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The Economics of Safe Drinking Water

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  • Robert Innes
  • Dennis Cory

Abstract

This paper studies a drinking water market in which a water company, faced with random contamination, chooses a treatment system, treatment levels, and whether to notify consumers that they should drink bottled water rather than risk exposure to contaminants in the tap water. The paper describes efi cient practices including protocols which prescribe when a company should notify customers to drink bottled water, and regulatory standards on post-treatment water quality that depend upon system size, the extent of contamination, and the customer noti ® cation decision. Implications for contemporary safe drinking water law are discussed.

Suggested Citation

  • Robert Innes & Dennis Cory, 2001. "The Economics of Safe Drinking Water," Land Economics, University of Wisconsin Press, vol. 77(1), pages 94-117.
    • Handle: RePEc:uwp:landec:v:77:y:2001:i:1:p:94-117
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    References listed on IDEAS

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    1. Innes, Robert, 1999. "Optimal liability with stochastic harms, judgement-proof injurers, and asymmetric information1," International Review of Law and Economics, Elsevier, vol. 19(2), pages 181-203, June.
    2. Lichtenberg, Erik & Penn, Tony, 1996. "Groundwater Quality Policy under Uncertainty," 1996 Conference (40th), February 11-16, 1996, Melbourne, Australia 149660, Australian Agricultural and Resource Economics Society.
    3. Grady, Mark F, 1988. "Common Law Control of Strategic Behavior: Railroad Sparks and the Farmer," The Journal of Legal Studies, University of Chicago Press, vol. 17(1), pages 15-42, January.
    4. Kaplow, Louis & Shavell, Steven, 2002. "Economic analysis of law," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 25, pages 1661-1784, Elsevier.
    5. Oates, Wallace E, 1983. "The Regulation of Externalities: Efficient Behavior by Sources and Victims," Public Finance = Finances publiques, , vol. 38(3), pages 362-375.
    6. Boyd, James & Ingberman, Daniel E, 1997. "Should "Relative Safety" Be a Test of Product Liability?," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 433-473, June.
    7. Wetzstein, Michael E. & Centner, Terence J., 1992. "Regulating agricultural contamination of groundwater through strict liability and negligence legislation," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 1-11, January.
    8. Lichtenberg, Erik & Zilberman, David & Bogen, Kenneth T., 1989. "Regulating environmental health risks under uncertainty: Groundwater contamination in California," Journal of Environmental Economics and Management, Elsevier, vol. 17(1), pages 22-34, July.
    9. Barrett, James & Segerson, Kathleen, 1997. "Prevention and Treatment in Environmental Policy Design," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 196-213, June.
    10. Polinsky, A Mitchell, 1980. "Strict Liability vs. Negligence in a Market Setting," American Economic Review, American Economic Association, vol. 70(2), pages 363-367, May.
    11. Miceli Thomas J. & Segerson Kathleen, 1993. "Regulating Agricultural Groundwater Contamination: A Comment," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 196-200, September.
    12. Segerson, Kathleen, 1990. "Liability for groundwater contamination from pesticides," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 227-243, November.
    13. repec:bla:econom:v:50:y:1983:i:200:p:425-37 is not listed on IDEAS
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    Cited by:

    1. Erik Lichtenberg & Tony M. Penn, 2003. "Prevention versus Treatment under Precautionary Regulation: A Case Study of Groundwater Contamination under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 44-58.
    2. W. Viscusi & Joel Huber, 2012. "Reference-dependent valuations of risk: Why willingness-to-accept exceeds willingness-to-pay," Journal of Risk and Uncertainty, Springer, vol. 44(1), pages 19-44, February.
    3. W. Viscusi & Joel Huber & Jason Bell, 2012. "Heterogeneity in Values of Morbidity Risks from Drinking Water," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 23-48, May.
    4. W. Kip Viscusi & Joel Huber & Jason Bell, 2015. "The Private Rationality Of Bottled Water Drinking," Contemporary Economic Policy, Western Economic Association International, vol. 33(3), pages 450-467, July.

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    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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