Wellhead Treatment Costs for Groundwater Contaminated with Pesticides: A Preliminary Analysis for Pineapple in Hawaii

EPHRAIM D. LEON-GUERRERO 1

Department of Landscape Architecture University of California Berkeley, California 94720, USA

KEITH LOAGUE*

Department of Soil Science University of California Berkeley, California 94720, USA

RICHARD E. GREEN

Department of Agronomy and Soil Science University of Hawaii Honolulu, Hawaii 96822, USA ABSTRACT / In Hawaii, trace concentrations of pesticides used in the production of pineapple were found in the groundwater supplies of Mililani Town in the Pearl Harbor Basin on the island of Oahu. Groundwater serves as the major source of drinking water and residents pay for wellhead treatment of the contaminated water, via their monthly water bill. The agricultural chemical users within the Pearl Harbor Basin do not include these wellhead treatment costs in their production costs. The agricultural industry benefits from using pesticides but does not pay the entire societal cost of using these chemicals. In this

study we evaluate the specific financial cost of wellhead treatment, and not the economic value of groundwater. While wellhead treatment costs could conceivably be shared by several parties, this study focuses on the financial impact of the pineapple industry alone. This study factors annual wellhead treatment costs into annual pineapple production costs to measure the effect on annual financial return from pineapple production. Wellhead treatment costs are calculated from the existing granulated activated carbon (GAC) water treatment facility for Mililani Wells I and II. Pineapple production costs are estimated from previous cost of production studies. The inclusion of wellhead treatment costs produces different production-cost results, depending on the scale of analysis. At the local scale, the Mililani wellhead treatment costs can be factored into the production costs of the pineapple fields, which were probably responsible for contamination of the Mililani Wells, without causing a deficit in economic return. At the larger regional scale, however, the return from all of the pineapple grown in the Pearl Harbor Basin can not sustain the cost of wellhead treatment for the entire water supply of the basin. Recommendations point to the prevention of groundwater contamination as more cost-effective measure than wellhead treatment.

Agricultural practices are a primary source of groundwater pollution. T h e National Research Council (1989) reports that an increasing n u m b e r of agricultural production contaminants are found in groundwater supplies in the United States. Surveys have indicated that pesticides, used u n d e r normal agricultural practices, occur in the groundwater supplies of most states. T h e importance of protecting

KEY WORDS: Pesticides; Groundwater contamination; Cost-benefit analysis; Wellhead treatment

1Current address: Contra Costa County Public Works Department, Martinez, California 94553-4897, USA. *Author to whom correspondence should be addressed.

groundwater from agricultural contaminants can not be overstated. In Hawaii, trace concentrations of pesticides used in the production of pineapple have been found in the groundwater supplies in the Pearl H a r b o r Basin on the island of Oahu (Au 1991). Since g r o u n d w a t e r is the major source of drinking water in Hawaii, residents pay for the treatment via their monthly water bill. T h e agricultural chemical users within the Pearl H a r b o r Basin do not include remedial cleanup costs in their production costs. T h e r e f o r e , the agricultural industry benefits from using pesticides without paying the entire cost of using tbese chemicals. In this study we address the specific financial cost of wellhead treatment costs in relation to pineapple production costs. T h e effort here does not constitute

Environmental Management Vol. 18, No. 1, pp. 93-104

9 1994 Springer-Verlag New York Inc.

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E.D. Leon-Guerrero and others

I
0

I
5

I
I0 miles

4
North

Figure 1. Pearl Harbor Basin, Island of Oahu, Hawaii.

a rigorous economic analysis of groundwater contamination.

of Water Supply (HBWS), closed the affected pumps of Mililani Wells I and II in 1983, and an emergency waterline was constructed from the nearby town of Wahiawa. Many public health, water, and agricultural experts considered the closing of the wells unnecessary. T h e health risk assessment conducted for the incident (Environ Corporation 1985) concluded that the risk of cancer from exposure to these chemicals was below that which is generally recognized, by federal regulatory agencies, as presenting significant public health concern. T h e Mililani wells were closed because the contaminants were discovered at detectable limits, not at levels that are recognized to threaten public health. Whatever the reason for well closure, public concern led the HBWS to decontaminate the water p u m p e d from the Mililani Wells. In 1985, construction began on a granulated activated carbon (GAC) wellhead treatment system to decontaminate the water p u m p e d from Mililani Wells I and II. T h e GAC facility, completed in 1986, filters an average of four million gallons of water per day (HBWS 1991).
Previous Work

Background
T h e pineapple and sugar industries in Hawaii have applied various agricultural chemicals for many decades. These chemicals were not expected to contaminate precious groundwater resources (Loague and others 1990). However, the State of Hawaii has closed ten water supply wells in the Pearl Harbor Basin due to the detection of DBCP (1,2-dibromo-3-chloropropane), EDB (ethylene dibromide), and T C P (1,2,3trichloropropane). Each o f these three chemicals can be linked with the pineapple industry (Oki and Giambelluca 1987, Lau and Mink 1987). As a result of these discoveries, numerical simulations (Loague and others 1989a,b) and assessment uncertainty analyses (Loague and others 1989c, 1990), focused upon the Pearl Harbor Basin, have been conducted. T h e Hawaiian public expressed great concern over the contamination and closure of Mililani Wells I and II, the primary source of drinking water for residents of Mililani Town. Located in the north central part of the Pearl Harbor Basin, Mililani Town sits on f o r m e r pineapple fields and is surrounded by existing pineapple fields (Figure 1). T h e groundwater recharge area for Mililani Wells I and II may include several pineapple fields where pesticides were applied in the past. T h e local water purveyor, the Honolulu Board

