Overview of costs and benefits associated with regulation in Scottish agriculture

6. The Control of Pollution (Silage, Slurry & Agricultural Fuel Oil) (Scotland) Regulations 2001, 2003

Abstract

This case study examines the costs and benefits of regulations designed primarily to reduce the number of pollution incidents arising from the inappropriate storage of silage and slurry. Likely costs and benefits have been identified through discussion with the Scottish Environment Protection Agency, and by study of the background and development of the regulations. Consideration is given to on-farm compliance, to the distribution of costs and benefits, and to compliance with the principles of good regulation. The main costs are associated with the construction of improved storage facilities. Benefits include improved working conditions and significantly reduced pollution incidents due to structural failures. The balance of costs/benefits is difficult to assess, due to the lack of relevant data on the values of costs and benefits.

Introduction

Summary of the Regulations

The Control of Pollution (Silage, Slurry and Agricultural Fuel Oils) (Scotland) Regulations 2001 "re-enact, with changes the Control of Pollution (Silage, Slurry and Agricultural Fuel Oil) (Scotland) Regulations 1991 ("the 1991 Regulations"), which require persons with custody or control of a crop being made into silage, of livestock slurry or of certain fuel oil ¹¹ to carry out works and take precautions and other steps for preventing pollution of inland or coastal waters." (Scottish Parliament 2001, p10). They were re-enacted in the 2003 Regulations of the same name ¹², and further amended by the Water Environment (Diffuse Pollution) (Scotland) Regulations 2008 ¹³. The principal change from the 2001 to the 2003 SSAFO Regulations is to "allow equivalent European standards to be applied where conformity to a British Standard or Code of Practice published by the British Standards Institute is required by these Regulations ¹⁴". This is essentially an administrative change designed to allow for the proper application of British Standards under EU legislation. The most recent amendment (by the Water Environment (Diffuse Pollution) (Scotland) Regulations 2008) "allows lightly contaminated water from some areas of the farm steading, which is currently required to be stored and spread to land, to be treated through a Constructed Farm Wetland before discharge to the water environment" (Scottish Government 2008, p1). This is a more substantial amendment.

The purpose of the SSAFO Regulations is to reduce the number of silage and slurry related water pollution incidents ¹⁵, and the 2001 amendments to the original 1991 Regulations were designed to specifically target problems with silage and slurry storage, and set minimum standards for the design and construction of storage facilities. These regulations and their amendments did not arise from an EU directive but originated from national concern over the high proportion of agricultural pollution events caused by leakage from inadequate structures of silage effluent and to a lesser extent livestock slurry ¹⁶. In addition, the "apparent inability of manure collection and storage systems to cope with the volumes of waste produced" has been one of the main causes of water pollution (Aitken 2003, p218).

The SSAFO Regulations set out various entirely practical standards of storage for slurry, silage and fuel oil, dealing with such matters as the safe drainage of silage effluent into a tank, the strength of silo and slurry store walls, the amount of storage required, the type of material to be used to wrap big-bale silage and the positioning of all such things at a safe distance from water.

The Scottish Environment Protection Agency ( SEPA) is the regulatory body and is empowered to serve notice that works are required to bring storage systems up to the required standard. SEPA enforcement procedure is to serve a pre-notice notice before prosecutions under these regulations. At least 28 days is allowed for compliance, and there is an appeals procedure. Failing compliance, the maximum penalty on summary conviction is £20,000 or a maximum of three months in jail. Four notices had been served under the SSAFO Regulations prior to 2006, one in 1994/95 and three in 2005. Only four have been served because notices are preceded by pre-notice warning letters, and compliance with the many pre-notice letters issued has resulted in few notices being required.

Issues identified during consultation ¹⁷

During the consultation process for the 2001 version of the SSAFO Regulations thirteen responses were received. Twelve responses were in overall favour of the new Regulations with one declining to comment. The then Scottish Landowners Federation did seek clarification of the criteria to be employed to determine where the risk becomes significant in relation to the storage and handling of silage and slurry and the consequent need for the preparation of a Farm Waste Management Plan, issues which were addressed in operational guidance for SEPA staff. On balance the NFUS viewed the proposed changes as sound but expressed reservations about certain details including constructing storage facilities to British Standards ( BS).

