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An Economic Analysis of Consumer Expenditures for Safe Drinking Water: Addressing Nitrogen Risk with an Averting Cost Approach

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  • Tenwalde, Tracy
  • Jones, Eugene
  • Hitzhusen, Frederick J.
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    Abstract

    This article presents a procedure for estimating averting expenditures through the analyses of two data sources: (1) packaged water sales from 18 national supermarket chain stores in the Columbus, Ohio Metropolitan Area (COMA); and (2) treatment expenditures for both high and low service water from a local drinking water treatment facility owned and operated by the Columbus, Ohio municipality. The averting behavior results from a nitrogen advisory for drinking water for 1/3 of the COMA. The study concentrates on estimating these averting expenditures as representative of averting behavior for a market and non-market good trade-off. This article concentrates on the economic consequences of the nitrogen pollution problem as it affects households through the water they drink. It measures the private and public averting for the remedies available to address this problem. Major findings are that consumers make significant expenditures on packaged water both inside and outside the nitrogen advisory area and the municipality also makes considerable averting expenditures. The results represent an averting behavior effect emanating through an area having experienced recent and historic nitrogen advisory events with significant implications for government and industrial strategies for identification and prevention of nitrogen contamination incidents.

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    File URL: http://purl.umn.edu/19431
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    Bibliographic Info

    Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19431.

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    Date of creation: 2005
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    Handle: RePEc:ags:aaea05:19431

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    Keywords: Averting Cost; Nitrogen Risk; Safe Drinking Water.; Consumer/Household Economics;

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    1. Olof Byström, 2000. "The Replacement Value of Wetlands in Sweden," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(4), pages 347-362, August.
    2. Harford, Jon D., 1984. "Averting behavior and the benefits of reduced soiling," Journal of Environmental Economics and Management, Elsevier, vol. 11(3), pages 296-302, September.
    3. Bartik, Timothy J., 1988. "Evaluating the benefits of non-marginal reductions in pollution using information on defensive expenditures," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 111-127, March.
    4. Bystrom, Olof & Andersson, Hans & Gren, Ing-Marie, 2000. "Economic criteria for using wetlands as nitrogen sinks under uncertainty," Ecological Economics, Elsevier, vol. 35(1), pages 35-45, October.
    5. Bateman,Ian J. & Lovett,Andrew A. & Brainard,Julii S., 2005. "Applied Environmental Economics," Cambridge Books, Cambridge University Press, number 9780521671583.
    6. Courant, Paul N. & Porter, Richard C., 1981. "Averting expenditure and the cost of pollution," Journal of Environmental Economics and Management, Elsevier, vol. 8(4), pages 321-329, December.
    7. Bystrom, Olof, 1998. "The nitrogen abatement cost in wetlands," Ecological Economics, Elsevier, vol. 26(3), pages 321-331, September.
    8. Bryan J. Hubbell & Jeffrey L. Jordan, 2000. "Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 427-437.
    9. Carlsson, Fredrik & Frykblom, Peter & Liljenstolpe, Carolina, 2003. "Valuing wetland attributes: an application of choice experiments," Ecological Economics, Elsevier, vol. 47(1), pages 95-103, November.
    10. Charles W. Abdalla & Brian A. Roach & Donald J. Epp, 1992. "Valuing Environmental Quality Changes Using Averting Expenditures: An Application to Groundwater Contamination," Land Economics, University of Wisconsin Press, vol. 68(2), pages 163-169.
    11. Turner, R. Kerry & Georgiou, Stavros & Gren, Ing-Marie & Wulff, Fredric & Barrett, Scott & Soderqvist, Tore & Bateman, Ian J. & Folke, Carl & Langaas, Sindre & Zylicz, Tomasz, 1999. "Managing nutrient fluxes and pollution in the Baltic: an interdisciplinary simulation study," Ecological Economics, Elsevier, vol. 30(2), pages 333-352, August.
    12. Turner, R. Kerry & van den Bergh, Jeroen C. J. M. & Soderqvist, Tore & Barendregt, Aat & van der Straaten, Jan & Maltby, Edward & van Ierland, Ekko C., 2000. "Ecological-economic analysis of wetlands: scientific integration for management and policy," Ecological Economics, Elsevier, vol. 35(1), pages 7-23, October.
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