CAREY, O'MALLEY, WHITAKER & LINS, P.A.
Attorneys at Law
To: Florida Fruit and Vegetable Association
From: Douglas Manson
Re: Summary of SWFWMD's Economic Impact Statement on proposed
rule changes for 40D-2
Date: September 7, 1994
At its monthly meeting, on Wednesday, August 31, 1994, the
District staff presented an Economic Impact Statement (EIS) of the
proposed changes to the Southern Water Use Caution Area (SWUCA) to
the Board. According to staff, the EIS describes the impact of the
rule revisions as they effect water use permittees and non-
permittees who utilize the District's water. Two types of impacts
were measured. The first type, financial impacts, are the changes
to an individual permittees revenues and expenses. The second
type, the economic impact, is the change in production within an
industry because of the proposed rule changes. To determine the
impacts, the rule uses March 30, 1993 as a "baseline" for
determining current costs and revenues. The difference between the
baseline amount and the cost and revenues subsequently caused by
the rule changes is the amount of impact. For purposes of the
study, impacts were measured through to the year 2015.
Agriculture will be one of the more harder hit areas. Water
use for irrigation of citrus, tomatoes, melons, potatoes, sod and
pasture in the SWUCA will be permitted to a level lower than that
existing under the current regulations for most crops. Significant
cost increases could result to agricultural within the SWUCA
depending on the type of crop produced and the existing water
management technologies used by these persons. EIS states that
September 7, 1994
these increased costs to agriculture permittees are transferred as
revenues and earnings to other business and employees. However,
the EIS states that citrus, tomato and melon production is not
predicted to be significantly impacted by the revised rules, and
all should remain economically viable. Economic viability assumes
that as long as residual return to land remains greater than zero
after the financial impact of the revised rule, no changes in sales
or employment are to be expected. Therefore, so long as the total
revenue from the sale of crops produced on the land, minus the cost
of production including all labor, general farm expenses, etc.
produced any positive result whatsoever, the EIS reports the
industry to economically viable. The EIS does note, however, that
there is an exception when the drop in the residual returns causes
the highest and best use of the land to change from its current
(agriculture) to a more profitable use. Thus, so long as the
current agricultural use of the property can produce even $1.00
after the costs have been subtracted, that use will remain
economically viable and not result in a direct economic impact to
the region, or financial impact to the direct user.
The costs associated with attaining the higher efficiency
quantities imposed by the new rule will involve an up-front capital
expense and higher operating costs to growers. These changes will
reduce annual residual returns to land and may effect the economic
viability of the land use. For example, replacing a semi-enclosed
seepage system with a fully enclosed system would reduce residual
returns per acre from $1,042.00 to $931.00 for spring tomatoes and
from $519.00 to $408.00 for fall tomatoes. Installing a drip
system instead would result in an estimated residual returns of
$632.00 for spring tomatoes and $110.00 for fall tomatoes.
Overall land values and the wealth of some individual
landowners of property located within the SWUCA may fall as a
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September 7, 1994
result of the inability to obtain water use permits in the area.
According to the EIS, in order for the value of a piece of property
to drop, all of the following must occur:
1. The parcel is not located near growing residential areas.
2. The parcel is not associated with the Floridan Aquifer
water use permit.
3. The parcel's owner cannot economically access alternative
sources of water.
4. The parcel's owner cannot economically access water via
5. If water were available, the parcel could be profitably
used to produce high valued agricultural products.
6. Financial impacts to landowners in the SWUCA were based
upon land values in the Most Impacted Area (MIA).
A rough estimate of the difference in land value between
permitted and unpermitted land in the MIA for land which can be put
into profitable high-valued agricultural production is $800.00 to
$1,000.00. Even after subtracting an amount necessary for the
conversion to this higher use, the decrease in wealth to an
individual owner was still between $400.00 to $600.00 per acre.
The EIS understates the frequency that this set of conditions will
apply to the vast parcels of property in the SWUCA. This economic
impact to property owners from the devaluation will cost hundreds
of millions of dollars in the area.
The EIS declares that the economic impact to the region will