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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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Listed:
  • Tenwalde, Tracy
  • Jones, Eugene
  • Hitzhusen, Frederick J.

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.

Suggested Citation

  • Tenwalde, Tracy & Jones, Eugene & Hitzhusen, Frederick J., 2005. "An Economic Analysis of Consumer Expenditures for Safe Drinking Water: Addressing Nitrogen Risk with an Averting Cost Approach," 2005 Annual meeting, July 24-27, Providence, RI 19431, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19431
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    File URL: http://purl.umn.edu/19431
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    References listed on IDEAS

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    1. 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.
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    9. Bystrom, Olof, 1998. "The nitrogen abatement cost in wetlands," Ecological Economics, Elsevier, vol. 26(3), pages 321-331, September.
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