Groundwater economic studies have researched the value of groundwater contaminated by hazardous materials, although not specifically pesticides. Foster and Foster (1989) outlined a framework for comparing the societal benefit of an economic activity with the societal cost, namely groundwater contamination, of that activity. Raucher (1983, 1986) developed a model for measuring the benefits of groundwater protection. Sharefkin and others (1984) estimated the economic value of damages to human health from groundwater contamination and compared the cost of alternative methods o f mitigating groundwater contamination. Recent studies in Hawaii have examined the processes controlling groundwater flow and chemical fate following pesticide application relative to improved management. In Hawaii sampling programs (Wong 1983, Peterson and others 1985) have shown that the chemicals that have been applied in the past do, in fact, leach beyond the root zone, contrary to the original assessments, and can eventually reach groundwater. Experiments designed to characterize the nuances of various processes such as volatilization, sorption, and degradation have recently been conducted (e.g., Schneider and others 1990). Experiments such as these will improve the conceputalization of mathematical models used for assessments in the future. Agricultural economic studies in Hawaii have focused on the impact of pesticide elimination on crop

Wellhead Treatment Costs for Groundwater Contamination

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productivity. For example, a report on a proposal to ban pesticides estimated that the elimination of DBCP would reduce profits by $50 per acre per year for pineapple produced in Hawaii (USDA 1982). Current wellhead treatment costs represent the cost of removing pesticides (e.g., DBCP, EDB) that are no longer applied by the pineapple industry. T h e new replacement pesticides may also contaminate groundwater supplies in the future, although this appears unlikely based on recent assessments (Kleveno and others 1992, Schneider and others 1990), and the cost of wellhead treatment may change accordingly. Determining the treatment cost for the banned pesticides demonstrates the financial consequences of the replacement pesticides contaminating groundwater. In addition, other contaminants may occur in groundwater. For example, nitrogen fertilizers have the potential to reach groundwater resources. Other industries (e.g., sugar) and the military also use synthetic organic chemicals. Chemicals used in these activities have been found in groundwater. While future wellhead treatment costs could be shared by several parties, this study focuses on the financial impact on the pineapple industry alone.

how many acres of pineapple must have pesticides applied to contaminate a particular groundwater resource, a comparison between annual treatment costs and annual production costs, using the units defined here, is useful.

Estimation of Costs
Wellhead treatment cost refers to the total cost to construct and operate the Mililani Wells I and II GAC system. Pineapple production cost includes normal production costs and normal overhead costs for growing pineapple. T h e overall net return equals pineapple production net return minus wellhead treatment cost. In general, the pineapple companies in Hawaii do not share production cost information with each other (or the public) due to the extremely competitive nature o f the industry. T o the best of" our knowledge, the information reported in this effort has not been used before. O u r c o s t estimates were based on tile best, albeit limited, inlbrmation available. T h e estimation of each cost c o m p o n e n t is discussed below. WeUhead treatment cost. T h e Honolulu Board of Water Supply (HBWS) provided us with the cost required to implement and operate the GAC system at Mililani Wells I and II. T h e wellhead treatment cost includes the capital, chemical analysis, and operation, and maintenance required for the Mililani GAC system. T h e capital costs for the facility were recorded by the Engineering Division of the HBWS. Preliminary costs included planning and engineering expenses. Construction costs included contactor (filter) and valve installation. T h e construction of an additional water transmission main was also included as a capital cost. Labor and materials are included in all capital cost figures (D. Ching, personal communication, 1991). T o obtain an annual cost for the total capital cost, payments were calculated for a 30-year term loan at a fixed rate of 10%. T h e chemical laboratory staff of the HBWS provided estimates for the annual cost borne by their d e p a r t m e n t for tile operation of tile Mililani GAC facility. T h e laboratory routinely tests the water from the facility to ensure its p r o p e r operation and water quality. In addition, the laboratory analyzes each carbon tilter after it has been spent and must be replaced. Chemical laboratory estimates include labor and materials (E. Kawata, personal communication, 1991). T h e Plant Operations Division of the HBWS is responsible for the routine operation and maintenance of the facility. Unlike the laboratory cost figures, these costs were not estimated by staff. Instead, the costs are tabulated f r o m actual records kept by the division since the beginning of facility operation in fiscal year 1986. T h e Plant Operations

Objective
T h e objective of this study was to conduct a preliminary analysis that incorporated external costs, namely those associated with wellhead treatment for groundwater contamination, into an evaluation of the cost of pineapple production in the Pearl Harbor Basin.

Methods
T h e methods o f this study involve three steps: (l) estimation of wellhead treatment costs; (2) estimation of pineapple production costs and return; and (3) incorporation of wellhead treatment costs into pineapple production costs. Wellhead treatment costs are considered at two scales of pineapple production: a local scale (approximately 1000 acres) and a regional scale. Obviously, the local scale is a subdomain of the regional scale. In o r d e r to conduct an overall cost study, wellhead treatment and pineapple production costs are both calculated in terms of unit costs. Wellhead treatment cost is derived according to a unit cost of dollars per million gallons of water ($/1,000,000 gal). T h e pineapple production cost, meanwhile, is derived according to a unit cost of dollars per acre of pineapple (S/acre). Both categories are calculated on an annual basis to provide a comparable time reference. Although it is impossible to show definitively

