Contamination of freshwater ecosystems and drinking water sources with micropollutants (MPs) is increasingly recognized as a major environmental concern in industrialized countries (Schwarzenbach et al., 2006). Numerous products used in households, industry and agriculture contain MPs. A substantial amount of them enter rivers and lakes through municipal sewage treatment plants (STPs) because they are not or only partially removed in conventional treatment processes (Joss et al., 2006). Even at very low concentrations, MPs can have adverse effects on aquatic ecosystems and possibly also on human health. New wastewater treatment technologies, such as ozonation and activated carbon, can substantially (>80%) decrease the loads of many MPs (Hollender et al., 2009). Following the precautionary principle, the Swiss government has decided to impose legal requirements for reducing MP loads from STPs.
Economic analysis of a reduction in MP loads has so far focused mainly on cost estimates. There has been only one previous attempt to estimate the benefits of reducing MP loads from wastewater (Molinos-Senante et al., 2013). However, the authors recognize that their approach is limited compared to stated preference (SP) methods used in our study (Molinos-Senante et al., 2010).
The main objectives of this study are (1) to investigate public awareness and perception of environmental and health risks of MPs in Switzerland, (2) to estimate the benefits of reducing the MP loads from wastewater based on people's stated willingness to pay (WTP), and (3) to perform a cost-benefit analysis (CBA) of upgrading STPs in Switzerland.
One of the key challenges in applying a CBA to evaluate environmental policy is the monetary quantification of its non-market values (costs and benefits), without which the analysis may be incomplete and, therefore, seriously misleading (Pearce, 1998). This study estimates such non-market values relating to the reductions in potential environmental and public health risks of MPs by means of stated preference methods. More specifically, we conduct a choice experiment in a national online survey (N=1000). Choice experiment determines people's preferences based on choices they are asked to make in a survey trading off the costs and benefits related to two or more possible policy alternatives. One of the alternatives is usually a baseline option, representing the status quo situation.
Results and Discussion
Respondents consider themselves well informed about MPs and their potential risks. Despite this, approximately three quarters were not aware of the level of the potential environmental risk of MPs in their area of residence before taking part in this survey. Over 80% of the respondents perceive MPs as risky or somewhat risky, around 10% think that they are very risky, while only 4% think that they are not risky at all.
Results indicate that the marginal willingness to pay (MWTP) for reducing the potential environmental risk from current high or medium to a low level is CHF 100 annually per household. For reducing the potential environmental risk in the whole of Switzerland instead of only in the canton of a respondent's residence, Swiss households are willing to pay CHF 51 annually on top of their current water bill. Finally, their MWTP for having the new knowledge about the effects of MPs on human health available one year sooner is CHF 6 annually. These benefits, aggregated over households in the catchment of the STPs to be upgraded, generate a total annual economic value of CHF 155 million. This compares with estimated annual costs for upgrading 123 STPs of CHF 133 million or CHF 86 per household connected to these STPs. Hence, a cost-benefit analysis justifies the investment decision from an economic point of view and supports the implementation of the national policy in the ongoing political discussion.
The results show that despite high uncertainty surrounding the impacts of MPs, Swiss households are willing to pay a substantial amount of money on top of their current water bill for their reduction. The mean WTP for reducing the potential environmental risk of MPs to a low level at a cantonal scale (CHF 100 annually per household) equals 20% of the household's current water bill and just over 1% of an average household's income.
The CBA results show that investments in upgrading STPs in the country can be justified and they support the implementation of national MP policy from an economic perspective. The results are, however, not entirely robust. The estimated costs and benefits need close future monitoring to ensure that the conclusions drawn in this study are valid. For example, policy makers may consider increasing the share of ozonation technology, which proves to be cheaper and therefore ensures higher social welfare.
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