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Valuing Water Quality Changes Within A Water Quality Ladder Framework

Congress: 2015
Author(s): Diane Dupont (St. Catharines, Ontario, Canada), Asit Mazumder, James Price, Steve Puglia, Steven Renzetti, John Zhu
University of Victoria (Biology)1, Brock University/Economics2, Brock University3

Keyword(s): Sub-theme 14: Valuing water: monetary and non-monetary dimensions,
Abstract Introduction

The goal of the project was to develop a computer-based model to facilitate the valuation of changes in water quality parameters in support of water policy decisions. Valuation is frequently required for the purposes of undertaking cost-benefit analysis of regulatory and other impacts that may alter the level of water quality. The project developed a flexible platform capable of incorporating future changes and improvements. The model is comprised of two key modules (Water Quality Ladder Module and Willingness-to-Pay Module), along with underlying databases of key parameter information. The two modules ultimately are used to link changes in water quality parameters (WQP) to "rungs" on a Water Quality Ladder (WQL) and then map onto water-based uses and/or activities and their associated values (or willingness-to-pay estimates). The ladder is scaled to identify activities associated with the lowest and the highest quality of water levels (Carson and Mitchell, 1993). Movements along the ladder imply either potential increases in benefits (from higher water quality) or potential increases in costs (from lower water quality). Ultimately, these changes in economic values can be used as inputs into cost-benefit analyses of regulatory decisions that may cause water quality changes.

Methods/Materials

The project integrated the scientific expertise of biologists and economists to develop an ACCESS-based program that will enable a variety of different types of end users (e.g., policy analysts, regulators, etc.) to translate changes in water quality into forecasted changes in economic values (benefits/costs). The team employed a five-step process. The first step required determination of the water quality parameters of interest. For the test case of Canada, the team identified the following key parameters: total phosphorus, total nitrogen, chlorophyll, microcystin, Fecal Coliform, DO, turbidity, pH, BOD, mercury, selenium, and arsenic. For each parameter, the team determined the levels associated with the various rungs on ladder of water use (that is, water that is good enough for boating, water good enough for fishing, water good enough for swimming, and finally water good enough for drinking). The second step involved collection of baseline levels for the water quality parameters as well as the socio-demographic characteristics of households. In the initial stage this was done for the 25 drainage regions defined for Canada. The third step linked changes from the baseline water quality levels (where the changes could arise either from regulatory or other impacts) to their new positions on the ladder. The fourth step matched water quality changes with the relevant willingness-to-pay values for water quality improvements from the research literature (e.g., from water that is boatable to water that is fishable, etc.). In order to make these values sensitive to local conditions, the team employed a benefit transfer approach (Johnston and Thomassin, 2010). This estimates economic values by transferring available information from studies completed in different locations/contexts to the study area of interest (in this case, the Canadian context). In order to allow for flexibility, four different benefit transfer functions were incorporated into the Willingness-to-Pay Module. These functions estimate willingness-to-pay values that are dependent upon drainage-region specific incomes, population levels, and water quality changes. This provides the analyst with flexibility to undertake sensitivity analyses and to examine the extent to which water quality changes either provide benefits or impose costs upon a population. The fifth and final step was the reporting stage. End users have options for the formats in which reports are provided, including tables, charts and graphs. They can also export the results to EXCEL for further analysis.

Results and Discussion

The model was developed in ACCESS to facilitate both the incorporation of new information in an automated fashion (e.g., from the government of Canada's Statistics Canada websites that contain updated census information) and flexibility in Module development and extension, such as, incorporation of sub-drainage basin level information as it becomes available, as well as the capability of adding more water quality parameters. In addition, the model provides options that allow the end user to refine the analysis. Options include: the use of different weightings for aggregation of water quality changes when a regulation affects more than one water quality parameter and the option to examine a regulatory change in a single drainage region or for a combination of regions, as well as at a national scale).

Conclusion

There are three outcomes from this project. The first is better knowledge related to the link between surface water quality improvements/degradation and changes in Canadians' valuation of these changes. The second is the application of expertise from several disciplines (economics, biology, hydrology) to develop a tool that will assist decision-making for policy-makers in many jurisdictions by using the findings in cost-benefit analyses. The third is an increase in knowledge on the contribution of water to an economy.
1. Carson, R.T. and Mitchell, R.C. (1993) The value of clean water: the public’s willingness to pay for boatable, fishable and swimmable quality water. Water Resources Research. 29(7):2445-2454.
2. Johnston, R. J. and Thomassin, P. J. (2010) Willingness to pay for water quality improvements in the United States and Canada: considering possibilities for international meta-analysis and benefit transfer. Agricultural and Resource Economics Review. 39(1):114-131.

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