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Division purchases and replaces spent carbon as needed and conducts analysis of the spent carbon ind e p e n d e n t of the chemical laboratory analysis. T h e operation and maintenance costs account for both labor and materials (F. N a k a m u r a , personal communication, 1991). T h e cost of developing Mililani Wells 1 and II is not included in the wellhead treatment capital cost because these costs were not due to wellhead treatment f r o m pesticide contamination. These develo p m e n t costs include the initial drilling of the wells and construction of the original p u m p i n g facility. Pineapple production cost. Data regarding the cost of pineapple production were not readily available from the principle industry of Hawaii. T h e production cost estimates used in this study were derived f r o m previous studies (Bowen 1987, unpublished communication 1987, Philipp and Baker 1975) as well as consultations with pineapple researchers at the University of Hawaii (e.g., D. Bartholomew, personal communication, 1991). T h e Bowen study analyzed the cost of growing 600 acres of pineapple on the island of Molokai. T h e scale and costs of the Molokai operation are similar and applicable to pineapple production operations in the Pear[ H a r b o r Basin. Financial return estimates f r o m pineapple production were based on data published by the Hawaii Agricultural Statistics Service (HASS 1990). Production cost is the total of production and overhead costs. Pineapple is typically grown in the Pearl H a r b o r Basin according to a three-year crop cycle that produces two harvests: (1) a plant crop and (2) a first ratoon. T h e ratoon crop results from shoots that sprout from the mother plants of the initial plant crop after it is harvested. Production costs include materials and labor for preplanting operations, harvesting, and irrigation. Preplanting costs begin with land preparation that involves tilling, grading, and formation of growing beds. Fumigant and preplant fertilizer are applied in the bed, along with installation of drip-irrigation tubing (irrigated fields), prior to covering the beds with a plastic sheet to retain the fumigant. Preemergence herbicides are applied after the plastic is laid. Plants are placed in the soil through the plastic layer. Harvesting costs occur once for the plant crop and once for the first ratoon. Irrigation costs also occur for both harvests. Table 1 outlines the crop cycle schedule. All pineapple production cost estimates are calculated according to a dollar per acre unit value. Overhead costs were also estimated in the previous studies. Capital costs include production equipment such as tractors, trucks, other vehicles, spare parts, and an equipment repair facility. In addition, the costs of

Table 1. Time table showing schedule of pineapple production costs for three-year crop cycle a Fixed Costs Equipment Tractors Trucks Spare parts Office equipment Office vehicles Equipment depreciation Office personnel Rent Property tax Interest on Capital Miscellaneous Production Costs Land preparation Tilling Grading Growing bed formation Plastic laying Pesticide application Other fumigant application Fertilizer applicatinn Harvesting Irrigation Additional labor Equipmen~ depreciation Year 1 Year 2 Year 3

"Cost categories are from Bowen (1987). Three-year crop cycle schedule is from a Pineapple Grower's Association of Hawaii handout (not dated). Plant crop harvested at end of year two and first ratoon crop harvested at end of year three. office personnel, equipment, and vehicles were tabulated as well as depreciation on all equipment. Fixed costs include rent, property tax, and interest on capital (Bowen 1987, Philipp and Baker 1975). Table 1 outlines the overhead and fixed costs. All production and overhead cost estimates are calculated according to a dollar per acre unit value. Combined Treatment and Production Costs Tile cost we refer to here as the combined cost is the hypothetical addition of wellhead treatment costs to pineapple production costs. T h e effect of this combined cost is measured by its impact on net return relative to the pineapple production net return; in essence, the greater the wellhead treatment cost the less return there will be from pineapple production. T h e wellhead treatment unit cost, derived for the Mililani GAC system costs, is considered at local and regional scales. T h e local scale allows comparison of wellhead treatment costs with the production costs of the pineapple fields where the pesticides originated. T h e regional scale, on the other hand, relates the cost

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Table 2.

Scale of wellhead treatment and pineapple production in the Pearl Harbor Basin
Local scale Regional scale Pearl Harbor Basin Pearl Harbor Aquifer None ~' HBWS 61,685 mgy" Two (i488.5"

Geographic area Affected aquifer Wellhead treatment Water purveyor Affected aquifer yield No. of pineapple growers Pineapple acreage

Mililani Wells I & 11 recharge area Mililani Wells I & II Mililani GA(" system HBWS 1460 mgy t' One 1071 d

~Wellhead treatment is not currently applied to the entire yield of the Pearl Harbor Aquifer, although one other (;At: system exists at the Waipahu wells. t'Million gallons per year. r yield (C. Lao, personal communication, 1991) dGiambelluca (1987).

o f treating the entire g r o u n d w a t e r yield o f the basin with the cost o f cultivating all o f the pineapple g r o w n within the basin. Table 2 outlines the characteristics o f the two scales considered in this study. At the local scale, t r e a t m e n t cost is i n c o r p o r a t e d into the p r o d u c tion cost for the fields primarily responsible for the pesticide contamination o f Mililani Wells I and II. T o accomplish this, the a n n u a l wellhead treatment cost is subtracted f r o m the a n n u a l net r e t u r n f r o m pineapple cultivation to obtain an annual c o m b i n e d net ret u r n (Figure 2). At the regional scale, wellhead treatment cost is factored into tile p r o d u c t i o n cost tor the entire pineapple acreage o f the Pearl H a r b o r Basin. T o derive the wellhead t r e a t m e n t cost for the entire basin, the Mililani Wells G A C system unit cost is multiplied by the sustainable yield o f the basin. T h e annual t r e a t m e n t cost is then subtracted f r o m the annual net r e t u r n f r o m pineapple p r o d u c t i o n to arrive at an annual c o m b i n e d net r e t u r n for the entire basin (Figure 3). Scale of analysis. Cost analyses are c o n d u c t e d here at local and regional scales (Table 2). T h e local scale analysis demonstrates the impact o f wellhead treatm e n t costs for Mililani Wells I and II when they are c o m b i n e d with the p r o d u c t i o n costs tbr the pineapple fields that occur in the r e c h a r g e areas o f these wells. T h e regional scale analysis d e m o n s t r a t e s the impact o f wellhead t r e a t m e n t costs for the entire Pearl Harbor Basin's g r o u n d w a t e r supply when they are combined with the p r o d u c t i o n costs for the pineapple fields that occur in the r e c h a r g e areas o f the basin. At the local scale, wellhead t r e a t m e n t costs are calculated f r o m the real cost figures for applying G A C t r c a t m e n t to water p u m p e d f r o m Mililani Wells I a n d II. At the regional scale, the Mililani Wells I and II GAC costs are extrapolated u p w a r d to estimate the cost o f applying wellhead t r e a t m e n t to the entire Pearl

