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Valuing Ground Water: Economic Concepts and Approaches Appendix A— Glossary If you wish to converse with me, define your terms. Voltaire aquifer— an underground geologic unit that stores ground water. aquifer capacity— the amount of water that is stored in an aquifer; sometimes used loosely to indicate the amount of water an aquifer can deliver under a specified set of pumping conditions. averting behavior model (ABM)— an assessment approach in which costs incurred by households to offset or mitigate environmental hazards (e.g., expenditures on water purifiers to remove pollution from ground water) are used to infer value of clean water (Young, 1996). base flow— that portion of a stream's flow derived from ground water (as opposed to surface runoff and interflow). basins and watersheds— areas of drainage in which all collected water ultimately drains through a single exit point. Basins differ from watersheds only in the perception of their size: basins are usually considered to be much larger, composed of many watersheds. Within a watershed or basin, water moves both on and below the surface. Topographic "highs" prevent surface water from crossing from one watershed (aquifer) to another. benefits— the gains, often measured as the sum of the monetary values of the direct and indirect uses, associated with the use of a resource or with improvements in the quality of a resource unit. benefit-cost analysis (BCA)— a technique to compare the economic efficiency of different alternatives, usually applied to individual projects or policies. A BCA comprises the gross benefits of a project or policy and with its the opportunity costs. Benefits and costs are measured as changes in consumer and producer surpluses accruing to individuals in society.
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Valuing Ground Water: Economic Concepts and Approaches bequest value (BV)— a willingness to pay to preserve the environment for the benefit of one's descendants. buffer value— the difference between the maximum value of a stock of ground water under uncertainty and its maximum value under certainty where the supply of surface water is stabilized at its mean. Thus, this value arises from the ability of ground water to provide supplemental water supplies during short-term periods of drought or other supply disruptions. cone of depression— a localized depression of the water level in an aquifer as a result of pumping. The depression may be confined to a small area or spread over a large area depending on the pumping rate and transmissivity of the aquifer. See Figure 2.4. confined aquifer— an aquifer bounded above and below by units of distinctly lower hydraulic conductivity and in which the pore water pressure is greater than atmospheric pressure. An unconfined aquifer is not bounded above and is the uppermost aquifer. See Figure 2.2. consumptive use— a use of water that does not return water (polluted or not) to system. For example, drinking water is consumed, while shower water returns to the treatment system. contingent valuation method (CVM)— a method determining money measures of change in welfare by describing a hypothetical situation to respondents and eliciting how much they would be willing to pay either to obtain or to avoid a situation. Although well accepted for use values, CVM has many limitations when used to calculate nonuse values (Young, 1996). costs— the mirror image of benefits, that is, what is lost when a resource increases or decreases in quantity or quality. In this context one can think of costs as damages. Costs also refer to the value of any resources used to change the quality or quantity of the resource stock, for example, the costs of ground water remediation. direct approaches— valuation approaches that use survey-based techniques to elicit preferences for nonmarket goods and services (e.g., the contingent valuation method). discounting— a procedure that adjusts for future values of a particular good by accounting for time preferences. It aims to determine the present value of benefits or costs in relation to the benefits or costs at different times in the future. drawdown— lowering of the water table or potentiometric surface as a result of pumping. existence value (EV)— a pure nonuse value that is the amount an individual would pay to know that a resource exists. extractive value— a value calculated by adding up the benefits (across time) of removing water from an aquifer.
