The Lost Value of Groundwater and its Influence on Environmental Decision Making

Abstract

A critical aspect in establishing environmental policies lies in the proper assessment of the value of the resource being affected. Standard risk assessment analyses calculate the cost of pollution as consisting, solely, of the cost to remediate a site. This traditional definition is extended here to include the lost value of groundwater. These concepts and their impact on decision-making analyses are illustrated through the case of municipal waste landfills. Based on data from existing polluting sites, a simple cost-benefit probabilistic analysis is conducted first, which equates, as is the practice, the cost of pollution to that of remediation. This leads rationally to selection of the lowest-protection technology. Using plausible arguments the reduction in value of groundwater from potable high-quality water to irrigation water, which is what is returned after remediation, is argued. The arguments consist of: (a) the ratio of the subsidized prices of drinking to irrigation water reflects the relative value of the use of water; (b) the amount paid for remediation, in each case, represents, at a minimum, the value of the water recovered; and (c) the lost value of groundwater equals the value of drinking water minus the value of irrigation water. Incorporation of this lost value of groundwater is sufficient to drastically alter the conclusions of the decision-making analysis and make the highest level technology the most rational and profitable alternative. The broader point of this article lies in that proper accounting of environmental costs is necessary in order to alter environmental policies and practices.