Total annual cost for Mililani Wells I & 1I GAC System (HBWS) ($/yr)

Average price for ton of pineapple (HASS, 1990) (S/ton) ~ (multiply) Average yield for pineapple I production (Bowen, 1987) (tons/ac/yr) Annual gross return for pineapple production

($/ac/yr)

~ (subtract) Annual cost for pineapple production (Bowen, 1987) ($/ac/yr) Annual net return for pineapple production ($/ac/yr) ~ (multiply) Total acreage of pineapple in relevant recharge area (Giambelluca, 1987) (ac) (subtract) Annual net return for pineapple production in re evant recharge area ($/yr) I combined net I return for pineapple grown in the relevant recharge area
Annual

Figure 2. Flow chart of cost analysis process for the Mililant

Fields (local scale).

H a r b o r Basin Aquifer. This linear extrapolation does not incorporate any e c o n o m y o f scale, and thus is likely an overestimate o f wellhead treattnent costs at the regional scale. T h e u p w a r d extrapolation a p p r o a c h used in this study to estimate wellhead t r e a t m e n t costs for the regional scale from the local scale estimates is without

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Totalannual cost for MililaniWellsI & lI GAC System(HBWS)($/yr)

Averageprice for I ton of pineapple (HASS,1990)(S/ton) ~ (multiply) Averageyield for pineapple production(Bowen,19871 (tons/ae/yr) Annualgross return for pineappleproduction ($/ac/yr) ~ (subtrac0 I Annualcost for pineapple production(Bowen,19871 ($/ac/yr) Annualnet return for pineappleproduction ($/ac/yr) ~ (multiply) I Totalacreageof pineapple in Pearl HarborBasin (Giambe|luca,1987)(ac) (subtract) Annualnet return far pineappleproductionin Pearl HarborBasin($/yr)

Table 3. Capital cost for Mililani Wells I and II GAC treatment system a

Operation Planning and engineering Construction Carbon and contactors Advance purchase of valves Construction contract Transmission main installation Total capital costb Estimated annual paymentsc

Cost ($) 256,000 685,000 127,000 1,243,000 226.000 2,537,000 266,268

l(divide) Averageannual flow for MililaniWellsI & If (HBWS)(mg/yr)

Unit costfor Mililani WellsGAC treatment system ($/mg)

~l(multiply ) Sustainableyieldof Pearl Harbor Aquifer (HBWS)(mg/yr)

dSource: D. Ching (personal communication, 1991). bCost given in 1986 dollars. GAC facility was constructed in 1986. CAnnual payments are estimated according to tire terms of a thirtyyear term loan at tixed rate interest of ten percent.

Table 4. Annual chemical laboratory cost estimate for Mililani Wells I and II GAC treatment system a'b

Operation c
Annualcost to apply GAC treatmentto Pearl Harbor Aquifer($/yr)

Cost ($) 1700 426 6012 8138

Contactor change out analysis Spent carbon sampling Routine contactor testing Total annual cost

I Annual combined net I return for pineapplegrown in the Pearl HarborBasin

Figure 3. Flow chart of cost analysis process fbr the entire Pear[ Harbor Basin (regional scale).

"Source: E. Kawata (personal communication, 1991). bEstimate based on calculations conducted by HBWS chemical laboratory stall'. CIncludes materials and labor.

question conservative, it is unlikely that all the groundwater resources f r o m within the Pearl H a r b o r Basin would be contaminated by agricultural chemicals. T h e distribution of contaminated groundwater would undoubtedly be both spatially and temporally variable at the large scale. In addition, not all groundwater taken f r o m the Pearl H a r b o r Basin needs to be of domestic quality and thus in need of treatment; for example, groundwater used for "the irrigation o f sugar does not require treatment. T h e r e f o r e , the combined treatment and production cost estimates for the regional scale that are presented here, based u p o n linear extrapolation, should be viewed as "food for thought" rather than a call to throw in the towel.

Results
Wellhead Treatment Costs

T h e Engineering Division o f the Honolulu Board of Water Supply recorded the cost to develop the Mililani GAC treatment system (D. Ching, personal communication, 1991). Table 3 outlines the capital

cost for the Mililani GAC system. T h e total capital cost was $2,537,000. Construction o f the facility was the largest component, totaling over $1,000,000. Purchase of the carbon, contactors, and valves a m o u n t e d to over $800,(100. An additional transmission main had to be installed at a cost of $226,000 (D. Ching, personal communication, 1991). T h e total capital cost is converted to annual capital payments by treating it as a loan with a term of 30 years and a fixed interest rate of 10%. U n d e r these assumptions, the annual payment for capital costs equals $266,268. Chemical laboratory costs pertaining to the operation of the Mililani GAC system were estimated by the HBWS staff since costs records were unavailable. T h e laboratory costs a m o u n t e d to $8138/yr (E. Kawata, personal communication, 1991). Table 4 lists the chemical laboratory costs; the greatest cost is for routine analysis of the GAC system to ensure p r o p e r operation and water quality. T h e chemical analysis cost is estimated to be $6012/yr. Tests are also conducted on the spent carbon and contactors after replacement; the annual cost for replacement analysis is

