6
The Environmental Pillar of Sustainable Water: Ecological Services

Across the globe, increased demand and water mismanagement have put stress on water services. As a result, there has been a growing societal recognition of the need to look at sustainable solutions that allow for everyone to have access to clean water. There is growing recognition of the importance of ecological services (benefits arising from the ecological functions of healthy ecosystems) as part of a management strategy in new approaches. Ecological services imply that nature can also play a role in providing safe drinking water. Whether through source water protection or natural filtration, the environment can work in concert with technology to provide water in a reasonable, sustainable fashion.

DRINKING WATER VALUATION: CHALLENGES, APPROACHES, AND OPPORTUNITIES

Diane Dupont, Ph.D., Professor of Economics

Brock University


The value of water and the importance of having the public recognize the true value of water are of great relevance to the goals of achieving sustainability and efficiency in water supply systems. Investigating how people value water and how to elicit these beliefs and behavior in order to improve water use and cost recovery can be understood by outlining challenges to the valuation of water, approaches to valuation, and opportunities to make gains in water systems and societal attitudes about the former. While workshops such as this one will not be able to solve the challenges, bringing together scientists from diverse areas to discuss water issues creates opportunities to bring about crosscutting solutions.



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6 The Environmental Pillar of Sustainable Water: Ecological Services Across the globe, increased demand and water mismanagement have put stress on water services. As a result, there has been a growing societal recogni - tion of the need to look at sustainable solutions that allow for everyone to have access to clean water. There is growing recognition of the importance of ecologi - cal services (benefits arising from the ecological functions of healthy ecosystems) as part of a management strategy in new approaches. Ecological services imply that nature can also play a role in providing safe drinking water. Whether through source water protection or natural filtration, the environment can work in concert with technology to provide water in a reasonable, sustainable fashion. DRINKING WATER VALUATION: CHALLENGES, APPROACHES, AND OPPORTUNITIES Diane Dupont, Ph.D., Professor of Economics Brock University The value of water and the importance of having the public recognize the true value of water are of great relevance to the goals of achieving sustainability and efficiency in water supply systems. Investigating how people value water and how to elicit these beliefs and behavior in order to improve water use and cost recovery can be understood by outlining challenges to the valuation of water, approaches to valuation, and opportunities to make gains in water systems and societal attitudes about the former. While workshops such as this one will not be able to solve the challenges, bringing together scientists from diverse areas to discuss water issues creates opportunities to bring about crosscutting solutions. 

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 GLoBAL ENVIRoNMENTAL HEALTH Challenges to Valuing Water: What to Value, Water Competition, and Willingness to Pay The first challenge in estimating the value of water to the consumer and soci- ety is to determine which qualities, amounts, and uses to include. Human health is an obvious value, as are general household and industrial and agricultural uses. Water is used for many valued activities, which fall into three categories: (1) direct, including household consumption, waste disposal, and recreation as well as industrial and agricultural input use in production processes or as a method of eliminating waste; (2) indirect, including hygiene, ecosystem maintenance, flood protection, and aesthetics; and (3) nonuse, including the values people place on the existence of bodies of water, such as the Great Lakes. One framework for water valuation is the Total Economic Valuation Framework, which was used in Canada to quantify the value of Canada’s natural resources, including water. The focus of these remarks is on drinking water as it directly affects human health. Drinking water has two main dimensions that affect health: quantity and quality. Water quality is a critical component in value for consumers and directly links to health. Economists use a willingness to pay (WTP) approach in order to value drinking water quality. By enumerating a number of components of quality, they then have survey respondents reveal their values through a series of tasks designed to elicit trade-offs made across different aspects of water quality. This is a difficult problem for water, as it may be difficult for consumers to separate out components of water quality, and there are no competitive markets to allow market comparisons. The lack of a market to equilibrate between the supply and the demand for water is problematic, in that many people have no concept of their consumption levels or the quality of water they consume. Even more complicat - ing is the fact that value may differ significantly in different contexts. In Canada, the metering of household water consumption is not universal. Approximately two-thirds of households are metered, which results in many individuals not knowing how much water they use and therefore having little understanding of the value of water. A similar situation exists in the United States. An exacerbating factor in both countries is that the pricing structure designed by water utilities generally is intended as a cost-recovery exercise relating to admin - istrative costs and past infrastructure cost recovery. Thus individual households can in theory use very large volumes of water, but be charged only a minimal administrative cost. Furthermore, current pricing structures do not generally cover infrastructure renewal or innovation. Overconsumption and ignorance of the amount of water usage arise from the lack of understanding that water is scarce. Current pricing structures encourage the perception that water is not scarce, which results in a reference bias, in which water becomes a free good and its value is zero. Because there is no feedback mechanism, such as volumetric pric- ing, people have the tendency to overconsume. Similarly for the industrial sector, the pricing structure is such that the cost of one more unit of water is so small that firms are discouraged from adopting