Others supportive of the proposed changes included the Association of Scottish Shellfish Growers, the Centre for Ecology and Hydrology, the Association for the Protection of Rural Scotland, East of Scotland Water, The Crown Estate, the Atlantic Salmon Trust, the Scottish Environment Protection Agency, North of Scotland Water, CIWEM Scottish Branch and the Faculty of Advocates.

The introduction of the 2001 Regulations was particularly welcomed by the Scottish Agricultural Pollution Group (2001) , who considered that the new regulations would address the (then increasing) number of pollution incidents by "facilitating a more flexible, yet environmentally-justified, approach towards maintaining and upgrading on-farm storage structures than was the case under the 1991 regulations".

Identification and assessment of costs and benefits

Regulatory Impact Assessments

The Regulatory Impact Assessment ( RIA) done for the 2001 regulations has not been repeated for the 2003 version, which is substantially unchanged. The RIA is summarised below:

Does the Regulation originate from an EU Directive?NO

Has a Scottish RIA been completed?YES

a) Are the benefits adequately quantified? Benefits are described, but not quantified.

b) Are the administrative costs adequately quantified?NO

c) Are the policy costs adequately quantified? The costs are not thought to fall inequitably on any particular group, but they are not quantified. However, it is very hard to quantify administrative and policy costs of something that has not happened and for which the pre-existing compliance/non-compliance figures are unknown. The RIA is informative given these constraints.

The findings of the 2001 RIA, in brief, is that the Regulations:

• Are not envisaged as imposing inequitable costs on any particular group
• Will remove the disadvantage that Scottish farmers faced in comparison with farmers south of the border regarding regulation relating to new or substantially changed storage structures
• Will allow SEPA to address problems associated with silage and slurry storage.

A Regulatory Impact Assessment has also been carried out on the Water Environment (Diffuse Pollution) (Scotland) Regulations 2008. This assessment deals mainly with the potential impact of various options for the implementation of General Binding Rules, compliance with which is considered sufficient authorisation in itself to undertake specific low-risk activities such as land cultivations, fertiliser storage, road construction, pesticide application and sheep dip application.

Pertinent to this study, this RIA considers the specific effect of the amendment of the SSAFO Regulations to allow for lightly contaminated water to be discharged through a Constructed Farm Wetland ( CFW), an option that may allow for considerable savings in storage space within existing slurry stores. This is considered ¹⁸ to be an important amendment with potential for significant benefit to farmers. SEPA have published a design manual (see Carty et al 2008), which sets out the standards for CFW construction, and the benefits of this amendment will depend largely on how many farms find CFW's to be a practical option. Much depends on there being sufficient land available of a suitable soil type and it is outwith the scope of this study to attempt to determine likely uptake. It is fair to say however that where CFWs have been utilised there has been a noticeable benefit to water quality and there are also additional biodiversity benefits associated with the wetland. The amendment was supported by the National Farmers' Union of Scotland in their consultation response ( NFUS 2007). Analysis by Carty et al (2008) suggests that CFWs will be a more cost-effective option than land spreading for some farmers, so the amendment should have significant financial benefits. The 2008 amendment reflects the principles of better regulation by making the regulations more flexible, and thereby more proportionate and better targeted.

Major benefits

Scottish Agricultural Pollution Group data indicates that the 1991 regulations led to a significant reduction in pollution events. Furthermore, the Scottish Agricultural Pollution Group (2003) provides a graph of trends in causes of agricultural pollution in Scotland, which shows a sharp downturn in pollution incidents arising from structural failures (e.g. structural failures in silos and slurry pits) immediately after the introduction of the regulations in 2001 (see figure 1). This change is part of a longer term trend that has seen a marked reduction in the proportion of water pollution events caused by structural failures since 1983.

Figure 1. Trends in causes of agricultural pollution in Scotland (source : Scottish Agricultural Pollution Group (2003)

It is difficult value with precision the costs and benefits arising from this legislation, instead estimation of the orders of magnitude are given in Tables 1 and 2. Given the many variables associated with individual farms, and the relative paucity of data on the subject this tabular summary is intended primarily as a starting point for discussion and as a reminder of the need for the effective monitoring of the impact of legislation.