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99

Table 5. Annual operation and maintenance requirements for Mililani Wells I and II GAC treatment system (for fiscal years 1986-1991 )~
1986-87 No. of contactors Qty. of GAC (lb.) Nonlabor costs GAC purchase ($) Replace GAC ($) Test carbonb ($) 4 96,140 76,512 20,338 3,000 1987-88 4 96~140 74,989 30,000 2,997 1988-89 12 288,420 214,008 61,531 6,168 1989-90 3 192,280 159,418 21,208 2,563 183,189 768 199(~91 5 144,210 114,922 ! 9,000 5,790 139,712 NA Mcan 5.6 163,438 127,970 30,415 4,104 162,489 743 17 12,645

Total nonlabor ($) 99,850 107,986 281,707 Labor costs Hours NA~ NA 717 Average salaryd ($) Total labor ($) Total annual average operation and maintenance cost: $175,134

"Source: F. Nakamura (personal communication, 1991) bThe Operation and Maintenance Department of the H BWS conducts carbon analysis independent of chemical laboratory analysis. "Not available. Average hours based on available data from fiscal years 1988 and 1989 only. dAverage salary equals $17.019/hour and includes fringc benefits.

approximately $2000. All chemical laboratory cost estimates include labor and materials. Since construction of the Mililani GAC system in 1986, the Honolulu Board of Water Supply has kept records regarding the cost of its annual operation and maintenance. Based on these records, the estimatcd average annual cost for operation and maintenance is $175,134. Table 5 shows the operation and maintenance costs. T h e major component of operation cost is for the annual replacement of spent granulated activated carbon. Based on records and estimates from the Honolulu Board of Water Supply, the total annual cost to provide GAC wellhead treatment at Mililani Wells I and II is $449,540. T h e total annual cost figure includes annual payments for capital outlays, operation costs, and maintenance costs as indicated in Table 6. T h e total cost calculates into an approximate per unit cost of $308/million gallons of water, T h e unit cost for this estimate is based on an average water flow of four million gallons per day from the Mililani Wells (HBWS 1991). Wellhead treatment is an additional cost that does not include the normal cost o f providing potable water from the wells. I f the entire Pearl H a r b o r Basin Aquifer required wellhead treatment, the cost would be substantial. Using the unit cost derived for the Mililani wellhead treatment system, the annual cost to apply GAC wellhead treatment to the entire water supply of the basin would amount to nearly $19 million. This estimate is based on the current estimated sustainable yield for the Pearl H a r b o r Aquifer of 169 million gallons per

Table 6. Estimated total and unit cost for Mililani Wells I and II GAC treatment system
Cost ($) Total cost Capital payment~ Operation and maintenance ~' Chemical laboratory analysis and testing C Total annual cost for Mililani GAC system Unit cost Average annual flow for Mililani Wells 1 and lI (mgy)d Total per unit cost for Mililani GAC system ($/mg)
"See Table 3. bSee "Fable 5. "See Table 4. aWater flow measured in millions of gallons per year. Mililani Wells I and II have an average flow of four million gallons per day (HBWS 1991).

266,268 175,134 8,138 449,540 1,460 308

day (C. Lao, personal communication, 1991). Table 7 outlines tile estimate to apply GAC wellhead treatment to the Pearl Harbor Basin yield.

Pineapple Production Costs

Based on cost of production studies, with adjustment for inflation, the estimated minimum cost to cultivate one acre of pineapple in Hawaii is $5946/yr. T h e maximum estimated cost is $7928/acre. These estimates are based on studies conducted by University of Hawaii researchers and state government agen-

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Table 7. Estimated annual cost to apply GAC treatment to sustainable yield of Pearl Harbor Aquifer
Component
S u s t a i n a b l e yield o f P e a r l H a r b o r A q u i f e r (mgy) a 61,685

Per unit cost to apply GAC treatment ($/mg)b

T o t a l a n n u a l cost to t r e a t Pearl H a r b o r

308
18,998,980

Aquifer yield ($)

~Sustainable yield or capacity, noted in million gallons per year (mgy), is "'... the water supply that may normally be withdrawn from a specific source, such as a well or shaft, at the m a x i m u m rate that will not unduly impair source utility" (HBWS 1982). T h e current HBWS estimate is 169 million gallons per day (C. Lao, personal communication, 1991). bPer unit cost, noted in dollars per million gallons ($/mg), is based on cost to operate Mililani GAC system. See Table 6.

cies (Bowen 1987, Philipp and Baker 1975, and unpublished communication, 1987). Table 8 lists the estimated production costs. The minimum and maxim u m production costs are both based on estimates by Bowen (1987). The minimum cost is Bowen's total cost increased by 14% to account for inflation (3.5%/yr for 4 years). The maximum production cost is estimated as the minimum cost increased by one third according to comments by state officials in response to the Bowen study (unpublished communication, 1987). Pineapple production expenses include production and overhead or fixed costs. T h e largest component o f production cost was for preplanting operations that amounted to $5700/acre for the threeyear growing cycle. Production costs include labor and materials. Overhead and fixed costs constitute a major part of production costs. For example, the largested fixed cost, interest on capital, is estimated at $2375/acre. T h e greatest overhead cost is for office personnel and equipment at $2613/acre. Return from pineapple production in Hawaii is based on yield estimates from previous studies (Bowen 1987, and unpublished communication, 1987) and market prices from the Hawaii Agricultural Statistics Service (HASS 1990). T h e estimated net return for an acre of pineapple in Hawaii is $2072/year during a three-year growing cycle that produces two harvests. Net return is based on the maximum production cost. T h e maxim u m cost is used in our study because we feel it best approximates the cost of growing pineapple in the Pearl Harbor Basin. Table 9 summarizes the yield and return for pineapple production. Total unit yield for a three-year crop cycle is estimated to equal 75 tons/

acre. Total yield is then multiplied by the average market price of $400/ton from 1985 through 1989; this calculates to a gross return of $30,000 per acre per three-year crop cycle or $10,000 per acre per year. T h e net return is derived by deducting maxim u m production cost from gross return. T h e net return for pineapple production is therefore estimated to be $2072 per acre per year. T h e total area of the pineapple fields within the recharge area of Mililani Wells I and II is 1071 acres (Giambelluca 1987). Applying the return per acre figure, the annual net return for the fields is estimated to be $2,219,112. This estimate does not include the cost of wellhead treatment. Table 10 outlines the return tor the fields surrounding the two Mililani wells. The estimated total acreage used for pineapple in the Pearl Harbor Basin is 6488.5 acres (Giambelluca 1987). Applying the net return figure to the Pearl Harbor Basin acreage, we estimated the annual net return from pineapple production in the basin to be $13,444,172. This estimate does not include the cost of wellhead treatment. Table 10 outlines the return for the basin.

