15th Stockholm Water Symposium

~ Workshop 8 ~

The Cost of Non-Action in Controlling Toxic Water Pollution:

An Economic Perspective

by K. William Easter

Professor of Applied EconomicsUniversity of Minnesota

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A. Objectives

1. Determine best methods for estimating cost

2. Discuss how information and behavior affects choice

3. Indicate what existing data shows concerning costs

4. Suggest strategies for reducing costs

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B. Three toxic contaminates

1. Arsenic – widespread in Bangladesh, China and NE India

2. Atrazine – heavily used in U. S. Midwestern agriculture

3. Mercury – emission from coal-fired plants and mining

C. Two country settings

1. Developed country – i.e., U.S. and Japan

2. Developing country – i.e., Bangladesh and India

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D. Effects of three pollutants

1. Arsenic (inorganic) – acute/immediate and chronic health risks and death at high doses

2. Mercury (methylmercury) accumulates in fish and those who eat fish. Causes cancer, heart attacks, permanent brain damage, etc.

3. Atrazine – was classified as possible human carcinogen but is now listed as not a likely carcinogen by USEPA

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E. Methods for estimating cost

1. Avoidance cost – need information and options

2. Recreational choice – for nondomestic uses

3. Cost-of-illness or value of statistical life – when health is impaired

4. Contingent valuation (survey) – to measure cost of discomfort and suffering of illness

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F. What do past estimate show? (tables 1-3)

1. Avoidance cost for toxics $200 to $1,000 annually

2. Avoidance costs for nontoxics - $50 to $1,300

annually

G. Developing country cost estimation (table 4)

1. Limited information and options

2. Recreation low priority

H. Developed country cost estimation (table 5)

1. Have information and options

2. Recreation important

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Table 1. Economic Cost of Drinking Water Quality Contamination

Study Area

Estimate Ranges

Avoidance Cost (per month)

Contingent Valuation

(per month)Cost of Illness

(per case)

Georgia, U.S. (2000) $4 - -

West Virginia, U.S. (1993) $27 & 30 - -

Milesburg, Pennsylvania, U.S. (1993)

$13-33 - -

Grande Vitoria, Brazil

(2000)

- $3-39 -

Kathmandu, Nepal (2005) $3 $17 $89-108

Pennsylvania, U.S. (1989) $34-108 - $858-1,255

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Table 2. Economic Cost of Toxic Pollution of Drinking Water Supplies Per Household

Study Area

Estimate Ranges

Avoidance Cost (per month)

Contingent Valuation

(per season)

Perkasie, Pennsylvania, U.S. (1992)

$17

West Virginia, U.S. (1993) $91

Seoul, South Korea (1997) $3

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Table 3. Economic Costs of Toxic Pollution of Water Used for Recreation

Study Area

Estimate Ranges

Recreational Choice (per user per season)

Cost of Illness (per case)

California, U.S. (coastal area) (2005)

$37-77

New York, U.S. (lakes) (1997)

$63

Wisconsin, U.S. (Great Lakes) (2000)

$89-108

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Table 4. Best Method for Estimating Welfare Costs for a Developing Country with an Uninformed Population

Pollutant Best Measure of Cost of Non-Action

Arsenic Cost of illness and continent valuation

Mercury Cost of illness and contingent valuation

Atrazine Contingent valuation to estimate avoidance costs

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Table 5. Best Method for Estimating Welfare Costs for a Developed Country with an Informed Population

Pollutant Best Measure of Cost of Non-Action

Arsenic Avoidance cost

Mercury All four methods

Atrazine Avoidance cost plus recreational choice

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I. Future costs (table 6)

1. Arsenic serious future costs for Asia

a. Bangladesh 60% of population affected

2. Mercury serious future costs for world

a. Increased emission of coal fired plants:

1,500 tons annually with 870 tons from Asia

b. High fish consumption – Asia and Pacific

c. Weakening the U.S. mercury emission

regulations impose a $190 million cost on

Minnesota

d. Japanese deaths from mercury just the

beginning for Asia?

3. Atrazine’s full impact still uncertain

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Table 6. Future Cost of Not Controlling or Mitigating Toxic Pollution

Pollutant Developing Country Developed Country

Arsenic Large Small

Mercury Very large Large

Atrazine Uncertain but growing Insignificant to moderate

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J. Strategies for controlling the pollutants

1. Improve monitoring and detection efforts

2. Develop improved filters for arsenic

3. Strengthen and enforce mercury pollution emission standards

4. Develop improved substitutes for Atrazine.

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Web page to access this paper.

http://www.apec.umn.edu/faculty/weaster/research.html

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St. Croix River in Interstate State Park, MNPhotographer: Robert Ashley Wilson, 1983

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Lake Kabetogama, Voyageurs National Park, MN. White pine.Photographer: Donald L. Breneman, 1995

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Lake Superior, North Shore, MN, Split Rock Lighthouse   Photographer: Donald L. Breneman,1995

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Lake Superior, North Shore, MN, Middle Falls, Pigeon River Photographer: Robert Ashley Wilson, 1982