New Horizons in Environmental Economics series
Edited by Fred J. Hitzhusen
Chapter 3: Estimating Willingness to Pay for Additional Protection of Ohio Surface Waters: Contingent Valuation of Water Quality
Stephen Irvin, Tim Haab, and Fred J. Hitzhusen INTRODUCTION Public good provision usually depends on governmental intervention in the form of regulations or standards. Regulations try to level the playing ﬁeld in markets involving externalities like pollution. The diﬃculty comes in trying to ﬁnd the right amount of externality to regulate. In the case of rivers, state environmental protection agencies must decide the amount of pollutant discharge to permit into the water. The rules regarding discharge consider rivers and other water bodies as surface water.1 The amount of pollution admitted to enter surface water determines the level of public good available to all consumers. These rules are the regulations established by state governments to protect rivers and provide nonmarket beneﬁts to the public in the form of cleaner water, recreational opportunities, scenic views, and healthy diverse ecosystems. They are usually confusing to the general public, but have value in that they facilitate the provision of a public good. In Ohio, the regulation concerning discharge into surface waters is known as the Antidegradation Rule. The rule outlines a quality criterion for surface water, known as the minimum pollutant assimilative capacity, which states the level at which surface water cannot accept any more discharge in order to protect human health and wildlife (Ohio EPA, 2003). Any discharge beyond this point would create hazardous conditions. Some surface waters have the ability to assimilate more pollution without violating the quality criterion. In these cases, the ambient quality of surface water is above...
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