Combined Treatment and Production Costs

The total cost to operate the Mililani GAC wellhead treatment system amounts to $449,540 (Table 6) per year while the return from the pineapple fields, within the Mililani Wells I and II recharge area, equals $2,219,112 (Table 10). Based on these figures, the combined net return calculates to $1,769,572/yr. in other words, the combination of treatment and production costs at the local scale will decrease profit by 20%. Table 11 shows the calculation for the combined net return. At the regional scale, the combined cost analysis is performed in the same manner as was done for the local scale. T h e total wellhead treatment cost for the Pearl Harbor Aquifer is factored into the total return from pineapple in the basin. U n d e r these assumptions, the total cost to treat the aquifer if $18,998,980, while the total return from pineapple in the basin is $13,444,172. Subtracting treatment cost from pineapple returns yields a loss of $5,554,808. Table 11 summarizes the combined net loss for the regional scale.

C o n c l u s i o n s and R e c o m m e n d a t i o n s
Pesticide contamination adds a significant cost to providing potable water from groundwater resources of the Pearl Harbor Basin. Based on the Mililani GAC system, the per unit cost to apply wellhead treatment is $308/million gallons of water. This additional cost

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Table 8.

Estimated annual production cost for pineapple grown in Hawaii for a three-year crop cycle a
Plant crop (S/acre) First ratoon (S/acre) Total (S/acre) 1,140 2,613 475 95O 2,375 95O 3,876 1,824 5,700

Overhead and tixed costs b Rapair facility, spare parts/trucks Office personnel/equipment Office vehicles/equipment depreciation Rent/property tax Interest on capital Miscellaneous Production Cost b Preplanting (land preparation, plastic laying, fumigation and initial fertilization, plants and planting) Harvesting cost Irrigation Additional labor costs Equipment depreciation Total cost per acre per thrce-year crop cycle Total cost M i n i m u m a n n u a l cost per acre c Maximum a n n u a l cost per acre a

456

456

912 342 1,026 1,357 17,840 5,946 7,928

aCost estimates are based on Bowen (1987). Estinmte includes labor and materials. bCost per three-year crop cycle producing two harvests: plant crop and first ratoon. Estimates have been increased 3.5%/yr to account for inflation. "Minimum cost is one third of the total cost per acre three-year crop cycle. dMaximum cost derived by increasing annnal cost by one third (based upon unpublished communication, 1987).

Table 9.

Estimated annual yield and return for pineapple production in Hawaii

Plant crop First ratoon 25 Total 75 400 30,000 10,000 7,928 2,072

Gross r e t u r n a Average unit yield (tons/acre) b Average fresh market price per ton for 1985-1989 ($)c Gross return per acre per three-year crop cycle ($) Net r e t u r n Gross return per acre per year ($) Maximum production cost per acre ($)~ Net r e t u r n per acre

50

"Returns per three-year crop cycle producing two harvests: plant crop and first ratoon. bAverage yield estimates are based on Bowen (1987) and unpnblished communication (1987). CHawaii Agricultural Statistics Service (HASS 1990). "Estimate to reflect value at wholesale establishments for local sales and shipper dock for mainland and foreign sales," i.e., fresh market price does not include packing and shipping cost. dProduction cost per acre from Table 8.

effectively d o u b l e s t h e a v e r a g e cost o f p r o v i d i n g p o t a ble w a t e r f r o m g r o u n d w a t e r s o u r c e s o n O a h u , w h i c h is c u r r e n t l y a p p r o x i m a t e l y $ 3 0 0 / m i l l i o n g a l l o n s (C. Lao, p e r s o n a l c o m m u n i c a t i o n , 1991), to a total o f $ 6 0 8 / m i l l i o n g a l l o n s o f water. B a s e d o n these p e r u n i t costs, t h e total a n n u a l cost to p r o v i d e G A C t r e a t m e n t for t h e Mililani Wells I a n d II is $ 4 4 9 , 5 4 0 / y r . A t t h e r e g i o n a l scale, t h e cost is e s t i m a t e d at $ 1 8 , 9 9 8 , 9 8 0 / y r

to t r e a t t h e s u s t a i n a b l e yield o f t h e P e a r l H a r b o r A q u i f e r . T h e e s t i m a t e d a n n u a l cost for p i n e a p p l e cult i v a t i o n in H a w a i i is $7928/acre. B a s e d o n a gross return figure of $10,000/acre, the estimated average n e t r e t u r n if $2072/acre. F o r t h e local scale, t h e a n n u a l a v e r a g e r e t u r n is $ 2 , 2 1 9 , 1 1 2 / y r . A t t h e r e g i o n a l scale, the a n n u a l a v e r a g e r e t u r n is $ 1 3 , 4 4 4 , 1 7 2 . C o m b i n a t i o n o f w e l l h e a d t r e a t m e n t costs with t h e p r o d u c -

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Table 10. Estimated annual yield and return for pineapple production for local and regional scales
Net return per acre ($)~ Mililani field return b Total pineapple production area (acres) c Annual return for local scale ($) Pearl Harbor Basin return Total pineapple production area (acres) ~ Annual return for regional scale ($) 2,072 1,071 2,219,112 6,488.5 13,444,172

"From Table 9. b"Mililani Field" refers to the pineapple fields that occur within the recharge area of Mililani Wells I and II. CAcreagetotal from Giambelluca (1987).