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 THE ENVIRoNMENTAL PILLAR oF SUSTAINABLE WATER conservation efforts or efficient use. Of course, the cost to society is far more than nothing, and reform of water provision is needed to reflect these costs. Engineer- ing has come to focus on production to meet the demand rather than prioritizing other needs, such as safety and sustainability. The alternative is that water is managed through conservation pricing as a way to acknowledge that the supply of water is not inexhaustible. Finally, sustainable action must commence prior to when supplies run dry and the demand for water can be modulated through price. When it comes to valuation, most people struggle to quantify what con - stitutes water of high quality. Focus groups defined good-quality water by the absence of contaminants, such as color, odor, and taste. Economically, this is a conundrum that may be addressed by turning these negatives into positives, such as health benefits and reliability (i.e., the water will be there when the tap is turned on). Another challenge in quality is helping the consumer make linkages between their own water use and ecosystem services (conservation and environ- mental consequences). The solution to this disconnect is education of the public on the impact of water quality and quantity. The Real Value of Water: Economic Approaches Markets will not be able to reveal the disparate values for different com - ponents of water, as their approach is based on giving every unit of the item in question a homogeneous value, which is not the case for water. Because of this market failure, economists turn to nonmarket valuation approaches, both indirect and direct. The indirect method relies on the assumption that the value of water can be revealed through examination of the values of related goods and services that are bought and sold in a market. In terms of finding water values related to health, indirect methods include the cost of illness (COI) approach, which infers the value of water to promoting good health with refer- ence to treatment costs associated with illness or to lost wages due to illness, and the averting behavior (AB) approach, whereby consumers spend money to self-protect in order to reduce the perceived risk of ill health from poor quality water. For example, in a water valuation study of 1,600 Canadians, individuals were found to spend about $180 Canadian per household per year on bottled water. This can be viewed as a form of averting behavior, since many individu- als reported doing so for health reasons. Further questioning revealed that, for just over 50 percent of the individuals surveyed, bottled water was considered safer than tap water (Dupont et al., 2008) despite less regulation and testing. Expenditures on in-home filtration systems were of a similar order of magni - tude ($189 per household per year). Given that the average household pays on the order of $500 a year to purchase tap water from public utilities, these expenditures represent a significant increase. Since these expenditures tend not to be in reference to the purchase of specific benefits but instead are related to

