Assessing Environmental Impact 25Federal courts have ruled (cf. for example, State of Nevada vs. Herrington, 1987)
that consideration of public health and environmental protection alone are not suffi-
cient grounds on which to evaluate a range of alternative programs. Socioeconomic
considerations such as population increases, need for public services like schools, and
increased or decreased job availability are also included under NEPA considerations.
Very recently (O’Leary 1995), federal agencies have also mandated inclusion of envi-
ronmental justice considerations in environmental impact assessments. Frequently,
public acceptability is also a necessary input to an evaluation process. Although an
alternative may protect public health and minimize environmental degradation, it may
not be generally acceptable. Factors that influence public acceptability of a given
alternative are generally discussed in terms of economics and broad social concerns.
Economics includes the costs of an alternative, including the state, regional, local, and
private components; the resulting impacts on user charges and prices; and the ability
to finance capital expenditures. Social concerns include public preferences in siting
(e.g., no local landfills in wealthy neighborhoods) and public rejection of a particu-
lar disposal method (e.g., incineration of municipal solid waste rejected on “general
principle”). Moreover, as budgets become tighter, the costhenefit ratio of mitigating
a particular impact is increasing in importance. Consequently, each alternative that is
developed to address the issues of public health and environmental protection must
also be analyzed in the context of rigid economic analyses and broad social concerns.
Financing of Capital ExpendituresA municipality’s or industry’s inability to finance large capital expenditures will nec-
essarily affect choice among alternatives and possibly affect their ability to comply
with environmental regulations. Traditional economic impact assessments examine
the amortized capital, operation and maintenance (O&M) costs of a project, and the
community’s ability to pay, but the analyses typically overlook the problems involved
in raising the initial capital funds required for implementation. Financing problems
face municipalities and industries of all sizes, but may be particularly troublesome for
small communities and firms that face institutional barriers to financing. The follow-
ing discussion examines only financing capability of compliance with water quality
regulations, but parallel issues arise for other types of public and private projects.
For relatively small capital needs, communities may make use of bank borrowing
or capital improvement funds financed through operating revenues. However, local
shares of wastewater treatment facility capital costs are generally raised by long-term
borrowing in the municipal bond market. In the absence of other sources of funds, both
the availability of funds through the bond market and the willingness of the community
to assume the costs of borrowing may affect the availability of high-cost programs. The
availability and cost of funds are, in turn, affected by how the financing is arranged.
Bonds issued by a municipality for the purpose of raising capital for a wastewater
treatment plant typically are general obligation (GO) bonds or revenue bonds. Both
have fixed maturities and fixed rates of interest, but they differ in the security pledge by
the issuing authority to meet the debt service requirements, i.e., payments for principal