Valuing Drinking Water Provision as an Ecosystem Service in the Neuse River Basin

by Yoanna Kraus Elsin, Ph.D., Student; Dept. of Agricultural and Resource Economics, Univ. of Maryland, College Park, MD,
Randall A. Kramer, (corresponding author), Professor of Environmental Economics; Nicholas School of the Environment, Duke Univ., Durham, NC,
W. Aaron Jenkins, Associate in Research for Economic Analysis; Nicholas Institute for Environmental Policy Solutions, Duke Univ., Durham, NC,

Serial Information: Issue 4, Pg. 474-482

Document Type: Journal Paper

Abstract: The valuation of ecosystem services such as drinking water provision is of growing national and international interest. The cost of drinking water provision is directly linked to the quality of its raw water input, which is itself affected by upstream land use patterns. This analysis employs the benefit transfer method to quantify the economic benefits of water quality improvements for drinking water production in the Neuse River Basin in North Carolina. Two benefit transfer approaches, value transfer and function transfer, are implemented by combining the results of four previously published studies with data collected from eight Neuse Basin water treatment plants. The mean net present value of the cost reduction estimates for the entire Neuse Basin ranged from $2.7 million to $16.6 million for a 30% improvement in water quality over a 30-year period. The value-transfer approach tended to produce larger expected benefits than the function-transfer approach, but both approaches produced similar results despite the differences in their methodologies, time frames, study sites, and assumptions.

Subject Headings: Water quality | Basins | Drinking water | Rivers and streams | Aquatic habitats | Water treatment plants | Benefit cost ratios | Ecosystems | North Carolina

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