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 GLoBAL ENVIRoNMENTAL HEALTH preferences and beliefs, it is difficult to use these values solely for the purposes of obtaining health benefits from good-quality water. The second approach used by economists to obtain nonmarket values, direct methods of valuation, can be constructed to provide more detailed and accurate values. The direct valuation method constructs a simulated market setting for con- sumers to state choices that reveal the relative value of one level of quality of an attribute compared with another. This may be a better method for obtaining consumer-related water values, because individuals can clearly conceptualize an increase in the cost of their water bill as a trade-off. In a survey done in Canada, consumers chose between different water management programs that involved different levels of chlorination, resulting in decreases in microbial contamination at the cost of increasing bladder cancer cases and vice versa. Visual and numeric estimations of risk were used to describe the relative risks in the different sce - narios. Two methods of estimating willingness to pay were used in a survey done in 2004; the contingent valuation method (CVM), in which the entire package is priced, and the choice experiment (CE) method, in which individual components are priced by consumers. Individuals were, on average, willing to pay increased water bills in order to see reductions in either one or both health risks, with the average annual willingness to pay for a reduction in the risk of a cancer death of $10 and a willingness to pay of $13 for a reduction in the risk of a microbial death. Lower willingness-to-pay values were obtained for reductions in illnesses that were not fatal (Adamowicz et al., 2007). Opportunities to Bring the Value of Water Closer to the True Value The status quo value of water cannot remain close to zero if societies are ever to encourage its sustainable use. There exists a need to increase the price that users pay for water to include not only the full cost of infrastructure renewal and upkeep but also a component relating to the cost of environmental conservation. More research is needed to explore how consumers and industries value or fail to recognize the value of water and to examine how these beliefs can be challenged to refute false perceptions and, most importantly, to improve water conservation so that future generations do not see the day when the well runs dry. IMPACTS OF DEMOGRAPHIC CHANGES AND WATER MANAGEMENT POLICIES ON FRESHWATER RESOURCES Jill Boberg, Ph.D., Consultant The assumption that all water scarcity can be summarized in a single num - ber must be challenged. Instead, the factors influencing water scarcity are more complex and require scaling for different sectors. The discussion should be restructured to address demographics and water management and more clearly

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 THE ENVIRoNMENTAL PILLAR oF SUSTAINABLE WATER outline water supply issues. The limitations of these data are the inaccuracies and problematic measurement of supply and demand as well as changeable demo- graphic forecasts. Forecasts tend to change because of variation in human behav - ior as much as change in environment. Because of variation in local distribution, analysts tend to aggregate multiple, heterogeneous local groups into water data. Although this shortcut occurs because of limited information, it is, in fact, critical to water management, which by necessity will occur on a local level. Water Supply and Demand: The Bigger Picture Despite a general focus on domestic water consumption, this use of water represents only 10 percent of worldwide consumption, with 20 percent for indus - trial use and the remaining 70 percent for agricultural use. However, there is often wide variation in this breakdown, depending on the economy and the location. There is a framework for examining the factors that impact water management. The water supply, on one side, and water demand, on the other, are both modified by intervening factors. Water supply consists simply of water resources and water quality services. Water demand consists of the important demographic factors that are expected to predict use and need. Also of consideration is the importance of intervening factors, which tend to be neglected in water management estimates. World Demographics: A Picture of Water Demand Demographics are broken down into several categories: population size, number of households, urbanization, population distribution, migration, and mor- tality. Population size is a critical factor, as population growth is a strong predic - tor of future resource need. Fertility rates are widely disparate among levels of global development, which will drive future water needs strongly. A potential mitigating factor is declining growth rates; as fertility rates converge in differ- ent world economies, predictions of growth become more complex. Regardless, the median numbers indicate that overall there will continue to be an increase in growth and a need to adjust water management accordingly. Of all the demo - graphic inputs, population size is the one most consistently taken into account; yet the other implications for water demand are important. With growth, increase in the number of households is an expected trend; however, this increase is disproportionate to numbers of individuals. As multigen- erational households decrease, and the number of children per family decreases along with increasing independence of young adults and divorce rates, there is a greater increase in households. The number of households has a strong influence on domestic water rates, leading to more water usage for static needs as well as a decrease in the cost-effectiveness of water conservation and efficiency. It also leads to increasing sprawl and other environmental impacts, such as urbanization, again driving up domestic use. Number of households is gaining interest in the

