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The Economics of Water Quality

Water Quality Control

  1. Keith O. Keplinger

Published Online: 15 APR 2005

DOI: 10.1002/047147844X.wq673

Water Encyclopedia

Water Encyclopedia

How to Cite

Keplinger, K. O. 2005. The Economics of Water Quality. Water Encyclopedia. 2:127–135.

Author Information

  1. Texas Institute for Applied Environmental Research, Stephenville, Texas

Publication History

  1. Published Online: 15 APR 2005


The role of economics in water quality decision-making is a topic receiving increasing attention today. A number of factors have spurred this interest. On the policy front, the total maximum daily load program has emerged as a premier water quality program in the United States, engendering fresh opportunities for economic analysis, because the means of attaining ambient targets are not prescribed. The increased relevance of economic analysis in the policy arena has been accompanied by a blossoming of the discipline of environmental economics and greater public and governmental acceptance of pursuing cost-effective and market-based solutions to environmental problems.

The theory of environmental economics has been extensively developed, but the utility and form of policy instruments are highly influenced by the institutional landscape. Consequently, this report begins with a brief assessment of water quality policy in the United States, focusing on the landmark legislation that constitutes the lion's share of current water quality policy, the 1972 Clean Water Act (CWA). Next, the meaning of costs and benefits in a water quality context are discussed, and the merits of two commonly used economic instruments in water quality assessments are explored: cost–benefit analysis and cost-effectiveness analysis. Finally, equity issues and the economic implications of water quality policy alternatives are discussed, with particular emphasis on the historical development and potential for incentive-based mechanisms.


  • trace metal;
  • speciation;
  • chemistry;
  • measurement;
  • modeling;
  • bioavailability;
  • toxicity;
  • transport