SDWA Economic Analysis
This page provides information on EPA’s approach to economic analysis when developing standards for drinking water contaminants. EPA uses cost-benefit analysis as an important source of information to evaluate the impacts of alternative policy choices. The Safe Drinking Water Act (SDWA) and other regulatory process laws require EPA to conduct economic analysis during the development of new drinking water contaminant regulations.
Cost analysis involves estimating the expenses needed to comply with new drinking water regulations. Costs may include:
- Expenditures to install and operate contaminant removal technologies
- Costs of water monitoring and analyzing water samples
- Management and oversight costs
The estimated cost is also used to assess the financial impact of reducing the contaminant on the consumers of water (such as an increased household water bill).
Benefits represent the avoided damages or losses in well-being that humans would have experienced without regulatory action. Benefits analysis focuses on the qualitative, quantitative and monetary assessment of these positive changes.
Water Treatment Technology Cost Models
To estimate treatment costs, EPA developed several engineering models using a bottom-up approach known as work breakdown structure (WBS). The WBS models:
- Produce water system-level costs
- Provide EPA with comprehensive, flexible and transparent tools to help estimate these treatment costs
Data for Economic Analysis
A number of data sources are commonly used in the analysis of potential new drinking water contaminant regulations. The primary data used for analyses include:
- Health effects and risk assessment
- Contaminant occurrence in drinking water
- Regulated community statistics