Economic evaluation of the new U.S. arsenic standard for drinking water: A disaggregate approach

We evaluate the welfare consequences of the new U.S. arsenic standard for drinking water, using contingent valuation survey and recent cost data for the small rural community water systems in Minnesota that have had arsenic levels above the new standard prior to its implementation. Using variation in actual arsenic levels and an elicitation method that recognizes the dependence of welfare values on both ambient arsenic concentrations and self-protection levels, the welfare values of the new arsenic rule are estimated at $6-$23 per household per year for communities with less than 10 μg/L of arsenic currently in their water and $31-$78 for communities with more than 10 μg/L of arsenic. Given cost estimates of $230-$2,006 and the fact that a substantial portion of the cost needs to be internally financed, the new rule may have substantially negative welfare consequences for a number of small communities.