measure of the increase in water bills that may result from the LT2ESWTR. Exhibit 6.14 presents the mean expected increases in yearly household costs by system size, system type, and occurrence data set, for those systems subject to the rule. ( Appendix J, Exhibit J. 4 presents household cost estimates for those systems predicted to make treatment changes.)

These cost increases incorporate the costs of rule implementation ( e. g., reading and understanding the rule), initial and future monitoring for bin classification, fixing uncovered finished water reservoirs, treatment changes, benchmarking, and compliance reporting. A detailed description of the derivation of per household costs is in Appendix J. Per household costs for uncovered finished water reservoirs are determined by taking the costs for fixing the reservoirs from section 6.8 and assigning them to systems as described in section 4.6.

To annualize capital costs when determining the costs to households, EPA uses different discount rates for private and public systems and for systems of different sizes. The rate differences between systems represent the different borrowing sources each type of system has available to it, differences in risk and expectations regarding inflation. The rates vary from 5.20 to 6.27 percent depending on system size and ownership, and are summarized in Appendix J, Exhibit J. 1. Per household costs also include costs for royalty payments on the use of UV light ( described below).

The unit costs for treatment in dollars per thousand gallons is then multiplied by the annual perhousehold usage rate to obtain their contribution to per household costs. Although rule implementation and monitoring represent relatively small, one time costs, they have been included in the analysis to provide a complete distribution of the potential per household cost increase.

EPA has learned that Calgon Carbon Corporation holds a patent ( No. 6,129,893) for " A method for prevention of Cryptosporidium oocysts and similar organisms in water by irradiating the water with ultraviolet light in a range of 200 to 300 nm in concentrations of about 10 mJ/ cm2 to about 175 mJ/ cm2." It is EPA's understanding that this patent would apply to systems using medium pressure mercury vapor lamps to inactivate Cryptosporidium. EPA also understands that Calgon has applied for a continuation in part to extend coverage of the patent to low pressure mercury vapor lamps and to lower UV concentrations. Calgon has informed EPA that the company intends to charge a license fee of $ 0.015/ 1,000 gallons treated to water producers using UV under conditions covered by the patent. This cost was added to the unit cost of UV in the per household cost calculations. It was not used in the national cost estimates because it represents a transfer payment involving no use of resources.

For purchased systems that are linked to larger, nonpurchased systems, the per household costs are calculated using the unit costs of the larger system, however they are reported within the size category distributions for the purchased system. Household costs for these purchased systems are based on the per household usage rates appropriate for the retail system and not the system selling the water. This reflects the fact that although purchased systems will not face increased costs from adding their own treatment, whatever costs the wholesale utility incurs would likely be passed on as higher water costs. Economic Analysis for the LT2ESWTR Proposal 6 30 June 2003 System Type/ Size Households Mean Median 90th Percentile 95th Percentile Percent of Systems with Household Cost Increase < $ 12 Percent of Systems with Household Cost Increase < $ 120 All CWS 65,816,979 $ 1.68 $ 0.13 $ 4.06 $ 7.57 98.37% 99.99% All CWS   £ 10,000 3,318,012 $ 4.61 $ 1.34 $ 13.04 $ 14.92 87.88% 99.88%

All CWS 65,816,979 $ 1.07 $ 0.03 $ 3.24 $ 5.43 99.31% 100.00% All CWS   £ 10,000 3,318,012 $ 2.68 $ 0.80 $ 6.10 $ 9.39 95.71% 99.95%

All CWS 65,816,979 $ 1.28 $ 0.03 $ 3.48 $ 6.47 99.07% 100.00% All CWS   £ 10,000 3,318,012 $ 3.27 $ 0.80 $ 6.62 $ 13.04 93.90% 99.93%

All CWS 65,816,978 $ 1.83 $ 0.14 $ 4.51 $ 7.58 98.25% 99.99% All CWS   £ 10,000 3,318,012 $ 4.98 $ 1.43 $ 13.50 $ 15.78 87.15% 99.87%

All CWS 65,816,979 $ 0.73 $ 0.03 $ 2.81 $ 3.84 99.60% 100.00% All CWS   £ 10,000 3,318,012 $ 1.76 $ 0.46 $ 5.37 $ 6.10 97.51% 99.98% All Systems  Low All Systems  ICR All Systems  ICRSSL All Systems  ICRSSM All Systems  High Exhibit 6.14 Summary of Annual Per Household Cost[ 1] Increases, Preferred Alternative ($/ Year)

Note: [ 1] Annualized at discount rates varied by system size and ownership ( see Appendix J, Exhibit J. 2). [ 2] Households served by systems subject to the LT2ESWTR. Source: Appendix J, Exhibit J. 3.

EPA estimates that all households served by surface and GWUDI sources will face some increase in costs due to implementation of the LT2ESWTR ( except for those few who have already installed 5.5 log of treatment for Cryptosporidium; see Chapter 4 for a summary of households served by systems subject to various LT2ESWTR provisions). Of all the households subject to the rule, 24 to 35 percent are projected to incur costs for adding treatment, depending on the Cryptosporidium occurrence data set used. Approximately 95 percent of the households potentially subject to the rule are connected to systems serving at least 10,000 people; these systems experience the lowest increases in costs due to economies of scale. Over 90 percent of all households will face an annual cost increase of less than 5 dollars.

6.11 Unquantified Costs EPA has quantified all the major costs for this rule and has provided uncertainty analyses to bound the over or underestimates in the costs. Some costs are unquantifiable, however, because of a lack of information. One cost not quantified is the effect of systems needing to comply with several rules in a similar time period. This analysis took into consideration compliance with the Stage 2 DBPR, the LT1ESWTR, and the IESWTR. It did not, however take into account other rules that are or will be promulgated before this rule. These include the Arsenic Rule, the Ground Water Rule, the Radon Rule, and the Filter Backwash Rule. Although most of these will not affect surface water sources, they may limit the use of alternative sources. The rules affecting ground water could affect the GWUDI systems in the LT2ESWTR. There could be lower costs for these systems if technologies installed for this rule also achieved reduction in other contaminants. There could be unquantifiable savings in monitoring and Economic Analysis for the LT2ESWTR Proposal 6 31 June 2003 implementation costs for complying with several rules at once. There are also unquantifiable costs savings associated with some of the treatment and management strategies listed in section <IP_ADDRESS> that were not included in this analysis, but that may be less expensive than the treatment technologies which were evaluated.