Sizing Up Erosion and the EC Industry
Contractors, regulators, legislators, manufacturers, business owners, and policymakers all need a better grasp of the real costs of manmade, accelerated erosion and sedimentation; how dollars can best be spent to minimize those costs; and just what the erosion control industry encompasses. To address these needs, the International Erosion Control Association Board of Directors created its Economic Research Committee in 1998 to take steps to measure the size of the industry. Now we need your help to continue.
It goes by many names, appears in many guises, and almost always costs a bundle: Repairing roads damaged by landslides and debris flows. Dredging a sediment-filled shipping channel. Restoring a watershed polluted by urban runoff. Although many people don't see a connection between these events, they are all consequences of the same problem - accelerated erosion and sedimentation.
Globally, nationally, locally, and sometimes even on our own job sites, the costs and implications of erosion are difficult to measure. Even more difficult is knowing whether what we've spent to prevent erosion has paid off. Almost everyone in the industry can cite dozens of separate facts and figures: the average daily cost to operate a river dredge is $29,000, for example (Tilton, 1999), and Los Angeles will spend $150 million over the next six years to battle dust storms emanating from central California's dry Owens Lake bed (ENR, 2000). But deciding what to include in a comprehensive inventory of erosion-related costs - and determining what is possible to quantify - can be extremely difficult.
When a hillside in southern California collapses after heavy rains, the costs include more than just the clean-up of the landslide. They also include damage to the houses on and below the hillside, increased homeowners-insurance rates as insurance companies cover those losses, lost productivity as thousands of people are trapped in their cars on the freeway blocked by the landslide, road repair, and even injury or loss of life in some cases. The costs of fugitive dust from agricultural or urban areas include not only the soil loss itself, but also the health-care costs to treat people downwind whose asthma and other respiratory diseases are aggravated by the dust, and perhaps the shortened lifespan of machinery that operates in dusty environments.
No matter how daunting, though, tallying the costs makes good economic sense. If we can calculate and summarize what erosion is really costing us - its far-ranging repercussions and its indirect as well as direct costs - we can more easily understand the economic benefit of spending money up front to prevent it. More importantly for our industry, we can demonstrate those benefits to others. Equipped with reliable information on the true economic impacts of erosion, policymakers will be able to make well-informed, sensible long-term decisions that will effectively address the problem and ultimately save tax dollars. But before public officials can treat erosion control as a serious issue worthy of attention - and funding - the public they represent must also understand and care about its effects and its costs.
As IECA Executive Director Ben Northcutt points out, knowing the numbers "gives us clout if there's an issue that we need to advocate. If the sales of erosion control products are increasing 20% a year, are we seeing a comparable improvement in our water and air quality? Ideally we show the fact that the application of these products, which are an element of technology, are having positive environmental impacts."
IECA President John Peterson, who retired from the USDA Soil Conservation Service (now the Natural Resources Conservation Service [NRCS]) before founding KEMPS Consultants Inc. and assisting the National Watershed Coalition, has a broad perspective on how legislators view the industry. "I spent years testifying before Congress when I was on the other side of the aisle, and I was always dismayed when senators and representatives would say, 'We've been putting money into erosion control for 50 years. When's this job going to get done?' State legislatures ask the same question. They need to understand the nature and complexity of it; it's never going to be done as long as we live on this earth. But we need to do a better job of describing the benefits that actually are achieved by what we have done."
As yet, very little research has been done on the economics of erosion. More data are available for agricultural than for urban areas, but few attempts have been made to look at the full scope of erosion and its costs. One study estimates that wind and water erosion in the United States causes $17 billion annually of onsite damage, such as lost soil and nutrients (Pimentel et al., 1995). When such offsite damages as siltation, drainage disruption, flooding, and undermining of foundations, pavements, and roads are added in, the figure rises to $44 billion per year. The authors estimate that controlling erosion on US cropland would cost only $8.4 billion per year - a better than 5:1 cost-benefit ratio. These numbers - well documented and well publicized - are needed to make erosion control a tangible issue for the policymakers and the public.
Taking the First Step
Realizing the need for reliable data, the IECA Board of Directors established its Economic Research Committee (ERC) in February 1998. The ERC has two main goals: One is to establish the economic impacts of erosion, both agricultural and nonagricultural, and the economic benefits of its control. The other is to establish the sales volume and economic impact of erosion control industry-related products and equipment.
