"Each utility faces their own unique challenges and opportunities when it relates to the value of water," Rayburn said. "Truly, from an economic point of view, it's full value costing. That cost is both the fixed cost of maintaining the infrastructure, the delivery, the treatment, and it's also the value of the good that you are providing, which is safe, aesthetic, yet affordable tap water."
The current EPA research program is going far beyond the municipal water market and is attempting to look at all aspects of water use and the impact of that use on the economy.
Agriculture, energy production and the public supply of water account for more than 90 percent of off-stream water use in the U.S. However, the "value" of water goes beyond off-stream uses. Rivers, lakes and oceans provide a natural highway for commercial navigation, as well as places to swim, fish and boat, helping to fuel economic activity in the recreation and tourism industry. Nearly every sector of the economy is influenced in some way by water.
Seven expert papers were funded as part of this study to examine various aspects of water use in the U.S. economy. Topics included how urban economic growth and employment can be affected by constraints on the availability of water supply, water use and agricultural production, and lessons learned from short-term supply disruptions. CH2M HILL also authored a paper for the project that focuses on the changing value of water and implications for five key industrial sectors.
In conducting the study, the EPA is hampered by a lack of specific data about the value of water and its economic impact. Some reasons why there is not more detailed information on the value of water include a lack of market transaction data, limited pricing data because water rights are only infrequently bought and sold, and altered prices because of subsidies. Also, the price charged for water often fails to reflect the full cost of its use.
Part of the challenge in considering the value of water is understanding the difference between cost, price and value. Cost refers to the expense of producing and delivering a unit of water. Price refers to the rate charged to a customer for the unit of water delivered. Value, on the other hand, is a more ambiguous concept and one that is harder to measure.
It is difficult to determine water's value because it depends upon multiple dimensions — the volume of water supplied, where the water is supplied, when it is supplied, whether the supply is reliable, and whether the quality of the water meets the requirements of the intended use.
The value of water "all depends on where you sit," Arndt said. "If you're someone involved in the fisheries, the quality of the water is significant and can have a different economic value than for some other user who is looking at it purely for cooling purposes like the power industry."
The Lehigh County Authority (LCA) serves more than 20,000 customers across 16 townships and provides wastewater service in 13 municipalities. Among its customers are the Samuel Adams Brewery, water bottlers, a Coca-cola plant, and a Kraft Foods plant.
"Almost every organization in some way, even in the very minimal sense of sanitation, requires water to establish an employee presence in a community. In the case of the organizations we serve, the bottlers and the Kraft food plant, water is a key ingredient in producing those products," said Arndt. "They need reliable service on an ongoing basis, but also the services need to be cost competitive so they are able to compete effectively with other competitors."
