Effect of Forest Cover on Water Treatment Costs

Abstract

This paper studies the relationship between forest cover and drinking water chemical treatment costs using land use data and a survey by the American Water Works Association (AWWA). The survey gathers cost and water quality data from 37 treatment plants in forested ecoregions of the United States. We model the effect of forest conversion on the cost of water treatment using a two-step process. First, we examine the effect of changes in land use on water quality through an ecological production function. Second, we examine the effect of changes in water quality on cost of treatment through an economic benefits function. We find a negative relationship between forest cover and turbidity, but no relationship between forest cover and total organic carbon (TOC). Increasing forest cover in a watershed by 1% reduces turbidity by 3%, and increasing development by 1% in a watershed increases turbidity by 3%. The impact of development is more consistent across models than the impact of forest cover. We also find a large impact on turbidity from grazing in the watershed. Our economic benefits function shows a 1% increase in turbidity increases water treatment costs by 0.19%, and 1% increase in TOC increases water treatment costs by 0.46%. TOC has a clearer impact on costs than turbidity, which becomes insignificant when we omit one of our observations with high turbidity.