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Once captured, this information will serve several needs. One is simply the need for a better understanding of the size and scope of our industry. IECA fields questions almost daily on this issue, from marketers as well as from people trying to break into or expand their share of the business. A better understanding of the size of the industry will help IECA track how fast the industry is growing and where the most rapid growth is occurring. A clear picture of what erosion control industry includes and where it's heading will also bring greater credibility and visibility for the entire industry. "It's one of our goals to quantify those things, to say, 'Here are the impacts of erosion in economic terms. Here are the benefits. Here's what we're spending on it, and here's how those things relate," Northcutt points out. Improving land, air, and water resources and furthering innovation in erosion control products and technology are two further goals the ERC hopes this information will serve.
And how will tracking this information directly benefit IECA members? "We want to serve the association's membership by increasing the value of those working in the erosion control industry," says Dan Waldman, co-chair of the ERC and publisher of Erosion Control. He notes that working in a field where the benefits are well understood by the public and by policymakers "is easier than working in obscurity, where people don't really understand what you do. We'd like the CPESC designation to be more widely recognized outside the industry." More visibility for the industry and greater understanding of the benefits it provides will lead state and city governments to view erosion control as a valuable resource. "We can move to the next economic level. We want to grow the size of the market. It's not just a matter of increasing the market share for a few manufacturers at the expense of others. We want to grow the pie so that everyone sells more products."
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July-August 2000
Sizing Up Erosion and the EC Industry
Contractors, regulators, legislators, manufacturers, business owners, and policymakers all need a better grasp of the real costs of manmade, accelerated erosion and sedimentation; how dollars can best be spent to minimize those costs; and just what the erosion control industry encompasses. To address these needs, the International Erosion Control Association Board of Directors created its Economic Research Committee in 1998 to take steps to measure the size of the industry. Now we need your help to continue.
It goes by many names, appears in many guises, and almost always costs a bundle: Repairing roads damaged by landslides and debris flows. Dredging a sediment-filled shipping channel. Restoring a watershed polluted by urban runoff. Although many people don't see a connection between these events, they are all consequences of the same problem - accelerated erosion and sedimentation. Globally, nationally, locally, and sometimes even on our own job sites, the costs and implications of erosion are difficult to measure. Even more difficult is knowing whether what we've spent to prevent erosion has paid off. Almost everyone in the industry can cite dozens of separate facts and figures: the average daily cost to operate a river dredge is $29,000, for example (Tilton, 1999), and Los Angeles will spend $150 million over the next six years to battle dust storms emanating from central California's dry Owens Lake bed (ENR, 2000). But deciding what to include in a comprehensive inventory of erosion-related costs - and determining what is possible to quantify - can be extremely difficult.
When a hillside in southern California collapses after heavy rains, the costs include more than just the clean-up of the landslide. They also include damage to the houses on and below the hillside, increased homeowners-insurance rates as insurance companies cover those losses, lost productivity as thousands of people are trapped in their cars on the freeway blocked by the landslide, road repair, and even injury or loss of life in some cases. The costs of fugitive dust from agricultural or urban areas include not only the soil loss itself, but also the health-care costs to treat people downwind whose asthma and other respiratory diseases are aggravated by the dust, and perhaps the shortened lifespan of machinery that operates in dusty environments.
No matter how daunting, though, tallying the costs makes good economic sense. If we can calculate and summarize what erosion is really costing us - its far-ranging repercussions and its indirect as well as direct costs - we can more easily understand the economic benefit of spending money up front to prevent it. More importantly for our industry, we can demonstrate those benefits to others. Equipped with reliable information on the true economic impacts of erosion, policymakers will be able to make well-informed, sensible long-term decisions that will effectively address the problem and ultimately save tax dollars. But before public officials can treat erosion control as a serious issue worthy of attention - and funding - the public they represent must also understand and care about its effects and its costs.
As IECA Executive Director Ben Northcutt points out, knowing the numbers "gives us clout if there's an issue that we need to advocate. If the sales of erosion control products are increasing 20% a year, are we seeing a comparable improvement in our water and air quality? Ideally we show the fact that the application of these products, which are an element of technology, are having positive environmental impacts."
