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Valuing Ground Water: Economic Concepts and Approaches
LEGAL CONSIDERATIONS, VALUATION, AND GROUND WATER POLICY
The last two decades have brought changes in emphases in both technical and institutional issues related to ground water management. Due to society's misplaced perceptions of ground water's "pure" natural quality, there has been overemphasis over several decades on ground water quantity issues rather than quality issues. This has included the magnitude of water supplies being developed and associated costs. Quality considerations were mainly related to chlorides, nitrates, and the need for disinfection prior to human consumption. Since the mid-1970s increasing attention has been given to deteriorations in ground water quality. With ground water issues becoming more complex, the incorporation of economic valuation of ground water and other natural resources in decision-making takes on more urgency. This is especially true where a resource supports an ecosystem of national significance that not all citizens may be in contact with but still want protected (e.g., the Everglades or the Grand Canyon).
Sixteen federal laws relate directly or indirectly to ground water management. Key laws include the Clean Water Act (CWA), Safe Drinking Water Act (SDWA), Resource Conservation and Recovery Act (RCRA), Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund), and Superfund Amendments and Reauthorization Act (SARA). The SDWA addresses the quality of public drinking water supplies and ground water protection. The CWA addresses pollution control, while RCRA relates to waste disposal sites and underground storage tanks. Soil and ground water remediation are the subjects of the Superfund laws (CERCLA and SARA). Numerous state and local laws also address ground water usage (quantity allocations) and quality via numerical standards or descriptive criteria. These multiple laws and regulatory agency overlaps can create conflicts regarding ground water usage, quality protection, and/or remediation responsibility.
Command-and-control approaches have historically dominated pollution control in environmental quality laws. More recently, market-based considerations, incentives for pollution prevention, and risk management have been advanced as additional components in environmental management, including the management of ground water. Many of these recent environmental management approaches include consideration of some economic issues, including program or project costs and benefits.
Water marketing (the buying and selling of water rights) has emerged as a valuable policy alternative for allowing water allocation laws to efficiently respond to all water use demands. Theory suggests that where price reflects the TEV, reliance on water marketing is a more efficient way to allocate scarce resources.
On a national level, regulatory impact assessment has been used to address some economic issues. For example, President Reagan initiated a formal balancing of the benefits of environmental protection and regulatory compliance costs