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0 GLoBAL ENVIRoNMENTAL HEALTH Demographic Intervening Water factors factors resources Supply management Demand management Sectoral distribution Population size Physical climate Number of households Social/cultural climate Urbanization Water quality Political climate Sector Economic climate Population distribution Migration Economic development Mortality Access to water and sanitation Land use FIGURE 6-1 Water supply and water demand (demographics factors) impact water man- agement. However, both water resources and demographic factors are modified by a num- ber of intervening factors that are often neglected in water management estimates. Figure 6-1.eps SOURCE: Boberg, 2005. Liquid Assets: How Demographic Changes and Water Man- redrawn agement Policies Affect Freshwater Resources, RAND Corporation. Reprinted with now fully editable permission. water management sector, with ongoing studies to determine whether number of households might be more important than population size in predicting water use (Figure 6-1). Urbanization and Agriculture: Challenges to Water Management Rapidly increasing rates of urbanization should also be expected to alter water consumption. The proportion of urban and rural dwellers in the world is expected to be equal in 2030, with growth concentration increasing in urban centers after that. Despite the fact that urban areas are currently less than half of the world population, they already account for 60 percent of world’s freshwater withdrawals (O’Meara, 1999). Because water in urban centers is piped rather than directly withdrawn, it generally leads to increased use per person. Urban centers are more likely to use water-based sanitation, which is a very high use of water; for example, in India, when adding water-based sanitation, water use increased threefold. Industrial use of water is higher in urban areas, as is the predominance of convenience foods, which are very water-intensive to produce. Because of the population density in urban centers, there tends to be a large, negative environ- mental impact on the surrounding area. In addition, urban areas are quite prone to water shortages, even in areas that are relatively water secure, owing to large

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 THE ENVIRoNMENTAL PILLAR oF SUSTAINABLE WATER demand and environmental disruption, leading to lower water supply or quality in the periurban area (O’Meara, 1999). Agricultural water use must be addressed in water management. A major concern for water quality is groundwater contamination with pesticide and fertil - izer runoff. Protection of groundwater, however, is an achievable and necessary endeavor for large urban centers. For example, New York City has ensured a clean water supply through watershed protection in its region. Watershed protection can be achieved through maintenance and replacement of forest or natural land cover in the watershed and reforestation when necessary. Equity and Access: Providing a Fair Share of Water Resources Another challenge of urbanization is the provision of equal access to water resources for everyone in the region. Poor and migrant populations tend to clus- ter on the city outskirts, where there is no formal access to water or sanitation (Lenzen, 2002). Even when service is provided, agencies sometimes struggle to keep up with demand of these populations. This scarcity of water and sanitation services coincides with other shortages, such as fuel and housing. Paradoxically, this leads to increased fertility rates, as each child can provide a marginal benefit to the household of another person to search for water, food, and other resources. This increased fertility of marginalized poor populations only exacerbates scar- city and reduces the opportunities to improve the financial situation of the house - hold (Dasgupta, 2000). Furthermore, the individuals in these circumstances are vulnerable to disease and death because of their lack of access to clean water and sanitation. These influences create a feedback loop that leads to more children, more poverty, and more scarcity. Water resources are important to refugees and migrants, but water scarcity is itself a cause of migration. Individuals who move because of resource con - straints or environmental disasters are known as environmental refugees. Thus, migration and changing demographics lead to such conditions as scarcity or pol - lution, which in turn lead to migration and environmental refugees. Although in ancient times migrants often moved to locations with rich stores of water, this is not the case more recently, and scarcity is supplanting demand as a motivator for migration. Economic Development: A Confounder of Water Management An intervening factor that strongly affects levels of water use is develop - ment status. The more industrialized a nation is, the larger the per capita water use, with the most developed nations using twice as much water per person as the least developed (World Bank, 2002). In theory, this trend makes some sense, as more developed nations have more industry and thus more industrial use. Industrialized nations are more likely to use water for removing or dilut -

