Costs and benefits of water quality: Massachusetts as a case example

Economists have long argued for economic principles to play a major role in pollution control as the most efficient way to achieve goals. To date, there has been limited use of such principles for several reasons including the difficulty of placing a value on intangibles such as environmental quality or, specifically in this case, clean water. However, as financial resources have become more limited, some thought is being given to fuller use of marginal (as opposed to total) benefit-cost analysis as a component rather than the absolute arbiter in evaluating environmental improvements. The present paper explores some of the background for such an analysis, areas where data exist, where they are needed and draws information from the state of Massachusetts for a case example. The results suggest that overall in the United States and in Massachusetts specifically, a point of economic inefficiency may be near based on available tools. However, existing tools are likely to be deficient and protocols for assessing benefits as well as costs need to be verified and a consensus reached on their use; also, the pertinent data need to be collected before great reliance is placed on benefit-cost techniques as a principal component in decision making.