Table 11. Combined net return for local and the regional scales
Mililani field scale a Annual return for pineapple ($)b Annual cost for Mililani GAC system ($)c Combined net return Pearl Harbor Basin scale Annual return for pineapple ($)b Annual cost to treat Pearl Harbor Aquifer yield ($)a Combined net return ($) 2,219,112 449,540 1,769,572 13,444,172 18,998,980 - 5,554,808

"Mililani field refers to tile pineapple fields that occur within the recharge area of Mililani Wells I and lI. hFrom Table 10. CFrom 'Fable 6. aFrom Table 7.

tion costs at the two scales considered in this study p r o d u c e s two different results. At the smaller field scale, the cost o f wellhead t r e a t m e n t can be c o m b i n e d with the p r o d u c t i o n costs without resulting in a deficit. T h e c o m b i n e d r e t u r n at the local scale is $1,769,572. At the regional scale, however, the r e t u r n f r o m pineapple can not sustain wellhead t r e a t m e n t costs without resulting in a substantial deficit. T h e c o m b i n e d r e t u r n at the regional scale results in an estimated deficit o f $5,554,808. T h e results o f this study point to the i m p o r t a n c e o f scale in assessing the impact o f including water treatm e n t costs in the cost o f production. At the local scale, the a m o u n t o f c o n t a m i n a t e d g r o u n d w a t e r f r o m Mililani Wells I and II is small relative to the pineapple acreage o f the fields that occur within the r e c h a r g e area o f the wells. At the regional scale, however, the

a m o u n t o f potentially c o n t a m i n a t e d g r o u n d w a t e r is m u c h greater relative to pineapple acreage. T h u s , d u e to the differences in the flow to acreage ratio, r e t u r n at the local scale can s u p p o r t wellhead treatm e n t costs while r e t u r n at the regional scale can not sustain wellhead treatment costs. T h e n a t u r e o f nonpoint source pollution makes it difficult to assign t r e a t m e n t costs to a particular field o r to a p p o r t i o n the per unit t r e a t m e n t cost to a particular acre o f pesticide application. For example, it is u n k n o w n how m a n y years o f pesticide application over how large an area o c c u r r e d before wellhead t r e a t m e n t was required at Mililani Wells I and II. M a n y fields, which may have contributed to c o n t a m i n a t i o n o f the wells, may no longer be in production. F u r t h e r m o r e , wellh e a d t r e a t m e n t costs at the regional scale would not be assigned entirely to the pineapple industry. C h e m icals originating f r o m sugar p r o d u c t i o n and military activities have also been f o u n d in g r o u n d w a t e r . Wellhead t r e a t m e n t costs, if required at the regional scale, would be difficult to assign d u e to the n u m b e r a n d varieties o f n o n p o i n t sources o f chemical contamination. T h e question also arises c o n c e r n i n g the liability o f pineapple growers for wellhead t r e a t m e n t that may, in fact, be unnecessary. T h e levels o f contaminants f o u n d in the g r o u n d w a t e r may not require t r e a t m e n t to meet acceptable health standards. Public concern, not necessarily public health standards, may often drive the perceived n e e d for wellhead treatm e n t measures. Hawaiian public c o n c e r n over the quality o f the state water supply played a major role in the decision to install wellhead t r e a t m e n t at Mililani. While the pineapple industry m a y be partially liable for public health impacts associated with g r o u n d w a t e r contamination, it is debatable w h e t h e r the industry should be liable for the cost o f r e m o v i n g contaminants that occur in concentrations below public health standards or costs g e n e r a t e d by u n d u e public concern. Additionally, it is unlikely that the pineapple industry, or any o t h e r user o f agriculture chemicals would be held legally responsible for impacts on g r o u n d w a t e r quality that are associated with the use o f chemicals according to E P A - a p p r o v e d label specifications. G r o u n d w a t e r protection is especially critical given the c u r r e n t state o f agriculture in Hawaii. T h e pressure o f u r b a n d e v e l o p m e n t a n d competition f r o m foreign p r o d u c e r s had diminished the e c o n o m i c stability o f the pineapple a n d sugar industries in O a h u . At the same time, the residents o f Hawaii have p u s h e d for the preservation o f agriculture t h r o u g h governm e n t policies a n d programs. T h e p r e v e n t i o n o f g r o u n d w a t e r c o n t a m i n a t i o n helps meet the goals o f e n s u r i n g public health and the health o f the agricul-

Wellhead Treatment Costs for Groundwater Contamination

103

rural industry. T h e continuing high cost of wellhead treatment at Mililani, as shown in this study, suggests that an alternative policy approach to groundwater contamination is needed. Compared to the remediation costs explained in this study, prevention of groundwater contamination should be more cost effective. Measures are needed to prevent further contamination of groundwater that may increase the cost of wellhead treatment. Public funds could support prevention of groundwater contamination to reduce future public expenditures for remediation. Public funds could also aid the agricultural industry in developing biological controls and integrated pest management measures that would protect groundwater and other natural resources. The agricultural industry could also be assigned a portion o f the cost o f mitigating groundwater contamination. A tax or fee could be assessed according to the amount and type of agricultural chemicals used. Whatever funding mechanism is used, reduction or prevention of further contamination should prevent greater wellhead treatment costs in the future.

