Water Quality Index Aggregation and Cost Benefit Analysis

Patrick Walsh and William Wheeler

No 201205, NCEE Working Paper Series from National Center for Environmental Economics, U.S. Environmental Protection Agency

Abstract: The water quality index (WQI) has emerged as a central way to convey water quality information to policy makers and the general public and is regularly used in US EPA regulatory impact analysis. It is a compound indicator that aggregates information from several water quality parameters. Several recent studies have criticized the aggregation function of the EPA WQI, arguing that it suffers from “eclipsing” and other problems. Although past papers have compared various aggregation functions in the WQI (usually looking at correlation), this is the first paper to examine these functions in the context of benefit-cost analysis. Using data from the 2003 EPA CAFO rule, the present paper examines four aggregation functions and their impact on estimated benefits. Results indicate that the aggregation method can have a profound effect on benefits, with total benefit estimates varying from $82 million to $504 million dollars. Furthermore, a sensitivity analysis does not find convincing evidence to substitute the current aggregation function, although several changes to the underlying WQI methodology may be warranted.

Keywords: water quality; valuation; cost-benefit analysis (search for similar items in EconPapers)
JEL-codes: D61 D62 Q25 Q28 Q51 Q53 Q58 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-07, Revised 2012-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.epa.gov/environmental-economics/workin ... ost-benefit-analysis First version, 2012 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nev:wpaper:wp201205

Access Statistics for this paper

More papers in NCEE Working Paper Series from National Center for Environmental Economics, U.S. Environmental Protection Agency Contact information at EDIRC.
Bibliographic data for series maintained by Cynthia Morgan ().