Jan van Eck: Fix Lake Champlain for Free

Article Image

Posted October 11, 2018

I would advance the proposition that Vermonters can clean Lake Champlain to crystal-clear standards, permanently abate the cyanobacteria blooms that now devastate polluted areas, help out the planet by restoring degraded landscape, and do all this without having to spend one thin dime.

It has been argued that the actual costs of Vermont accomplishing the above will run to $2 billion. And doing it the conventional way probably will consume every bit of that. Yet, spending beaucoup bucks is not a pre-ordained necessity. Indeed, Vermont can accomplish all of the above targets and simultaneously reduce the current tax burden, simply by monetizing the cow manure, municipal sewerage, and residual river spoils that it is burdened to remove.

The pollution problems stem from excess quantities of phosphorus entering the water environment. Together with excess nitrogen fertilizer, the compounds act as a jump-start to those ghastly cyanobacteria blooms, by handing the bacteria this vast buffet of stuff to go feed on. Obviously, if you cut off the free food, the bacteria are all done, and eventually you end up with this nice clean lake, where you can see the bottom 60 feet down. And that would be nice.

To get there, you do have to stop the practice of dumping cow manure upon the farmland, the current protocol being to liquefy the slop and spread it around with a dispersal truck, basically a big tank on a wagon with a horizontal boom with holes on it, so that the raw sewage can rain out over the farmland. Some guys on a tractor pull the wagon around, and the idea is that the slop is disposed of. This admittedly primitive approach results in manure overload, and then the excess washes off the land and into the creeks, then down to the river, and off into the lake. So the first step is to stop dumping cow manure on the farmland, in the wistful hope that it will just go away and stop being such a problem. But cow manure does not go away; it keeps coming, at the rate of 130 pounds per cow per day, rain or shine, and no breaks for statutory holidays. So, what is a farmer to do with all those mountains of manure? Right now, farmers put the manure into huge lagoons of three million gallons or more, outside, in the vain hope that somehow this “contains” the problem.

Meanwhile, back at the river, you have all these phosphorus-laden soil sediments getting washed downstream, and they eventually find their way into the lake, there to deposit on the lake bottom and into huge alluvial fans. To see the extent of the problem, I invite you to contemplate the alluvial fan of the Missisquoi River, which is extending into the bay for miles and stretches all the way up to the Canadian border. All of that material is saturated with phosphorus, which leaches out into the Missisquoi Bay – and causes massive cyanobacteria blooms.

So: what to do with all that cow manure, and what to do with all that saturated riverbottom slop? I propose a radical solution: go sell it.

That’s right: find a customer for the stuff, someone willing to pay you good money to take it off your hands. And if you can get enough money for the waste, then you can put the earnings towards general tax reductions. Wouldn’t that be nice?

Can waste be monetized? Of course it can; those Casella guys do that all day long. Their business model is to charge the generator to take it away. My business model is to pay the farmer to take it away (thus incentivizing the farmer to participate), and resell it to a customer who is highly motivated to buy it. Do those customers exist? Of course they do, but then you have to get off your duff and go hunt those customers down, do your sales pitch, and go sell him the stuff for a profit. This is basic business, the sort of thing that entrepreneurs do all day long. Interestingly, Vermonters seem remarkably inept at this.

Here is my customer. This customer is a sovereign entity, a state government, that is faced with the restoration of hundreds of thousands of acres of degraded landscape. They have an urgent need to restore the lands, as they want to have a working forest instead of so much rock. Previously, before the land despoilers came along, this was a vibrant forest, but it took several hundred centuries to get there. The customer does not wish to have to wait several hundred centuries to get their forest back.

This is what the customer is up against:

To say that this is a degraded landscape is putting it mildly. To restore this, the customer is currently spending $5 a square foot, which, let’s face it, is a ton of money. Fortunately, the customer is rich, and has the resources to pay the bills, and thus is struggling forward with the project. And it has a long way to go: figure 10,000 square miles.

Let’s run some numbers to see if this could work out. For a successful restoration, you would want to put down a soil layer over that rock, figure a foot deep, and mixed in with that (or on top) a layer of dried cow manure six inches deep. That combination will, if guarded against further erosion, nicely support a new forest; the client plants his seedlings in that, and 20 years later, he has a serious forest; in 25 years, he can start harvesting some of that for lumber. The client is incentivized to do your deal if that is the result.

To source the soil, the lake spoils area is dredged. Current dredging costs run in the single digits per ton of material, so let’s take $6 a ton for removal costs. The manure component cannot be sold in the form it is found on the dairy; some two-thirds of that is water content, so the manure has to be dried, then converted into usable form. I have developed a converter machine to accomplish that, and so figure the costs of converted manure to be (pick a number) running at another six bucks a ton. Now you do have to ship the stuff to the customer, so figure another $10 a ton for freight. All in, your product breaks even at $22/ton.

Running the numbers back from that $5 a foot now being spent for land restoration, it works out to roughly $145/ton equivalent. Since you are coming in at only $22/ton, it becomes apparent that there is a lot of room in there to work with. Specifically, probably $123/ton.

Let us assume that you ship these guys a modest one million tons a year. You can probably do a lot more than that, but you have to start somewhere. OK, so you want to incentivize the customer, thus you want to come in below that $5 a foot he is paying now, and also offer him a better, faster, more certain path to that forest. So cut your delivered price to $80/ton and leave that extra money on the table. Your customer will love that. Your gross is $80 million, and your costs are $22 million. The margin is $58 million.

The vendor splits that 50-50 with the state of Vermont, which is issuing the permits and the export licenses, putting the deal together. Now, instead of spending $2 billion to clean up the lake, the state is receiving $30 million a year in free cash. And that will work nicely for general tax reduction.

The point I make is that the money is there, ready to be plucked. But then the Vermonters, specifically the shrill crowd that always finds some objection to every single project that anybody comes up with, thereby creating this atmosphere of total paralysis, have to decide that Vermont just might be better off to dispose of the manure and the dredging spoils and getting rid of that legacy phosphorus pollution by selling it where it will do some good, instead of continuing on the present path. Are those folks going to come around? Probably not.

Meanwhile, there is even one more element that nicely caps this off. Remember the customer, who is faced with the forbidding task of restoring his 10,000 square miles of desolation. He has to look out at this:

He might not have enough tree saplings available to deal with the acreage involved, at least not at once. So, how to keep the soil deposited from washing away? And Vermont has yet another product to offer. Instead of the farmers planting hay, they can grow sod. The machinery to rapidly disperse grass seeds over land is well developed; you shoot the stuff together with a mixture of chopped straw out through an ejection tube, spreading a layer of seed over the soil, and then the grass grows up. Harvest the sod, palletize the layers, and ship to the customer, for him to place that Vermont sod directly over the deposited material. You have instant erosion protection. And, the customer is happy to pay you for the product.

Can the administration get this past those who deride everything? Well, that’s the challenge. We shall see. Would be nice for the state to pick up that extra revenue every year, though – and avoid that big $2 billion remediation tab.

Source: vtdigger