Assessing the Value of Polluted Groundwater: Toward a Rational Accounting of Costs in Environmental Problems

Abstract

An important component in the effectiveness of environmental policies is the proper accounting of the cost pollution. Currently, the cost of pollution is viewed as consisting solely of the expenses needed to remediate a site. However, for many commodities the value of a good that is returned after repairs does not approach the original value of the good before damages. This article expands the traditional concept of the cost of pollution by incorporating in this the value lost of groundwater as a result of pollution events. Probabilistic decision-making analyses are used to evaluate the selection of alternative technologies based on their effectiveness, their implementation costs, and the probabilities and costs of success/failure