On the Distributional Implications of Safe Drinking Water Standards

Abstract

The provision of safe drinking water provides a dramatic example of the inherent complexity involved in incorporating environmental justice (EJ) considerations into the implementation and enforcement of new environmental standards. To promote substantive EJ, implementation policy must be concerned with the net risk reduction of new and revised regulations. The regulatory concern is that higher water bills for low-income customers of small public water systems may result in less disposable income for other health-related goods and services. In the net, this tradeoff may be welfare decreasing, not increasing. Advocates of Health-Health Analysis have argued that the reduction in health-related spending creates a problem for traditional benefit-cost analysis since the long-run health implications of this reduction are not considered. The results of this investigation tend to support this contention. An evaluation of the internal structure of consumption expenditures reveals that low-expenditure households can be expected to react to an increase in the relative price of housing-related goods and services due to a water-rate hike by reducing both housing and health-related expenditures. That is, the representative lowexpenditure household re-establishes equilibrium by not only decreasing housing-related spending, but also by decreasing spending on health-related expenditures in a modest but significant way. These results reflect the fact that expenditures on housing are a major proportion of overall household spending, and that accommodating drinking water surcharges exacerbates both health and food security concerns for low-expenditures households.

How should water affordability be measured in the United States? A critical review

“…Some evidence suggests that evaluating water bills as a ratio of discretionary income may assume more about household spending than we know. Cory and Taylor (2017) model the internal structure of spending budgets over time in the US Consumer Expenditure Survey for different income levels and demonstrate that households respond to increased water costs by cuts in their discretionary spending, but also for health care and, in some cases, food. If water and sewer bills at <10% of discretionary income are considered affordable (Teodoro, 2018(Teodoro, , 2019, households could still be decreasing spending on other essential needs.…”

“…Ensuring that affordable water does not come at the expense of other essential needs is particularly important for households with few resources ( Feature 2 ), as they may be forced to reduce spending on water overall (“under‐consuming”; Gawel et al, 2013) or reduce spending on other essential needs (Cory & Taylor, 2017). Our review demonstrates that while this is an active area of research, the reviewed measures do not fully capture the compromises households are forced to make by simply removing non‐water essential expenditures from incomes.…”

Achieving Economically Feasible Drinking Water Regulation

“…Third, USEPA estimates compliance expenditures, not opportunity costs. At the household level, this means not counting the benefits foregone from reduced expenditures on food, shelter, education, health care, transportation, and expenditures on goods and services that improve health (Keeney, 1990(Keeney, , 1994Lutter & Morrall III, 1994;Lutter et al, 1999;Cory & Taylor, 2017). At the system level, expenditures to comply with economically infeasible NPDWRs reduce resources available for infrastructure investments, the need for which has been estimated to exceed $1 trillion over 25 years (AWWA, 2012).…”

Penilaian Manfaat Nilai Ekonomi Program Penyediaan Air Minum dan Sanitasi Berbasis Masyarakat

“…Hal ini juga sesuai dengan penelitian yang dilakukan oleh Fitriyani & Rahdriawan (2015), di mana keberhasilan setiap indikator menjadi cerminan keoptimalan dalam pemanfaatan air bersih program Pamsimas. Hasil penelitian ini juga sesuai dengan Cory & Taylor (2017), yang menyatakan bahwa bentuk pengeluaran air akan berdampak pada pengeluaran kesehatan dan pengeluaran makanan dengan asumsi pendapatan tetap. Hal ini berarti bahwa penggunaan air akan meningkatkan kesehatan yang akan mengurangi pengeluaran kesehatan Sedangkan pada Tabel 6, indikator pertama yaitu "Penerima manfaat di desa dapat mengakses air bersih sepanjang tahun", ditetapkan 50% masyarakat dapat mengakses air bersih.…”