Citation:

James, P., Matthew Heberling, AND D. Ebert. The Effect of Cropland on Drinking Water Treatment Costs: A Cost Function Analysis of Municipal Groundwater Systems in Wisconsin. 2023 UCOWR/NIWR Annual Water Resources Conference, Fort Collins, CO, June 13 - 15, 2023.

Impact/Purpose:

Decision-makers considering source water or wellhead protection often lack quantitative estimates of its benefits. The presentation will help explain the role economics has in estimating avoided treatment costs and determining whether source water or wellhead protection is cost-effective.

Description:

Safeguarding source waters from contamination is often considered an essential component of drinking water provision. Whether these efforts are cost-effective relative to in-plant treatment options requires an understanding of hydrological, chemical, and biological processes, as well as knowledge of how treatment costs are affected by changes in source water quality. Quantitative evidence on the latter relationship is limited. This study estimates cost functions for municipal groundwater systems in Wisconsin, which relate treatment cost to production volume, factor input prices, and source water quality, where relative cropland coverage in the proximity of wellheads was used as a surrogate for water quality. This study estimates cost functions with both variable treatment cost and total treatment cost. Variable costs refer to expenditures on labor, electricity, and chemical inputs, while total costs further include expenditures on capital equipment. Results suggest that a 1% decrease in cropland relative to other land types is associated with a 0.07 – 0.09% decrease in variable treatment costs. A 1% decrease in cropland is associated with a 0.1 – 0.13% decrease in total treatment costs. Given the limited number of groundwater system studies, the results fill an important gap in the literature and offer insight into the potential avoided-cost benefits of wellhead protection.

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