VALUATION OF GROUNDWATER QUALITY CONTINGENT VALUES, PUBLIC POLICY NEEDS, AND DAMAGE FUNCTIONS

In a departure from past contingent valuation research of groundwater quality, this paper estimates a damage function for nitrate exposures based on actual water test results of individual wells. From the perspective of reliability, it is argued that such a full information approach more closely represents the goal of valuation research in this area -to estimate the economic values that people would place on improving water quality if they were actually experiencing contaminated water. The adoption of a damage function approach linking willingness to pay to actual exposures is also more useful to policy makers at the study site because it potentially provides benefit information to a broad range of policy options. Finally, because the damage function is based on objective data that could be obtained from other sources such as local well test programs, such an approach may be desirable from a benefits transfer perspective. Damages, as measured by willingness to pay for protecting individual well supplies within a 10 mg/L NO,-N health standards are estimated to be a concave function of nitrate exposure levels.