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Valuing Ground Water: Economic Concepts and Approaches future value (FV)— the value of a time-dependent benefit or cost obtained by discounting the values out into future. hedonic price method (HPM)— a technique to estimate implicit prices for environmental attributes of a market commodity. Usually applied to levels of clean air or water or similar environmental attributes as components of the total value (sales price) of real estate (Young, 1996). incremental value— see marginal value. indirect approaches— approaches that rely on observed behavior to infer nonmarket values. Examples include the travel cost method and the hedonic price method. in situ— in place, that is, within the aquifer. intergenerational equity— the concept that one generation should consume in a manner that allows an equal opportunity for future generations. irreversibility— an effect that cannot be restored to its original state. law of capture— as applied to common property resources is the tenet that whoever gets to the ground water first gets to use it. marginal value— the value of another (hypothetical or last) increment of water when used in the most efficient manner. nanofiltration— a membrane filtration process designed to desalinate (or soften) water at relatively low pressure. natural discharge— ground water that reaches the surface (streams, lakes, wetlands, etc.) in the absence of pumping, excavation, or other human action. neoclassical welfare economics— a school of economic thought in which the basic premises are that all economic activity is aimed at increasing the welfare of the individuals in society and that individuals are the best judges of their own welfare. nonmarket— describes goods and services not priced and traded in markets. nonmarket and market value— a market value is the value ascertained in a system where supply and demand forces are free to work and set the value of a good. A nonmarket value is the value of a good outside of a market system (for example, the value of the air you breathe or of the beautiful stream in the park). nonpoint source pollution— pollution that is caused by diffuse sources that are not regulated as point sources and are normally associated with agricultural, silvicultural, and urban runoff. nonuse value— values that are independent of the people's present use of the resource. (See bequest value and existence value.) open access resource— a resource that has unlimited access which causes overexploitation of the resource. option value— often categorized as a nonuse or passive use value, and refers to the fact that an individual places a certain current value on the option to
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Valuing Ground Water: Economic Concepts and Approaches use a resource in the future. Option value is often considered "closest" of the preservation values to use values. overdrafting— ground water supply that is being used in excess of its natural recharge rate. potentiometric surface— represents the height of rise of the water due to hydrostatic pressure when the constraint of the confining layer is removed (see Figure 2.2). Sometimes referred to as the piezometric surface. present value— the value of a time-dependent benefit or cost obtained by discounting the values back through time to the present. rate of time preference— rate of conversion of value between time periods. It is defined at the individual level; it is a feature of peoples' desires. recharge— the replenishment of water beneath the earth's surface, usually through percolation through soils or connection to surface water. recreational value— one of the use values provided by water. It is rooted indirectly to the value of ground water, which plays a role in providing surface water. regulatory impact analysis (RIA)— a required analysis to be performed to determine the benefits and costs of a proposed regulation. renovated ground water— ground water from which certain contaminants have been removed, synonymous with remediated ground water. reverse osmosis— is a highly efficient removal process for inorganic ions, salts, some organic compounds, and in some designs, microbiological contaminants. Reverse osmosis resembles the membrane filtration process in that it involves the application of a high feed water pressure to force water through semipermeable membrane. In osmotic processes, water spontaneously passes through semipermeable membrane from a dilute solution to a concentrated solution in order to equilibrate concentrations. Reverse osmosis is produced by exerting enough pressure on a concentrated solution to reverse this flow and push the water from the concentrated solution to the more dilute one. The result is clear permeate water and a brackish reject concentrate (NRC, 1997). riparian— associated with stream banks. service flows— indirect and direct benefits to consumers attributable to a provision of services over time. total economic value (TEV)— the sum of the extractive and in situ values. From the perspective of how to calculate the total economic value, it is the sum of use and nonuse values. travel cost method— an indirect valuation method that values a recreation site by estimating the demand for access to the site; expenditures on the travel required to reach a recreational site are interpreted as a measure of willingness to pay for the recreational experience (Young, 1996). unconfined aquifer— see confined aquifer. use value— determined by a resource's or environmental asset's contribution to
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Valuing Ground Water: Economic Concepts and Approaches current production or consumption. Values may take the form of changes in income to producers (e.g., increases in agricultural output) or changes in services not usually traded in markets, such as recreation. Use values thus involve both marketed and nonmarketed commodities. Changes may also involve ''intermediate" commodities that affect final consumption or production (e.g., natural filtration of polluted water or other ecosystem functions). value— what one is willing to give up in order to obtain a good, service, experience, or state of nature. Economists try to measure this in monetary terms. value taxonomies— a classification through which resource value or benefits reflect the economic channels through which a resource's service is valued (for example, use and nonuse values or extractive and in situ values). welfare economics— a field of inquiry within the broad scope of economics that is concerned with money measures of individual and social well-being, particularly changes in well-being due to implementation of public policies. willingness to accept (WTA) and willingness to pay (WTP)— willingness to accept is the minimum amount an individual must be paid to accept a certain risk or a change (decrement) in environmental quality. Willingness to pay is the maximum amount an individual would pay to obtain a change (increment) in environmental quality. References National Research Council. 1997. Safe Water From Every Tap. Washington, D.C.: National Academy Press. Young, R. A. 1996. Measuring Economic Benefits for Water Investments and Policies. World Bank Technical Paper No. 338. Washington, D.C.: World Bank. Acronyms ABM— averting behavior method BCA— benefit-cost analysis BV— bequest value CVM— contingent valuation method EV— existence value HPM— hedonic price method RIA— regulatory impact analyses TEV— total economic value TCM— travel cost method WTA— willingness to accept WTP— willingness to pay
Representative terms from entire chapter: