Economic Valuation of River Systems

Economic Valuation of River Systems

New Horizons in Environmental Economics series

Edited by Fred J. Hitzhusen

The book applies benefit–cost analysis and a wide array of non-market and distribution economic valuation methods in ecologic context to determine the pay-off and distribution impacts of various infrastructure and water quality improvements to eight river systems in the Great Lakes region of the US. The generally positive results have important implications for public policy and future research.

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

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation, water

Extract

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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