Natural Resource Damage Assessment: Methods and Cases

expenditures, that is, money spent to avoid consuming contaminated water. These are
summarized in Table 3.1. Powell (1991) obtained household bottled water expenditures as part
of a CV study of groundwater benefits in eight clean and seven contaminated communities in
Massachusetts, New York and Pennsylvania. Although half of the communities surveyed had
recent contamination problems, only 16% of the respondents were aware of the contamination.
He found that average expenditures on bottled water were $32 per year. Households aware of the
contamination were willing to pay $82 per year for increased water supply protection and those
relying on private wells were willing to pay $14 per year more for protection than those relying
on the public system. Another study used the averting expenditures method to determine how
much households actually spent in avoidance costs in College Township, Pennsylvania, where
perchloroethylene (PCE), a volatile organic compound, was discovered in the groundwater that
served as the source of the public water supply (Abdalla, 1991). Over the 6-month period
between when customers were notified of the PCE contamination and when an alternative water
supply for the community was put in place, over 76% of the households surveyed undertook
averting activities such as purchasing bottled water, bringing water in from elsewhere, boiling
water, using home water treatment systems, and purchasing food and beverages that did not
require the addition of water. Averting expenditures included costs of bottled water, cost of
transportation and lost leisure time hauling water, energy costs and lost leisure time boiling water
and costs of home water treatment devices. The total costs, in 1987 dollars, were estimated to
range between $137,371 and $160,343 depending on the imputed value of leisure. The mean
value was $148,900 for the entire community over the 6-month period, or an average of $21 per
month per household for those households who undertook averting activities (Abdalla, 1991).
Abdalla et al. (1992) used averting expenditures to estimate the economic costs to
households in southeastern Pennsylvania affected by groundwater contamination over an 88week
contamination period. The area studied was Perkasie, Pennsylvania, where
trichloroethylene (TCE) had been detected in a public well. Over the 88-week period between
the time when public water supply customers were notified and when this study was conducted,
customers undertook such actions as buying bottled water and home water treatment systems.
Less than half of those affected by the TCE contamination were aware of the pollution, despite
the fact that the public water supply was to notify their customers of the contamination. Of those
that knew of the contamination, slightly less than half undertook actions to avoid the
contamination. Costs averaged $123 for each household that chose to avoid the contaminant.
Regression analysis showed that households were more likely to make averting expenditures if:
they received information about TCE; they rated the cancer risks associated with the levels of
TCE to be relatively high; children between ages three and 17 were present in the household.
Households with children younger than three years of age incurred larger averting expenditures
than others.
Collins and Steinback (1993) found that 85% of rural households, relying on individual
wells in West Virginia, engaged in averting behavior (such as cleaning and repairing water
systems, hauling water, and water treatment) when informed about contamination. Average
avoidance costs were estimated to be $320, $357 and $1,090 for households with bacteria,
minerals and organic contamination problems, respectively. Table 3.1 highlights the facts from
the above studies.
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