Proposed CO Economic Analysis on Water Quality in Wisconsin


During the development of water quality standards the Department is required to perform a cost-benefit analysis for all proposed rules. The purpose of this project is to provide the department with the knowledge necessary to quantify the economic benefits of protecting water quality and the economic costs associated with degraded water quality in Wisconsin.


Historically, cost-benefit analyses received minor consideration during the development of water quality standards. However, as economic concerns became more prevalent in both government and society, the demand for detailed cost-benefit analyses has intensified. Currently, the Department lacks the fundamental economic information necessary to perform such detailed cost-benefits analyses. The primary objective of this project will be to quantify the value of clean water in Wisconsin. This project will identify the economic variables that are known and those that need to be researched in order to quantify the value of water quality protection. Without a quantitative cost-benefit analysis, rulemaking to protect Wisconsin’s water quality will be virtually impossible. Additionally, implementation strategies for protecting water quality, such as TMDL development, will benefit from quantifiable cost-benefit data by allowing stakeholders to see the economic impacts of project implementation.


The first outcome for this project will be to gather all pertinent peer-reviewed published articles on the social and economic costs and benefits of clean water. The number of pertinent articles will be reported in the Division Quarterly Report (Sept.). The next step will be to organize these articles into categories for analysis. For example, “cost of beach closures” would be one category. These categories, and number of articles in each category, will be reported in the second Division Quarterly Report (Dec.). The goal of the analysis for this project is to assign, when possible, positive or negative dollar values to each of these economic categories based on waterbody size and type. If quantification is not possible, a narrative will be developed to address why quantification is infeasible and discuss some possible solutions to the problem. A summary of this analysis will be included in the third Division Quarterly Report (Mar.). As a final product, this project will determine the feasibility of quantifying the benefits of clean water and the costs of degraded water in Wisconsin. If additional research is required, this project will make recommendations for improvement. Research needs and suggestions for improvement will be reported in the final Division Quarterly Report (June).

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This project will have three phases. The first phase will be data gathering. During the data gathering phase we will gather and synthesize relevant peer-reviewed articles. Phase one of this project will be completed at the end of the first Division Quarterly Report. Phase two will be the analysis phase at which time the articles will be organized into categories for analysis. The end goal of phase two is to assign an economic value to each category, when feasible. The second phase of the project will be completed at the end of the third Division Quarterly Report. The final phase is the project conclusions and recommendation phase. For this phase, we will summarize all of the results of this project, identify any missing information in the research, develop potential solutions to fill these research holes, and indentify the next steps in the project. This project will also work closely with the Wisconsin River TMDL work group. The Wisconsin River TMDL work group is currently performing a social and economic analysis for the Wisconsin River to strengthen the need for and benefits of the proposed TMDL. Coordination with this work group provides an opportunity to gather economic data, improve our understanding of the economic costs and benefits of the Wisconsin River, and, potentially, extrapolate these results for the rest of the State. By coordinating with this group we will be able to achieve meaningful results and avoid duplicity and inaccuracy. This coordination effort will require some amount of in-state travel.