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Natural Resource Damage Assessment: Methods and Cases

Natural Resource Damage Assessment: Methods and Cases

Table 3.2: Contingent

Table 3.2: Contingent Valuation Studies of Groundwater Values Location Cape Cod, MA Action evaluated Uses of water Protection from nitrates Drinking water Omitted health effects; included option values Dover, NH Increased water supply protection MI Protection from pesticides and nitrates Dougherty Increased water supply Co., GA protection from agricultural chemicals, nitrates and pesticides National Protection from landfill leachate GA Protection from nitrate contamination MA, NY, PA IN, NE, WA, Lower Susque- hanna Same as in above study Portage County, Wisconsin Portage County, Wisconsin Clark and Adam counties, Iowa Increased water supply protection (TCE contamination and diesel fuel) Protecting rural drinking water fro m contamination by agricultural chemical residues A filter that would reduce or completely eliminate nitrates from drinking water Groundwater protection program to ensure nitrate standard for drinking water after testing water Groundwater protection program to ensure nitrate standard for drinking water after testing water Delaying nitrate contamination of water supply by 10, 15 and 20 years and bequest values Current personal use values, option values and bequest values 67 Approximate WTP $1,623/HH/year to increase probability of supply from 0 to 1. $815/HH/year for a 25% reduction in risk Mean = $129/HH/year. Median = $40/HH/year. Reference Edwards, 1988 Shultz & Lindsay, 1990 Groundwater Rural: $43-46/HH/year. Caudill, Urban: $34-69/HH/year. 1992 Municipal public water Mean = $641/HH/year Sun, et. al., supplies and rural private wells; Included health effects 1992 Groundwater; Included health effects Drinking water; Included health effects Municipal public water supplies $84/HH/year McClelland et al., 1992 Public water: mean = $121/HH/year median = $66/HH/year Private water: mean = $149/HH/year median = $89/HH/year Jordan and Elnagheeb, 1993 Mean: $62/HH/year Powell, et. al., 1994 Drinking water Mean: $128-$639/HH/year Crutchfield et al., 1995 Municipal public water supplies; mentioned human health effects Private well drinking water quality Private well drinking water quality Private well drinking water quality WTP for safer water: $545- $661/HH/year (mean = $634). WTP for nitrate-free water: $580- $781/HH/year (mean = $654). $207/HH/year if subjective probability of exceeding nitrate standard is 0.5 and $516 if probability is one Crutchfield et al, 1997 Poe, 1998 $412/HH/year Poe and Bishop, 1999 $118/HH/year for 10 year delay $191/HH/year for 20 year delay NOTE: “HH” = household; WTP = willingness to pay. Values rounded off to the nearest dollar. Hurley, et al., 1999

Schultz and Lindsay (1990) estimated the willingness to pay for a hypothetical groundwater protection plan by households in Dover, New Hampshire. Dover was currently considering alternative plans to protect their groundwater supplies. Although Dover had not had any significant groundwater contamination incidents aside from some benzene contamination, neighboring towns had recent pollution problems involving toxic chemicals. Therefore, the study sought to quantify Dover’s willingness to pay for an increase in groundwater protection in comparison with the costs of the proposed protection policies, namely zoning near particular groundwater use areas. The payment vehicle was an annual increase in property taxes. They found that age of the respondent and the dollar amount of the bid presented to respondents had significant negative impacts on willingness to pay whereas income and land values had significant positive impacts. Other characteristics such as education and awareness of past water contamination did not have significant impacts on willingness to pay. In Michigan, Caudill (1992) estimated the option price of groundwater, or the maximum willingness to pay to remediate contamination from landfills to secure the option of using groundwater in the future. However, they did not specify the contaminants. Sun et al. (1992) estimated the benefits of protecting the currently “safe” groundwater from potential future contamination from agricultural chemicals in Dougherty County, Georgia. The groundwater in this area was considered safe at the time of the study by standards set by the Environmental Protection Agency (EPA). However, due to the heavy use of pesticides and fertilizers in the area, groundwater in the study area was deemed at risk for contamination. This study sought to quantify the benefits of increased water supply protection measured in willingness to pay compared to the costs of new policies to reduce agricultural chemical use in the area. Groundwater provides the sole source of public and private water supplies in that county. The payment vehicle was a reduction in the amount of money available to spend on other goods and services. Income, own health concern, subjective contamination probability and probable length of future residence in the county had a significantly positive impact on willingness to pay whereas bid value and age had significant negative effects. McClelland et al. (1992) estimated nonuse values for groundwater. A review by EPA’s Science Advisory Board, however, concluded that the researchers did not develop reliable estimates of nonuse values for groundwater because they were unable to convey the characteristics of the resource, the nature of the contamination and the availability of substitutes to respondents successfully (Desvousges et. al., 1999). Powell et al. (1994) used the CV method to determine if households that received water from a municipal public water supply would be willing to pay for increased protection of their groundwater supply, and if so, how much. Respondents were selected from several towns in Massachusetts, New York, and Pennsylvania. Some had past experience with water contamination, especially trichloroethylene (TCE), which is a volatile organic compound. The results of the mailed survey indicated that each household was willing to pay an average of $61.55 per year for an increase in water supply protection. They also found that willingness to pay increased $26.01 when the household had previous experience with water contamination. Willingness to pay also increased with income, perception of water supply safety, amount spent on bottled water and private water supply. Surprisingly, age and existence of children in the 68

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