Table 1. Estimation of the magnitude of benefits arising from the amended SSAFO Regulations

	Action	Scale of benefit
Private	Safer working conditions	Medium?
	Improved public perception of farmers	Medium
Social	Reduction in aquatic pollution incidents	High

Table 2. Estimation of the magnitude of costs arising from the amended SSAFO Regulations ¹⁹

	Action	Scale of cost
Admin	Co-operation with inspections	Low
Policy	Construction of larger storage facilities	High
	Building to a higher standard	High

Major costs

There is no formal collection of data on the range of compliance costs for the individual farmer. The cost of storage is dependent on the type and volume of storage required. Sharp (2005, p57) estimated the construction costs of a 1000t silage clamp to be £39k (£2008). The costs of constructing a glass-lined steel slurry tower can be estimated using the following formula, which is derived from the cost data reported in Beaton (2008, p351) and Sharp (2005, p22):

Cost (£2008) = volume (m ³)*30 + 8380

Using this formula, we can calculate that a typical 1000m ³ tower would cost approximately £38k to build. Unfortunately, data on how much it costs to build a certain size of slurry store does not translate easily into an evaluation of the overall cost of the regulation. To calculate the overall costs, information is required on: (a) what individual farmers have done to comply (e.g. how many new towers and lagoons have been built, what sizes are they, how many towers have been significantly upgraded/altered and are subsequently no longer exempt?); and (b) what would farmers have done in the absence of the SSAFO regulations - e.g. how much of the cost of new/upgraded slurry storage should be attributed to SSAFO, rather than other regulations (e.g., PPC or NVZ's) or non-regulatory drivers? It is therefore only possible to draw the broadest of conclusions about the magnitude of costs arising from these regulations. As with attempting to assess the magnitude of benefits, one is hampered by the lack of collated data on the situation. Table 2 indicates the possible relative magnitude of such costs.

Discussion

Compliance

Starting in 2002, SEPA audited over 2000 farms, mainly in south-west Scotland, and found that 68% were not complying with the SSAFO Regulations, and that three-quarters of these farms were sources of pollution. This sorry state of affairs is not a hopeless situation however, as there is compelling evidence that compliance levels can be strongly influenced given the right approach and advice. By the end of March 2005 pro-active engagement by SEPA with the farming community had increased the number of compliant farms in the same sample to 80%.

Publicity and training for farmers regarding relevant legislation is the responsibility of SAC contracted to the Scottish Government ( SG). The level of awareness of the SSAFO Regulation among the farming community is currently unknown, but could be patchy. Compliance levels will partly depend upon awareness of the existence of the Regulations and on common sense, approach to authority, risk behaviour and finances.

Distribution of costs and benefits

The 2001 Regulatory Impact Assessment concluded that the amendments to the 1991 Regulations would not impose inequitable costs on any particular group. The amendments would indeed remove factors that were putting Scottish farmers at a disadvantage in comparison with those in England and Wales. The changes to the Regulations were considered potentially beneficial to those running small farms, although impact on small farms would need to be determined on a case-by-case basis. Where livestock numbers are low, such as on crofts and other smallholdings, the quantity of slurry produced is not great, and black bags are usually the preferred option for storing silage.

Compliance with the principles of good regulation - Does it meet the Better Regulations guidelines?

Transparency: High. Certainly the regulations are transparent in that they are perfectly clear, even if, as with most legal documents, they do need careful reading.

Accountability: High. Accountability is presumably through the SG, who passed the regulations, and SEPA, who administer them. Both are public bodies, and as such are fully accountable. Consultation was thorough.

Proportionality: Medium. The legislation does appear proportionate in that there has been no obvious outcry about it one way or the other and have had a positive effect on the problem it was designed to address.

Consistency: High. The Regulations apply to anyone with responsibility for storing silage, slurry, which is a clear enough definition to be perfectly consistent.

Targeting: High. It is manifestly targeted at cases where action is needed, as compliance is a defence against prosecution.

Differential Implementation

These SSAFO regulations are not a response to an EU directive but originated from national professional concern regarding the high percentage of agricultural pollution incidents arising from silage and slurry storage. Therefore any over-implementation, failure to streamline legislation or regulatory creep would be purely an internal issue. The Scottish government has total discretion in how it implements its own legislation, and the only link with UK legislation in this case is the concern that Scottish farmers should be operating on a level playing field with their English and Welsh counterparts. However, SEPA have sought to influence changes for the benefit of and in partnership with farmers.

