Investing in Water Quality: Measuring Benefits, Costs and Risks

Abstract

Reviews Inter-American Development Bank (IDB) projects approved since 1989 that have ambient water quality improvement as an explicit objective and derives lessons for engineers and economists involved in the economic analysis of these projects. Discusses a decade of IDB experience with water quality projects; cost-benefit analysis of water quality improvement projects; temptations, pitfalls, and technical complications in cost-benefit analysis; decision support systems and water quality models; evidence on willingness to pay for various categories of water-quality-improvement benefits and benefit estimates by country; state-of-the-art techniques for estimating nonmarket benefits; uncertain willingness-to-pay measures from referendum contingent valuation surveys; uncertainty in the economic appraisal and the case for project risk analysis; and how to find the optimal sample size for a contingent valuation survey. Presents recommendations. Coauthors are William J. Vaughan, Christopher D. Clark, Diego J. Rodriquez, and Arthur H. Darling. Russell is Professor of Economics and Public Policy at Vanderbilt University and Director of the Vanderbilt Institute for Public Policy Studies. No index.