Ask anyone associated with the environmental industry how the field has been faring over the past five years, and you're likely to receive a roll of the eyes in reply. The environmental services sector has been marked by generally flat growth which has led to numerous mergers, buyouts and sometimes layoffs. While this sort of activity is expected in other sectors of the economy, it was virtually unheard of in the environmental sector prior to 1990. Increased competition over a stalled market has led to increased price pressure within the industry, forcing many weaker companies out of the marketplace. Those remaining have been forced to compete with one another to an extent formerly reserved for the more traditional engineering and contracting disciplines.

This of course is great news for consumers of these services. But now that the market has shaken out many of the weaker players, what are the future trends in environmental cleanup costs likely to be? The answer is based on three primary factors: changes in the regulatory environment, refinements in assessment and remediation technologies and continued heavy competition for scarce cleanup dollars.

The Regulatory Environment

Until recent years, most state and federal regulations relied solely on strict numeric standards for specific contaminants to serve as endpoints for cleanup activity. The best one could hope for with regard to flexibility would be a simple matrix allowing for variance in generalized site conditions. Typically, these cleanup standards were initially based to some degree on real science, but were subject to revision either up or down (usually down) as they wound their way through the highly political approval process. In order to obtain alternate cleanup levels, a site owner would typically be required to justify his or her proposal through a lengthy and expensive risk assessment process, thus providing little financial incentive to do so for any but the largest sites. As such, many sites were (and continue to be) remediated to extremely conservative cleanup levels without any consideration paid to the true health and ecological risk posed by the site.

A familiar phenomena associated with the flow of remediation dollars is the law of diminishing returns. For many "traditional" remediation technologies, each incremental decrease in the cleanup level results in an increasingly disproportionate increase in unit cleanup costs. Thus, attempts to reach unreasonably low cleanup standards can result in enormous increases in project costs. As state officials across the country saw their storage tank indemnity fund coffers drained throughout the ‘80s and early ‘90s with little to show in return, they began to reexamine the bases for their cleanup standards.

As a result, the federal Environmental Protection Agency, then followed by many states, have begun to push the concept of "risk based corrective action", or "RBCA". In RBCA, the potential effects of the contaminants on the specific "receptors" at the site are used as the basis for determining the appropriate cleanup levels, and even for the necessity of cleanup activity at all. As a result, many sites which pose little risk to the environment are no longer subject to the same conservative standards as sites which do pose an inordinate risk. While some measure of assessment and monitoring activities is required to demonstrate the actual level of risk associated with the site, the majority of such sites will require a more modest level of cleanup, and thus a lower cleanup cost.

In addition, as the level of technical sophistication within regulatory agencies has steadily risen, these agencies are increasingly amenable to less traditional or "experimental" methods of site management. These methods, such as passive bioremediation and natural attenuation, are far less expensive than traditional, more capital intensive "removal" technologies.

The Effects Of Technological Advances On Cleanup Costs

Typically, cleanup activities are split into two distinct phases: a site assessment phase where the nature and extent of the contamination is investigated and/or inferred, followed by the remedial phase in which an appropriate treatment method is devised and implemented. Obviously, the quality of information produced within the assessment phase has a direct effect on the cost effectiveness of the overall cleanup.

The last 10 years have seen a great deal of refinement in site assessment methods and technologies. A great deal of academic research, combined with an increasing body of practical experience, led to a better understanding of the transport and fate of contaminants in the subsurface. This, in turn, has allowed the development of complex models to determine the extent of contaminants with less, but better targeted data.

The cost of obtaining this data has fallen as well. Traditionally, the sole method of obtaining a quality groundwater sample involved the installation of a semi-permanent monitoring well. The sole method of obtaining a subsurface soil sample from any significant depth involved the mobilization of a drill rig to perform soil borings. While these methods are still in common use today for the appropriate applications, new technologies such as the "hydropunch" and cone penetrometer allow the procurement of subsurface samples at dramatically lower cost. In fact, newer "remote sensing" technologies are increasingly allowing geologists to determine some subsurface conditions from the surface. The continued development of such geophysical techniques, as well as competition among the increasing number of available technologies, promises further decrease in assessment costs.

As the range of unknowns associated with a particular site is reined in, the engineers involved in the selection and design of a remedial method are less compelled to "over-design" the cleanup. Many original "pump and treat" systems from the ‘70s and ‘80s were routinely designed to extract and treat contaminants at a rate three or four times that encountered in the field, simply due to the number of unknowns associated with the site. and the level of uncertainty associated with the discipline in general. As assessment data improves, and environmental engineering develops more similarities to "traditional" engineering disciplines, the practice of such rampant overdesigning, and the accompanying capital costs, should continue to moderate as a result.

Further, as alluded to previously, the number of remediation technology choices available to design engineers continues to multiply. As a result, specific designs better suited for a particular site and its technical, logistical and financial constraints, can be proposed. Also, competition for market share among the increasing number of technologies, many of them proprietary, will ensure prices are kept under control for the foreseeable future.

Maturing Of The Environmental Services Market

The environmental services business itself has matured greatly over the past several years. Many of the initial small-time profiteers of the high-growth years of the industry have given way to large multi-national engineering and contracting firms which have entered the market as it has become more standardized. Smaller companies forced to compete with the cost-advantage and technical firepower of these large firms are doing so on the basis of trust and long-term relationships, neither of which lend themselves to massive markups.

Indeed, a large factor in the continuing moderation in cleanup costs has been an increase in the level of sophistication among the client base. Many firms are more aware than ever of the choices available to them with regard to the contractors and consultants in the market, as well as the technologies available. As a result, environmental cleanup companies are coming to realize they must forward a cost-effective proposal to warrant even a second look by a client.

However, many small and even medium sized companies do not have the level of experience in the market to be sure they're making sound judgments with regard to vendor selection. Most lack the internal technical experience to independently evaluate proposals on the basis of technical merit. As a result, many businesses are increasingly relying on companies with the appropriate resources, but no interest in the size of the cleanup invoice, such as XL Claims Administrators , to help guide them through the process of contractor pre-qualification and selection as well as project management.