National Benefits Analysis for Drinking Water Regulations

The Safe Drinking Water Act (SDWA) requires cost-benefit analysis as part of the regulatory process.

In its benefits analysis of a regulatory action, EPA strives to:

  • Distinguish and describe the possible factors that will positively impact human well-being
  • Quantify these outcomes of the policy
  • Estimate a dollar value for these beneficial impacts to the extent feasible

Public drinking water regulation benefits result largely from reducing the harmful effects of contamination on people who use water from public water systems.  The most significant effects of these regulations are improvements in human health. Other types of benefits may also accrue, such as:

  • Improved taste
  • Reduced pipe corrosion
  • A reduction of the need to boil water, buy bottled water, or purchase a filter

The possible benefits of drinking water regulations can be broadly categorized as follows.

Human health improvements

Foremost among the damages avoided by public water treatment are the human health problems associated with some contaminants in drinking water. The illnesses caused by these contaminants can either be:

  • Characterized according to general health effects and diseases
  • Described by more specific health outcomes

The health problems can be broadly divided into diseases caused by:

  • Microbial contamination (for example, gastrointestinal illness)
  • Chemical contamination (for example, cancer)

The primary distinction that is typically made in health outcomes is between mortality and morbidity outcomes.  Mortality occurs when an adverse health effect leads to premature death. Morbidity is associated with reductions in physical or mental well-being that result from disease (for example, reproductive effects).

Human health benefits can be estimated through various methods such as avoided cost of illness or willingness to pay to avoid negative health impacts. The benefits analysis considers factors such as:

  • The number of people expected to be harmed after various levels of exposure to a contaminant
  • Subgroups of the population that may be more sensitive than the general population to exposure to contaminants in drinking water
  • How often the contaminant is expected to be found in drinking water
  • The economic values of reduced health risk

Enhanced aesthetic qualities

The aesthetic qualities of drinking water can generally be categorized according to three factors, which may be interrelated:

  • Taste
  • Odor
  • Appearance

People often use the aesthetic qualities of drinking water as indicators of potential health risks. They may also get direct value from these qualities. Individuals may purchase home treatment units, such as water softeners and activated carbon units, to improve the aesthetic (and functional) qualities of tap water.

Regulatory measures that improve these aesthetic qualities will provide benefits to the public, regardless of whether they are intended to improve the safety of the drinking water.

Avoided costs of averting behavior

Both households and public suppliers of water may take actions to prevent contamination at the tap prior to regulations being developed. With regulations that improve the quality of water at the tap, many of the costs of those activities can be avoided in the future.

Avoided materials damages

Drinking water regulations designed to protect public health may also reduce water corrosion of water pipes and other equipment. Measures to reduce the corrosivity of water have a number of potential benefits, such as:

  • A possible decline in pipe breakage
  • Damage to meters and water facilities
  • Water loss
  • Water damage from leaks

Avoided costs of market production

Drinking water sources are also used in the production of goods and services.  To the extent that drinking water regulations improve the quality of source water used in these activities, benefits may accrue in the form of lower production and processing costs for commercial operations such as:

  • Restaurants
  • Food processing companies
  • Other manufacturing establishments

Such businesses and industries may have previously provided treatment of their source waters to improve the quality. After regulation, they may be able to use less expensive public water sources.

Nonuse benefits

Some individuals may derive utility from cleaner drinking water supplies even if they do not consume and have no plans to consume the water themselves. The source of these nonuse benefits may be derived from altruistic motives (such as deriving utility from the knowledge that others benefit) or from more intrinsic motives (such as deriving utility directly from the knowledge that a natural resource is being protected).

Information benefits

Regulations that provide direct knowledge about drinking water quality allow people the benefit of not gathering information individually, thereby avoiding those collection costs. Publicly provided information can also enable individuals to make better informed decisions.

People may get a benefit from avoiding misinformation and misperceptions about drinking water quality (for example, by avoiding the perceived need to purchase bottled water instead of tap water). 

Consumers can also benefit through an increased sense of security and peace-of-mind by being informed about the safety of drinking water.

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