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 GLoBAL ENVIRoNMENTAL HEALTH ing pollutants and carrying waste. As previously mentioned, the industrialized nation lifestyle leads to increased use of convenience foods, with more intense water needs. Interestingly, agricultural use as a percentage decreases the more industrialized a nation becomes (Food and Agriculture Organization, 2003). The major division comes as a nation moves from lower middle to upper middle levels of industrialization, with large-scale changes from efficient agricultural practices to water-based sanitation and expanded industrial use. This trend seen in nations is also seen among individuals by income. The wealthy use far more water than the poor owing to higher consumption, sanitation uses, and increased access to water. In summary, water supply and demand are complex, and water manage- ment is a difficult area with significant methodological needs and research gaps. Many demographic factors—population size, number of households, urbaniza- tion, population distribution, migration, and mortality—interact with culture, the physical environment, economics, politics, and management to modulate demand. Again, it is important to look at local water economies and needs rather than large-scale, national, or regional networks. Caution should be taken in areas in which natural water scarcity and poverty of economic resources interact, as these are virtually insurmountable barriers for management. Otherwise, water management is achievable if demographic and supply limitations are considered with efficiency and watershed protection in mind. Sustainable water management will not accommodate a one-size-fits-all type of solution. A comprehensive plan informed by local data on demographics and unique intervening factors should be sufficient to prevent water scarcity and maintain quality. THE SUSTAINABILITY OF DRINKING WATER: SOME THOUGHTS FROM A MIDWESTERN PERSPECTIVE D. Peter Richards, Ph.D., Senior Research Scientist National Center for Water Quality Research, Heidelberg College The Midwest of the United States has a formidable role in water management and sustainability. The Midwest is a large region, from the central to the eastern United States, the heart of which surrounds the Great Lakes. The watershed of the Great Lakes includes parts of New York, Pennsylvania, Ohio, Indiana, Illinois, Wisconsin, Minnesota, and all of Michigan. The region has a temperate climate and a moderate amount of rainfall, 60–120 cm per year on average, depending on location, enough so that agricultural operations generally do not employ irri - gation. The southern parts of the region are largely agricultural, producing corn, soybeans, wheat, and barley, with some animal farming, and the northern portion is largely forested and rural.

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 THE ENVIRoNMENTAL PILLAR oF SUSTAINABLE WATER The Great Lakes and Sustainable Water Use The Great Lakes are the largest freshwater source in the world with the exception of the polar ice caps, containing 84 percent of North America’s and 21 percent of the world’s freshwater (http://www.epa.gov/glnpo/statsrefs.html). The lakes hold approximately 22,600 km3 of water (http://www.epa.gov/glnpo/ statsrefs.html). Approximately 25 million people obtain their water from sources within the Great Lakes watershed. Still, with so much water, sustainability would not seem to be an issue. The water in the region is the envy of all the surrounding regions, but par- ticularly the Southwest United States, which is perpetually water-scarce. As pressure mounted from outside sources, regional concern grew about protection of the Great Lakes as a water supply and as an ecosystem. Regional government leaders from Canada and the United States came together to develop the Great Lakes Water Resources Compact, signed into law October 3, 2008, that severely restricted the export of significant quantities of water from the watershed. It provides possible exceptions for communities bordering the watershed, provided the water is used for a drinking water supply, no adequate alternative source is available, and the majority of the water is returned to the basin after use. This protective action leads to the question, how much water can be used from the region without compromising its sustainability? What does sustainabil - ity mean in this context? Sustainability must be understood in the context not of the total amount of water, but of the rate at which it is replenished by rainfall and snowmelt within the watershed. The Great Lakes are like a bathtub with water coming in one end and flowing out of the other. Divert too much water, and the lake levels will go down, an unacceptable outcome. In this sense, the maximum sustainable export of water from the Great Lakes is represented by the water that actually leaves the lake system naturally via outflow down the St. Lawrence River. But the St. Lawrence River also has ecosystems that need to be protected, and that have evolved in the context of nearly constant discharge of water. One might be able to reduce that discharge by perhaps 5–10 percent without harming those ecosystems. But this is only about 0.05 percent of the total volume of the Great Lakes. If sustainability is considered in an appropriate way, the Great Lakes have much less to offer the outside world than it would appear from their size. Sustainability and Water Quality Sustainability is mainly a question of water quantity and the demands placed on it, but water quality also influences sustainability. For example, Lake Erie is generally a very high quality drinking water source. The most important threat to Lake Erie as a water supply at present is the increasing loads of phosphorus entering the lake from agricultural sources. These phosphorus loads result in large blooms of cyanobacteria like Microcystis and Lingbya, which can lead to

