Introduction Groundwater is a valuable, renewable natural resource that, if contaminated by economic activities, may be rendered a nonrenewable, unusable, and mobile public hazard. There are reasons to believe, given certain physical and technical aspects of groundwater contamination, that the straightforward piecemeal application of conventional Cost-Benefit analysis will lead to a cumulative loss of groundwater resources.
This report develops and extends features of economic theory appropriate to groundwater contamination issues, provides some empirical applications and reports empirical results, and suggests an easy-to-use technique that will usually allow policymakers to obtain a reasonably accurate and precise prediction of the economic benefits of groundwater protection.
This chapter surveys and synthesizes the analytical literature that deals with the economic value of preventing or remedying groundwater contamination. We identify and resolve several literature omissions and discuss the value implications of alternative analytical frameworks.
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