Benefit-Cost Analysis for Drinking Water Standards: Efficiency, Equity, and Affordability Considerations in Small Communities

Raucher, Robert S.; Rubin, Scott J.; Crawford‐Brown, Douglas; Lawson, Megan M.

doi:10.2202/2152-2812.1004

Cited by 11 publications

(15 citation statements)

References 10 publications

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“…For drinking water regulations, however, the same households that benefit from the regulation typically bear the full compliance cost. In this context, Raucher et al, (2011) argue that negative health impacts arising from regulatory costs may appreciably offset the risk reduction of the drinking water regulation itself. That is, increasing the cost of water service to a distressed household will increase the likelihood that the household will forego some other health related necessity.…”

Section: Discussionmentioning

confidence: 99%

“…These questions address a household's ability to meet essential expenses such as rent, utility, and medical bills; the ability to see a doctor or dentist as needed; and the adequacy of food availability. Based on the Bauman (1998) SIPP analysis, and similar hardship or financial distress studies, a hierarchy of household necessities can be constructed as shown in Figure 1 Raucher et al (2011), based on Bauman (1998Bauman ( , 1999, Energy CENTS Coalition (1999), and Boushey et al…”

Section: Health-health Analysis and Standard Settingmentioning

confidence: 99%

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On the Distributional Implications of Safe Drinking Water Standards

Cory¹,

Taylor²

2017

J. Benefit Cost Anal.

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The provision of safe drinking water provides a dramatic example of the inherent complexity involved in incorporating environmental justice (EJ) considerations into the implementation and enforcement of new environmental standards. To promote substantive EJ, implementation policy must be concerned with the net risk reduction of new and revised regulations. The regulatory concern is that higher water bills for low-income customers of small public water systems may result in less disposable income for other health-related goods and services. In the net, this tradeoff may be welfare decreasing, not increasing. Advocates of Health-Health Analysis have argued that the reduction in health-related spending creates a problem for traditional benefit-cost analysis since the long-run health implications of this reduction are not considered. The results of this investigation tend to support this contention. An evaluation of the internal structure of consumption expenditures reveals that low-expenditure households can be expected to react to an increase in the relative price of housing-related goods and services due to a water-rate hike by reducing both housing and health-related expenditures. That is, the representative lowexpenditure household re-establishes equilibrium by not only decreasing housing-related spending, but also by decreasing spending on health-related expenditures in a modest but significant way. These results reflect the fact that expenditures on housing are a major proportion of overall household spending, and that accommodating drinking water surcharges exacerbates both health and food security concerns for low-expenditures households.

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Section: Discussionmentioning

confidence: 99%

Section: Health-health Analysis and Standard Settingmentioning

confidence: 99%

On the Distributional Implications of Safe Drinking Water Standards

Cory¹,

Taylor²

2017

J. Benefit Cost Anal.

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“…Doctrinally, the proposal reiterated the Agency's longstanding view that economic feasibility is limited to "what may reasonably be afforded by large metropolitan or regional public water systems" (p. 10682), thus leaving unaddressed the economic inefficiency and inequity discussed in Section 3. The proposed revision was widely criticized by public commenters (USEPA, 2006c) and subsequently by others (Rubin et al, 2007;Crawford-Brown et al, 2009;Raucher et al, 2011;U.S. Conference of Mayors et al, 2013a;U.S.…”

Section: Usepa's Proposed Revision To the Affordability Doctrinementioning

confidence: 99%

Achieving Economically Feasible Drinking Water Regulation

Belzer¹

2020

J. Benefit Cost Anal.

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United States Environmental Protection Agency (USEPA) has regulated drinking water since the 1974 Safe Drinking Water Act (SDWA). Congress directed it to achieve three conflicting goals: (i) establish stringent nationwide standards, (ii) ensure that these standards are both technologically and economically feasible, and (iii) accommodate significant differences in cost among water systems of different sizes with different water sources. USEPA chose to emphasize goal (i) at the expense of (ii) and (iii). In 1986, Congress intensified its preference for (i), was silent concerning goal (ii), and criticized USEPA for failing to achieve goal (iii). In lieu of economic feasibility, the Agency substituted “affordability,” defined as expenditures up to 2.5 % of national median household income irrespective of the benefits. This imposed deadweight losses, and substantial inequities on rural areas, low-income communities, and low-income households generally. In 1996, Congress directed USEPA to use benefit-cost analysis positively and normatively. Regulations issued since 1996 do not appear to comply, however. A review of post-1996 drinking water standards indicates that most were certified by USEPA as having benefits that justified costs, but these determinations were unsupported by the Agency’s own regulatory impact analyses. This article proposes that USEPA define by regulation that “economic feasibility” means marginal benefits exceed marginal costs for the smallest water system subject to SDWA, and that all future drinking water standards must be economically feasible. Economic efficiency would be greatly enhanced and the pervasive inequities of “affordability” greatly diminished. Unlike “affordability,” this definition is objective and compatible with lay intuition about the meaning of key regulatory terms.

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“…Balancing affordability in small water systems with system sustainability has proved to be difficult. Despite extensive work at all levels of industry and government in the United States, the policy issue of affordability and sustainability has not been fully resolved (Raucher et al 2011). The same difficulty applies to Canada as well.…”

Section: Sizes Of Drinking Water Systems Regulated By Alberta Environmentioning

confidence: 99%