Citation:

Price, J. AND Matt Heberling. The Effects of Source Water Quality on Drinking Water Treatment Costs: A Review and Synthesis of Empirical Literature - Ecological Economics. ECOLOGICAL ECONOMICS. Elsevier Science Ltd, New York, NY, 151:195-209, (2018).

Impact/Purpose:

With concerns about drinking water quality and safety expanding, in part, due to excess watershed nutrient loadings, it is becoming increasingly important to understand the associated costs and potential benefits of better watershed management for drinking water treatment plants (DWTPs). This paper reviews existing literature estimating the relationship between source water quality and drinking water treatment costs. By completing this research activity, we hope to improve our understanding of the relationship between measures of water quality and drinking water treatment costs.

Description:

Watershed protection, and associated in situ water quality improvements, has received considerable attention as a means of mitigating health risks and avoiding expenditures at drinking water treatment plants (DWTPs). This study reviews the extant cost function literature linking source water quality to DWTP expenditures. For each relevant study, we report information on the modeling approach, data structure, definition of treatment costs and water quality, and statistical methods. We then extract elasticities indicating the percentage change in drinking water treatment costs resulting from a 1% change in a water quality measure. Forty-six elasticities are obtained for various water quality parameters, such as turbidity, total organic carbon (TOC), nitrate, sediment loading, and phosphorus loading. An additional 29 elasticities are obtained for land use classification (e.g., forest, agricultural, urban), which often proxy source water quality. Findings indicate relatively large ranges in the estimated elasticities of most parameters and land use classifications. However, average elasticities are smaller and ranges typically narrower for studies that incorporated control variables consistent with economic theory in their models. We discuss the implications of these findings for a DWTP’s incentive to engage in source water protection and highlight a number of gaps in the literature.

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