IECA President John Peterson, who retired from the USDA Soil Conservation Service (now the Natural Resources Conservation Service [NRCS]) before founding KEMPS Consultants Inc. and assisting the National Watershed Coalition, has a broad perspective on how legislators view the industry. "I spent years testifying before Congress when I was on the other side of the aisle, and I was always dismayed when senators and representatives would say, 'We've been putting money into erosion control for 50 years. When's this job going to get done?' State legislatures ask the same question. They need to understand the nature and complexity of it; it's never going to be done as long as we live on this earth. But we need to do a better job of describing the benefits that actually are achieved by what we have done."
As yet, very little research has been done on the economics of erosion. More data are available for agricultural than for urban areas, but few attempts have been made to look at the full scope of erosion and its costs. One study estimates that wind and water erosion in the United States causes $17 billion annually of onsite damage, such as lost soil and nutrients (Pimentel et al., 1995). When such offsite damages as siltation, drainage disruption, flooding, and undermining of foundations, pavements, and roads are added in, the figure rises to $44 billion per year. The authors estimate that controlling erosion on US cropland would cost only $8.4 billion per year - a better than 5:1 cost-benefit ratio. These numbers - well documented and well publicized - are needed to make erosion control a tangible issue for the policymakers and the public.
Taking the First Step
Realizing the need for reliable data, the IECA Board of Directors established its Economic Research Committee (ERC) in February 1998. The ERC has two main goals: One is to establish the economic impacts of erosion, both agricultural and nonagricultural, and the economic benefits of its control. The other is to establish the sales volume and economic impact of erosion control industry-related products and equipment.
Once captured, this information will serve several needs. One is simply the need for a better understanding of the size and scope of our industry. IECA fields questions almost daily on this issue, from marketers as well as from people trying to break into or expand their share of the business. A better understanding of the size of the industry will help IECA track how fast the industry is growing and where the most rapid growth is occurring. A clear picture of what erosion control industry includes and where it's heading will also bring greater credibility and visibility for the entire industry. "It's one of our goals to quantify those things, to say, 'Here are the impacts of erosion in economic terms. Here are the benefits. Here's what we're spending on it, and here's how those things relate," Northcutt points out. Improving land, air, and water resources and furthering innovation in erosion control products and technology are two further goals the ERC hopes this information will serve.
And how will tracking this information directly benefit IECA members? "We want to serve the association's membership by increasing the value of those working in the erosion control industry," says Dan Waldman, co-chair of the ERC and publisher of Erosion Control. He notes that working in a field where the benefits are well understood by the public and by policymakers "is easier than working in obscurity, where people don't really understand what you do. We'd like the CPESC designation to be more widely recognized outside the industry." More visibility for the industry and greater understanding of the benefits it provides will lead state and city governments to view erosion control as a valuable resource. "We can move to the next economic level. We want to grow the size of the market. It's not just a matter of increasing the market share for a few manufacturers at the expense of others. We want to grow the pie so that everyone sells more products."
Another benefit of selling widely recognized products and services is that those who must pay for them might actually start to value what they're buying. "If you're a contractor who now thinks erosion and sediment control is a financial burden, imagine if you could talk about it up front and charge for it, pricing it at the same rate of return you do any other service. Recognized and valued by your customer, erosion control can turn into a profit source for you," says Waldman.
Conducting the Survey
The ERC decided to tackle the second, more manageable question first: establishing the sales volume and economic impact of erosion control industry - related products and equipment. Last year the ERC commissioned a study - the first of its kind - encompassing 124 US companies. After issuing a request for proposals to nearly 90 vendors, the ERC selected Hebert Research Inc. of Bellevue, WA, an independent marketing research consultant, to conduct a detailed survey and prepare a report. The survey had several objectives:
- Determine sales figures for erosion control equipment, plant material, hydraulically applied products, rolled erosion control products, hardscape materials, and other miscellaneous erosion control products.
- Compare sales figures with those of previous years.
- Identify the typical buyers for these erosion control products.
- Analyze sales trends for erosion control product lines and market segments.
- Evaluate the sales potential for the different months of the year for erosion control products.
- Assess regional strengths in terms of sales for erosion control products.
- Gather additional perceptions and opinions regarding IECA.
Starting with the list of companies supplied by IECA, Hebert Research identified those qualified to participate in the survey, then conducted extensive telephone interviews. All companies that qualified sold erosion control products, equipment, or services. All were national rather than regional. No distributors or consulting firms were included, so prices reflect the initial or wholesale costs of products and equipment.