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 GLoBAL ENVIRoNMENTAL HEALTH the release of toxic substances that impact human health. While phosphorus itself does not degrade the quality of the water as a drinking water source, it sets into motion a chain of ecological events that lead to reductions in water quality and possibly in sustainability, or at least in treatment costs for drinking water. In the major Lake Erie tributaries, water quality is impacted by pesticides, nutrients, and the emerging contaminants of concern known as pharmaceuticals and personal care products. A significant amount of research has been done on pesticides in the region. Herbicides may present a chronic health risk, but the impact of insecticides is negligible. In general, the concentration of herbicides present in the water rarely reach the maximum containment level (MCL) levels on an annual average basis, but may exceed these levels in the summer months. More information is needed to determine the impact of pharmaceuticals and personal care products on the local ecosystems. The most significant water quality problem is nitrate nitrogen, which is present seasonally in major agricultural rivers like the Maumeee and Sandusky Rivers in concentrations up to 2.5 times as great as the MCL of 10 mg/L. Nitrate in high concentrations become a drinking water management issue, as nitrogen must be diluted to below the MCL with untainted water sources. High nitrate levels are most common in summer; in one instance, the concentration of nitrate exceeded the MCL for 41 consecutive days in May and June (NCWQR, unpublished data). Given this current situation, the demand for corn for ethanol becomes a major threat to water quality: more corn means more fertilizer, which means higher nitrate concentrations in these tributaries. Groundwater Contamination in the Midwest Although most people in the Midwest obtain their water from public water supply systems, many residents in rural regions still get their water from house - hold wells. Because these wells are private, testing for water quality is not required, and they are thus susceptible to unknown contamination. For this rea - son, the National Center for Water Quality Research (NCWQR) operates a vol- untary water testing program for private wells. This program has tested 55,000 wells over the past 15 years. Because private wells are generally more vulnerable to contamination than municipal wells, lower quality water was expected; how- ever, more than 80 percent of wells have ideal water quality, with only 3 percent exceeding safe nitrate levels and only 0.1 percent exceeding atrazine limits. Fac - tors that are predictors of contamination include older wells, those in sandy or karst terrain, those near barns or fields, and shallow or dug wells. Other, natural and locally prevalent contaminants of the water supply include iron, hydrogen sulfide, and less frequently radon and arsenic. More households are now “con - taminated” with arsenic, not due to increasing concentrations, but rather due to a recent decrease in the MCL from 50 ppb to 10 ppb. The recent trend is away from groundwater sources and toward local municipal supplies, mostly surface-

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 THE ENVIRoNMENTAL PILLAR oF SUSTAINABLE WATER water based, which will reduce stress on groundwater supplies and increase the stress on surface water. Sustainability or Carrying Capacity? I believe we need to change the way we understand sustainability. At present, “sustainability” is mostly about having enough good quality water in the future to meet our needs (i.e., increasing the supply to meet growing demands). We need instead to think of sustainability as synonymous with “carrying capacity,” which suggests modifying our demands to meet the available supply. The supply of water is largely static, though it can be increased somewhat by better sanita- tion and by expensive measures such as desalination. The way to sustainability is through more efficient and effective use and reuse of the water available to us, more than through continually seeking new sources.

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