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Water resource quality effects on water treatment costs: An analysis for the Brazilian case

Author

Listed:
  • Danelon, André Felipe
  • Augusto, Fernanda Gaudio
  • Spolador, Humberto Francisco Silva

Abstract

The cost effects of water resource quality on water treatment are critical factors for firms' performance. However, few economic studies incorporate water quality parameters into cost functions. This study's main contribution was to combine data on Brazilian water treatment companies and surface water monitoring stations to produce a unique panel data set from 2003 to 2017, and then estimate the effects of water quality on water treatment costs. Based on a panel model with fixed effect approach, our findings show that disturbances on turbidity have significant effects on optimal costs. On average, one-percent increase in turbidity increases the costs in 0.1162%. Therefore, the results indicate that water treatment companies have incentives to improve water resource quality in the long run, which should be considered by regulatory agencies to connect economic incentives and landscape protection.

Suggested Citation

  • Danelon, André Felipe & Augusto, Fernanda Gaudio & Spolador, Humberto Francisco Silva, 2021. "Water resource quality effects on water treatment costs: An analysis for the Brazilian case," Ecological Economics, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:ecolec:v:188:y:2021:i:c:s0921800921001920
    DOI: 10.1016/j.ecolecon.2021.107134
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    More about this item

    Keywords

    Sanitation; Productivity; Land use change; Ecosystem services;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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