Effects of water quality on municipal water supply are considered from the viewpoint of both supply side and demand side.
On the supply side the benefits of water quality improvement are measured by means of so-called cost saving approach. The annual data from 1973 to 1981 obtained from three municipal water supply plants which withdraw water from Lake Biwa and employ the water treatment of rapid sand treatment system. The cost function is statistically estimated in terms of the data on cost of chemical additives and water quality. Then a benefit is caluculated in terms of cost saving, which naturally understimates the true benefits of water quality improvement.
On the demand side the decrease of the averting behavior of consumers are considered to be one indicator of the benefits of water quality improvement. So, survey questionaires are undertaken in two comparative regions; one region consists of the city of Tsuchiura and the town of Ami and the other region consists of the city of Ohts. The consumers in the first region receive the municipal water from Kasumigaura municipal water supply plant which withdraw water from Lake Kasumigaura and the comsumers of the second region receive the municipal water from Yanagasaki and Zeze municipal water supply plants which withdraw water from Lake Biwa.
The survey results show that 1) the ratio of people taking various forms of averting behavior is higher in Tsuchiura and Ami than in Ohts and 2) the relationship between water quality and averting behavior is not judged to be significant in the first region.
Moreover, first, there are various forms of averting behavior and consumers are likely to utilize several forms simultaneously, so the benefit of water quality improvement will be underestimated. Second, averting behaviors are not likely to be perfect substitutes for water quality. So the decrease in averting behavior costs will understate the benefit in water quality. Further, when consumers reduce water consumption as water quality deteriorates, it brings another problem to estimate the expenditure function and the demand price for water quality.
