Achieving Economically Feasible Drinking Water Regulation

Abstract

United States Environmental Protection Agency (USEPA) has regulated drinking water since the 1974 Safe Drinking Water Act (SDWA). Congress directed it to achieve three conflicting goals: (i) establish stringent nationwide standards, (ii) ensure that these standards are both technologically and economically feasible, and (iii) accommodate significant differences in cost among water systems of different sizes with different water sources. USEPA chose to emphasize goal (i) at the expense of (ii) and (iii). In 1986, Congress intensified its preference for (i), was silent concerning goal (ii), and criticized USEPA for failing to achieve goal (iii). In lieu of economic feasibility, the Agency substituted “affordability,” defined as expenditures up to 2.5 % of national median household income irrespective of the benefits. This imposed deadweight losses, and substantial inequities on rural areas, low-income communities, and low-income households generally. In 1996, Congress directed USEPA to use benefit-cost analysis positively and normatively. Regulations issued since 1996 do not appear to comply, however. A review of post-1996 drinking water standards indicates that most were certified by USEPA as having benefits that justified costs, but these determinations were unsupported by the Agency’s own regulatory impact analyses. This article proposes that USEPA define by regulation that “economic feasibility” means marginal benefits exceed marginal costs for the smallest water system subject to SDWA, and that all future drinking water standards must be economically feasible. Economic efficiency would be greatly enhanced and the pervasive inequities of “affordability” greatly diminished. Unlike “affordability,” this definition is objective and compatible with lay intuition about the meaning of key regulatory terms.

An Equity Blindspot: The Incidence of Regulatory Costs

“…7 Many economic studies within this journal have focused on the distributional consequences of drinking-water regulations (e.g., Raucher et al, 2011;Cory & Taylor, 2017;Belzer, 2020). 8 In the case of lead service line removal, the environmental justice analysis put it this way, "Since the [removal] is expensive, the customer's willingness to share costs will depend on the household's ability-to-pay" (Abt Associates, 2019, p. 14).…”

“… 7 Many economic studies within this journal have focused on the distributional consequences of drinking-water regulations (e.g., Raucher et al, 2011; Cory & Taylor, 2017; Belzer, 2020). …”

Improved Decision-Making: A Sociotechnical Utility-Based Framework for Drinking Water Investment

“…For example, a contaminant’s maximum contaminant level (MCL) is set based on the concentration closest to the recommended level that is feasible to measure and achieve, which suggests that water users may be exposed to contaminant levels that are harmful to human health prior to triggering an MCL violation. 4 , 5 For instance, studies have observed an increased risk of adverse health effects from ingesting drinking water with nitrate concentrations below the MCL. 6 Further, studies have found significant under-reporting or inaccurate reporting of violation data in the Safe Drinking Water Information System (SDWIS).…”

“…The number of violations accrued by a water system is the primary metric for compliance under SDWA; however, the methodology for obtaining and reporting a violation is unreliable. For example, a contaminant’s maximum contaminant level (MCL) is set based on the concentration closest to the recommended level that is feasible to measure and achieve, which suggests that water users may be exposed to contaminant levels that are harmful to human health prior to triggering an MCL violation. , For instance, studies have observed an increased risk of adverse health effects from ingesting drinking water with nitrate concentrations below the MCL . Further, studies have found significant under-reporting or inaccurate reporting of violation data in the Safe Drinking Water Information System (SDWIS). − For example, a 2009 audit of 14 states estimated that these states inaccurately reported or did not report 26% of health-based violations and 84% of monitoring violations .…”