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

Published online by Cambridge University Press:  07 June 2021

Robert S. Raucher ,
Scott J. Rubin ,
Douglas Crawford-Brown  and
Megan M. Lawson
Robert S. Raucher
Affiliation:
Stratus Consulting Inc.
Scott J. Rubin
Affiliation:
Public Utility Consultant
Douglas Crawford-Brown
Affiliation:
University of North Carolina at Chapel Hill
Megan M. Lawson
Affiliation:
Stratus Consulting
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Abstract

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The federal Safe Drinking Water Act (SDWA), as amended in 1996, enables benefit-cost analysis (BCA) to be used in setting federal drinking water standards, known as MCLs. While BCAs are typically conceived of as a tool to inform efficiency considerations by helping to identify MCL options that maximize net social benefits, in this paper we also illustrate how important equity and affordability considerations can be brought to light by suitably applying BCAs to drinking water regulations, especially in the context of communities served by relatively small water systems. We examine the applicability and relevance of health-health analysis (HHA), and provide an empirical evaluation of the risk tradeoffs that may be associated with the MCL established for arsenic. We find that the cost-associated risks may offset a nontrivial portion of the cancer risk reduction benefits attributed to the MCL (e.g., the additional adverse health impacts from the costs may be roughly half as large as the number of cancer cases avoided). This reveals the relevance of using the HHA approach for examining net benefits of MCLs in small drinking water utilities, and raises issues related to whether and how these cost-associated health risks should be considered in BCAs for drinking water standards.

Keywords

drinking water regulationBCArisk assessmentaffordabilityhealth-health analysisuncertainty
Type
Article
Information
Journal of Benefit-Cost Analysis , Volume 2 , Issue 1 , 03 January 2011 , pp. 1 - 24
Copyright
Copyright © Society for Benefit-Cost Analysis 2011

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