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Benefit-Cost Analysis for Drinking Water Standards: Efficiency, Equity, and Affordability Considerations in Small Communities

Listed author(s):
  • Raucher Robert S.

    (Stratus Consulting Inc.)

  • Rubin Scott J

    (Public Utility Consultant)

  • Crawford-Brown Douglas

    (University of North Carolina at Chapel Hill)

  • Lawson Megan M.

    (Stratus Consulting)

Registered author(s):

    The federal Safe Drinking Water Act (SDWA), as amended in 1996, enables benefit-cost analysis (BCA) to be used in setting federal drinking water standards, known as MCLs. While BCAs are typically conceived of as a tool to inform efficiency considerations by helping to identify MCL options that maximize net social benefits, in this paper we also illustrate how important equity and affordability considerations can be brought to light by suitably applying BCAs to drinking water regulations, especially in the context of communities served by relatively small water systems. We examine the applicability and relevance of health-health analysis (HHA), and provide an empirical evaluation of the risk tradeoffs that may be associated with the MCL established for arsenic. We find that the cost-associated risks may offset a nontrivial portion of the cancer risk reduction benefits attributed to the MCL (e.g., the additional adverse health impacts from the costs may be roughly half as large as the number of cancer cases avoided). This reveals the relevance of using the HHA approach for examining net benefits of MCLs in small drinking water utilities, and raises issues related to whether and how these cost-associated health risks should be considered in BCAs for drinking water standards.

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    Article provided by De Gruyter in its journal Journal of Benefit-Cost Analysis.

    Volume (Year): 2 (2011)
    Issue (Month): 1 (January)
    Pages: 1-24

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    Handle: RePEc:bpj:jbcacn:v:2:y:2011:i:1:n:4
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    1. Chapman, Kenneth S & Hariharan, Govind, 1996. "Do Poor People Have a Stronger Relationship between Income and Mortality Than the Rich? Implications of Panel Data for Health-Health Analysis," Journal of Risk and Uncertainty, Springer, vol. 12(1), pages 51-63, January.
    2. Keeney, Ralph L, 1994. "Mortality Risks Induced by the Costs of Regulations," Journal of Risk and Uncertainty, Springer, vol. 8(1), pages 95-110, January.
    3. Keeney, Ralph L, 1994. "Mortality Risks Induced by the Costs of Regulations: Errata," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 320-321, May.
    4. Backlund, Eric & Sorlie, Paul D. & Johnson, Norman J., 1999. "A comparison of the relationships of education and income with mortality: the national longitudinal mortality study," Social Science & Medicine, Elsevier, vol. 49(10), pages 1373-1384, November.
    5. Lutter, Randall & Morrall, John F, III & Viscusi, W Kip, 1999. "The Cost-per-Life-Saved Cutoff for Safety-Enhancing Regulations," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 599-608, October.
    6. Portney, Paul R & Stavins, Robert N, 1994. "Regulatory Review of Environmental Policy: The Potential Role of Health-Health Analysis," Journal of Risk and Uncertainty, Springer, vol. 8(1), pages 111-122, January.
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