Cardon Research Papers
in Agricultural and Resource Economics
Research
Paper
2015-01
On the Distributional Implications of Safe
Drinking Water Standards
November
2015
Dennis C. Cory
The University of Arizona
Lester D. Taylor
The University of Arizona
The University of
Arizona is an equal
opportunity, affirmative action institution.
The University does
not discriminate on
the basis of race, color,
religion, sex, national
origin, age, disability, veteran status, or
sexual orientation
in its programs and
activities.
Department of Agricultural and Resource Economics
College of Agriculture and Life Sciences
The University of Arizona
This paper is available online at http://cals.arizona.edu/arec/publications/cardon-research-papers
Copyright ©2015 by the author(s). All rights reserved. Readers may make verbatim copies of this document
for noncommercial purposes by any means, provided that this copyright notice appears on all such copies.
On the Distributional Implications of Safe Drinking Water Standards Dennis C. Cory and Lester D. Taylor* JEL Subject Categories: Q53, K3, I14. Corresponding author: Dennis C. Cory, Agricultural and Resource Economics, PO Box 210023, The University of Arizona, Tucson, AZ, USA, 85721-­‐0023. dcory@ag.arizona.edu. (520)-­‐621-­‐
4670. * The authors are Professor of Agricultural and Resource Economics, The University of Arizona, and Emeritus Professor of Economics, The University of Arizona, respectively. 2 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 trade off 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 the representative low-­‐
expenditure household re-­‐establishes equilibrium by not only decreasing housing-­‐related spending, but also by decreasing spending on such health-­‐related items as physician services, eye and dental care, food, and prescription drugs in a modest but significant way. Key words: safe drinking water; environmental justice; consumption expenditures; low-­‐
income households 5
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