Hebert Research's report summarizes the gross sales volume for seven categories of erosion control products. Total sales volume was $225 million, although the ERC believes that will be much higher when regional manufacturers are included and when more companies contacted for future surveys agree to share their sales information anonymously.
The report lists the largest sellers of erosion control products, the primary markets for those products and percentage of sales that each market represents, and sales volume by market category. It identifies markets the respondents say are responsible for the greatest increases in the sales of erosion control products as well as markets they say are declining. The report also lists the percentage of companies selling erosion control products internationally. A copy of the original survey is included in the report to show exactly what questions were asked to elicit the responses. The complete 40-page report is available from IECA for $145 for members and $245 for nonmembers.
Although this study is the only one of its type and has provided valuable information on its own, for IECA it is only a beginning, and benchmark studies are planned. "One of the main benefits of the survey is that it starts to build economic indicators for us so we can track trends," says Northcutt. "Our goal is to conduct the survey every two years, so the next survey should be completed in spring 2001 if we stay on target."
Where Do We Go From Here?
Funding research studies is expensive: repeating the 1999 study could cost $10,000 or more, and a comprehensive study of the impacts of erosion could run to several hundred thousand dollars.
IECA has approached the Environmental Protection Agency (EPA) with a proposal for funding research to establish the economic impacts of erosion. Although EPA expressed interest in the results of such a study, funding has not yet been allocated for research. However, Gayle Mitchell, chair of the Department of Civil Engineering at Ohio University and co-chair of the ERC, speculates that NPDES Phase II may inspire government agencies to fund studies of this kind as regulatory groups are challenged to produce statistics on stormwater, erosion, and sedimentation.
"IECA doesn't sit on a huge bank account," notes Peterson. "We probably need to fund these kinds of activities from multiple sources. My guess is that we will be constantly looking for opportunities to partner with federal and state agencies in doing some of this work and might even ask our industry members to contribute. That's something we've not done much of in the past, and yet if this information is of benefit to them as participants and members of the industry, it might be that they would be willing to contribute in some way."
Some pieces of the puzzle have already been obtained, and it might simply be a matter of putting them together in the right order to come up with a fairly comprehensive picture. The Memorandum of Agreement between IECA and the NRCS, signed at the IECA Conference in Palm Springs last February, provides one avenue for gathering information. The NRCS conducts the National Cooperative Soil Survey. "We have a real opportunity not only to use their resources, but also to marry up their resources - which are mostly technical - with what we have representing the industry," says Peterson.
Other federal agencies may also provide data that IECA can expand on. "The Army Corps of Engineers probably has some of the best information available on dredging rivers and streams and ports. One could look at ports in the United States, see how much money the Corps of Engineers spends to dredge out and maintain them, and calculate the value of the damage caused by erosion," suggests Peterson. "One thing that's probably missing is what's really happening in the nation's urban areas. That information is probably isolated city by city. So it's really a fairly complex question, but I hope that doesn't stop us from trying."
When ERC co-chairs Mitchell and Waldman presented some preliminary study results at the conference, audience members offered some suggestions for possible ways to proceed with gathering information. Many centered on carving the ERC's two overarching questions into smaller, more easily addressed pieces - looking, for example, at how much state departments of transportation are spending annually on erosion control, at the annual costs of dredging, and at other factors that make up the total economic impact of erosion - and aggregating the results. Other members suggested partnering with universities, where graduate students in agricultural economics or engineering might tackle some of the research questions as part of a dissertation.
"We welcome ideas on how additional market surveys should be funded," says Mitchell, "as well as suggestions for other issues the Economic Research Committee should address."
What IECA Needs From You
Next time the survey comes around, participate! If you own a company that sells erosion control products or services and were not contacted for the survey in 1999 but would like to participate, let IECA know.
The ERC is also looking for suggestions on what to include in future surveys. "We want to know what people want to know," Northcutt emphasizes. "That will help us focus our research in the ways most useful to our members and to the profession as a whole." One way to begin is to fill out the survey in this issue of Erosion Control and mail to IECA.
"This is a vital aspect of what IECA does as an association," remarks Northcutt. "We need to be able to profile our industry, and the economic side of it is one of the more important elements to profile."
The Survey Is No Longer Available