Conclusions

A lack of monitoring, or at least of collating the relevant data, makes it difficult to assess the costs and benefits arising from these Regulations. They have served a useful purpose in upgrading the general standard of slurry and silage storage, and consequently the point source pollution issues they were initially designed to address are now less of an issue than are diffuse pollution risks. Even so, the necessary standards are clearly outlined and the regulatory authority has sufficient experience to enforce the regulations effectively while avoiding the expense and negative impact of necessary prosecutions. According to the records of the SEPA legal department, there have been no prosecutions directly involving the 2001 SSAFO Regulations, or their subsequent amendments. Application of the regulations has resulted in compliance before a prosecution has become necessary.

Benefits may well result from the 2008 amendment allowing the drainage of lightly contaminated water into constructed farm wetlands, particularly in terms of a possible reduction in required storage capacity. Scottish Rural Development Plan funding is available for the construction of farms wetlands that are built to the standards set out in SEPA's design and construction manual.

The most obvious lesson is perhaps the need to decide, when regulations are brought into effect, what information needs to be collated in order to assess their effectiveness. This may well be a very cost-effective exercise if carried out continuously; as a historical exercise it presents more of a problem.

References

Aitken M. N. (2003) Impact of agricultural practices and river catchment characteristics on river and bathing water quality. Water Science and Technology Vol 48 No 10 pp 217-224

Beaton, C. (ed) (2008) The Farm Management Handbook 2008/09 29 ^th Edition Edinburgh: SAC

Carty, A. , Miklas Scholz, Kate Heal, Jerome Keohane, Edmond Dunne, Fabrice Gouriveau, and Atif Mustafa (2008) Constructed Farm Wetlands ( CFW) Design Manual for Scotland and Northern Ireland Belfast/Edinburgh: Northern Ireland Environment Agency/Scottish Environment Protection Agency

NFUS (2007) Diffuse Water Pollution from Rural Land Use: General Binding Rules and Related Provisions Consultation NFUS Submission 17 ^th October 2007

Scottish Agricultural Pollution Group (2001) Scottish Agricultural Pollution Group Pollution Review No 14 August 2001.

Scottish Agricultural Pollution Group (2003) Scottish Agricultural Pollution Group Pollution Review No 16 August 2003

Scottish Government (2008) Implementing the Water Environment and

Water Services (Scotland) Act 2003: The Water Environment (Diffuse Pollution)

(Scotland) Regulations 2008 Diffuse Water Pollution from Rural Land Use General Binding Rules and related provisions Regulatory Impact Assessment January 2008 Edinburgh: Scottish Government

Scottish Parliament (2001) Scottish Statutory Instruments No. 206 WATERRESOURCES The Control of Pollution (Silage, Slurry and Agricultural Fuel Oil) (Scotland) Regulations 2001 London: The Stationery Office

Sharp, M.G. (ed) (2005) Farm Building Cost Guide 2005/06 28 ^th Edition Aberdeen: SAC

Weblinks/Sources

The Control of Pollution (Silage, Slurry and Agricultural Fuel Oil) (Scotland) Regulations 2003.

http://www.oqps.gov.uk/legislation/ssi/ssi2003/ssi_20030531_en_1

Consultation paper for 2001 Regulations

http://www.scotland.gov.uk/Publications/2007/10/ControlPollution/page1

Water Environment (Diffuse Pollution) (Scotland) Regulations 2008

http://www.uk-legislation.hmso.gov.uk/legislation/scotland/ssi2008/pdf/ssi_20080054_en.pdf

Water environment (diffuse pollution)(Scotland) Regulations, 2008, General Binding rules and RIA

http://cci.scot.nhs.uk/Resource/Doc/1057/0059419.pdf

Link to Scottish Agricultural Pollution Group ( SAPG)

http://www.sepa.org.uk/publications/leaflets/sapg/index.htm

Link between the SSAFO Regulations and the Prevention of Environmental Pollution from Agricultural Activity: Code of Good Practice.

http://www.scotland.gov.uk/Publications/2005/03/20613/51366

Estimated costs for slurry storage systems

http://www.sac.ac.uk/mainrep/pdfs/sacsepaproceedings2004.pdf