Abstract
Canadians reap the benefits of having an abundance of good quality water. In some cases, however, decisions regarding water resource allocation, quantity allocation decisions or investments in quality improvement, need to be made. A better understanding of the economic value of water would be helpful in these decision contexts. However, most of the values associated with water are not easily calculated since the benefits arise from goods/services for which there are no explicit markets or market prices, and values vary over space and time and differ across people. The goals of this chapter are threefold: (1) briefly outline and provide a critical assessment of the approach and methods associated with the Total Economic Value (TEV) framework for obtaining non-market water values; (2) illustrate a number of case studies of whether or not (and how) market and non-market values have been used for the purposes of allocating water or making investments in improved water management; and (3) identify important gaps in both available data and information for applying valuation information to support policy analysis. In particular, the chapter focuses on policy around improvements in water quality and aquatic ecosystems. The chapter concludes with an evaluation of the availability of Canadian water value estimates. This reveals both data and information gaps. The chapter discusses the importance of filling these gaps, along with the need to develop a systematic approach to their use in policy discussions around water quality, in particular.
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Notes
- 1.
In the current context, this is a very high discount rate. However, it was the value suggested by the Treasurer Board of Canada in 1976 in the Benefit Cost Analysis Guide (Treasury Board Canada Secretariat 2002). This was changed in 2007 to 8 %.
- 2.
The Council of Great Lakes Industries (1996), an organization representing common interests of industries operating in the Great Lakes Basin, identified their positions on public policy , specifically, on that relating to remedial action plans. A key recommendation was that effort be made on both sides (Canada and the United States ) to develop “methodologies for analyzing the … costs [..] and benefits of addressing any given use impairment”. In particular, they noted that the process used to decide on which projects should proceed “lacks quantitative technical and/or economic data”.
- 3.
The lack of progress at the federal level to value water for the purposes of decision-making stands in contrast to the use of EVRI by both Environment Canada and Health Canada to value human health benefits from better air quality and make regulatory decisions about ambient air quality. These agencies developed and have used the Air Quality Benefits Assessment Tool (AQBAT) since 2006.
- 4.
In 2013, the federal government announced the elimination of the NRTEE.
- 5.
This project’s explicit inclusion of non-market benefits stands in contrast to the more typical approach that discusses the possibility of using non-market values and then does not include them due to lack of data (e.g., Alberta ’s Meridian dam project (Golder Associates 2002)).
- 6.
This is a council comprised of environment ministers from provincial and territorial governments, along with the federal minister of the Environment. This group aims to work collectively to discuss national environmental priorities and to commission research in support of positive environmental results.
- 7.
This was developed in the mid-1980s as an effort to connect scientific measurements in water quality with environmental outcomes that are easily understood by the general public (e.g., water quality that is excellent such as for drinking to water quality that is extremely poor and only suitable for boating).
- 8.
Adamowicz et al. (2011) employ a stated preference survey to obtain the willingness to pay for changes to municipally supplied water in order to reduce the illnesses and deaths from microbial contaminants (e.g., such as E Coli). They find that the average household in Canada is willing to pay between $175 and $237 per year (in 2004 $) to reduce microbial risks. According to Vander Ploeg (2011) of the Canada West Foundation, in 2004 the average monthly charge for water supply in Canada was $23 (for an annual payment of $276). Thus, the Adamowicz et al, finding reveals that Canadians are willing to pay a very large premium on top of existing water bills in order to obtain a reduction in health risks associated with tap water consumption.
- 9.
The compact is a legally binding agreement signed by the United States government and eight states that border the Great Lakes with Canada being a voluntary signatory. The goal of the compact is to create a framework for future water resource management in the Great Lakes St. Lawrence River basin.
- 10.
A recently released report by the office of the environmental commissioner of Ontario notes the need to adopt both full-cost pricing for water and a user-pay (polluter pay) approach to improve water management (Environmental Commissioner of Ontario 2015).
- 11.
The goal of this long-term assessment project is analyze the natural environment in the United Kingdom in order to determine the benefits to society. In particular, the 2014 assessment examined the cultural and economic value of nature and identified tools and methods for assisting decision-makers (United Kingdom, Department for Environment, Food, and Rural Affairs 2014).
- 12.
Similarly, non-market values were a substantial portion of the total benefits associated with the Highwood River dam project discussed earlier.
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Dupont, D.P., Adamowicz, W.L. (2017). Water Valuation. In: Renzetti, S., Dupont, D. (eds) Water Policy and Governance in Canada. Global Issues in Water Policy, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-319-42806-2_10
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