Foster, S. S. D.. and V. Foster. 1989. The economic dimension of aquifer protection---or putting a price on groundwater. In E. Custodio and Gurgui A. (eds.), Groundwater economics: Selected papers from a United Nations Symposium held in Barcelona, Spain. Elsevier Science l'ublications. Developments in Water Science Series 39:201-211,625 PP. Giambelluca, T. 1987. Field map showing areas used for pineapple cultivation ill the Pearl Harbor basin. Unpublished field map. HASS (Hawaii Agricultural Statistics Service). 1990. Statistics of Hawaiian agriculture 1989. Hawaii Department of Agriculture, Marketing Division. United States Department of Agriculture, National Agricultural Statistics Service, Honohdu, Hawaii, 100 pp. HBWS (Honolulu Board of Water Supply). 1982. Oahu water plan: Summary report. Honolulu Board of Water Supply, Honolulu, 40 pp. HBWS (Honolulu Board of Water Supply). 1991. Various fact sheets on the GAC operations. Unpublished. Kleveno, J. j., K. Loague, and R. E. Green. 1992. An evaluation of a pesticide mobility index: Impact of recharge variation and soil profile heterogeneity.Journal of Contaminant Hydrology 11:83-99. Lau, L. S., andJ. F. Mink. 1987. Organic contamination of groundwater: A learning experience. Journal of American Water Wort~ A.~sociation 79:37-42, Loague, K., R. E. Green, C. C. K. Liu, and T. C. Liang. 1989a. Simulation of organic chemical movement in Hawaii soils with PRZM: 1. Preliminary results for EDB. Pacific Science 43: 67-95. Loague, K., T. W. Giambelluca, R. E. Green, C. C. K. Liu, T. C. Liang, and D. S. Oki. 1989b. Simulation of organic chemical movement in Hawaii soils with PRZM: 2. Predicting deep penetration of DBCP, EDB, and TCP. Pacific Science 43:362-383. Loague, K. M., R. S. Yost, R. E. Green, and T. C. Liang. 1989c. Uncertainty in a pesticide leaching assessment for Hawaii. Journal of Contaminant Hydrology 4:139-161. Loague, K., R. E. Green, T. W. Giambelluca, T. C. Liang, and R. S. Yost. 1990. Impact of uncertainty in soil, climatic, and chemical information in a pesticide leaching assessment. Journal of Contaminant l lydrology 5:171-194, 405. National Research Council. 1989. Committee on the Role of Alternative Farming Methods in Modern Production Agriculture, Board on Agriculture. Alternative agriculture. National Academy Press, Washington, DC, 448 pp. Oki, D. S., and T. W. Giambelluca. 1987. DBCP, EDB, and TCP contamination of ground water in Hawaii. Ground Water 25:693-702. Peterson, F. L., K. R. Green, R. E. Green, and J. N. Ogata. 1985. Drilling program and pesticide analysis of core sampies from pineapple fields in central Oahu. Water Resources Research Center, University of Hawaii at Manna, Spec. Rept. 7.5 (unpublished). Philipp, P. F., and H, L. Baker. 1975. Cost of production of fresh pineapple on Molokai. Hawaii Agricultural Experi-

AcknowLedgments
The work reported here was supported, in part, by funding from the UC Ecotoxicology Program and Mobil Oil Corporation. We are grateful to Donald Astrab, Duane Bartholomew, Delwyn Ching, Paul Eckern, Karl Gardey, T h o m a s Giarnbelluca, Chennat Gopalkrishnan, Erwin Kawata, Chester Lao, Donna Lee, Donald Martin, Floyd Nakamura, Delwyn Oki, Frank Scott, James Silva, Bonnie Warren, Stephanie Whalen, and Lyle Wong for their contributions throughout the study. T h e views expressed here are, however, those of the authors and may not represent the opinions of those we have acknowledged.

Literature Cited
Au, L. K. L. 1991. The relative safety of Hawaii's drinking water. Hawaii Medical Journal 50:71-80. Bowen, R. L. 1987. Molokai pineapple feasibility study. Memorandum to Mr. Yoshito Takamine, Chairperson, Governor's Agriculture Coordinating Committee. Department of Agricultural and Resource Economics, University of Hawaii at Manna, 23 December, 7 pp. Environ Corporation. 1985. Analysis of potential human heahh risk and approaches to setting action levels for pesticides in drinking water in Hawaii. Prepared for Honolulu Board of Water Supply, Department of Health State of Hawaii, and Office of Environmental Quality Control State of Hawaii. Washington, DC, December, 114 pp.

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ment Station, College of Tropical Agriculture, University of Hawaii, Research Report 231, 39 pp. Pineapple Growers' Association of Hawaii. Not dated. Timing of agricultural chemical applications in the 36-month crop cycle of pineapple. Handout. Honolulu, Hawaii. Raucher, R. L. 1983. A conceptual framework for measuring the benefits of groundwater protection. Water Resources Research 19:320-326. Raucher, R. L. 1986. The benefits and costs of policies related to groundwater contamination. La~wlEconomics 62:33-35. Sharefkin, M., M. Shechter, and A. Kneese. 1984. Impacts, costs, and techniques for mitigation of contaminated groundwater: A Review. Water Resources Research 20: 1771-1783.

Schneider, R. C., R. E. Green, W.J. Apt, D. P. Bartholomew, and E. P. Caswell. 1990. Field movement and persistence of fenamiphos in drip irrigated pineapple soils. Pesticide Science 30:243-257. USDA (United States Department of Agriculture). 1982. The biological and economic assessment of DBCP: A report of the DBCP assessment team to the rebuttable presumption against registration of DBCP. Submitted to the Environmental Protection Agency on 7 November 1977 and 3 July 1978. U.S. Department of Agriculture, Washington, DC, Technical Bulletin 1666, 117 pp. Wong, L. 1983. Preliminary report on soil sampling EDB on Oahu. Pesticide Branch, Division of Plant Industry, Department of Agriculture, State of Hawaii (unpublished).