Undergraduate Honors Theses

Thesis Defended

Spring 2016

Document Type

Thesis

Type of Thesis

Departmental Honors

Department

Economics

First Advisor

Nicholas Flores

Second Advisor

Martin Boileau

Third Advisor

R. Scott Summers

Abstract

When a community has poor water quality, the U.S. Environmental Protection Agency (EPA) requires it to comply with federal standards in accordance with the Clean Water Act (CWA). The projects required to meet these standards can be very costly, so the EPA allows communities facing these regulations to evaluate their ability to afford them. If the EPA determines that ratepayers in the utility district would face an economic burden by meeting these standards, the community is allowed to extend the schedule for reaching compliance. This prolongs diminished environmental conditions beyond what is usually considered acceptable under the CWA. My research analyzes the benefits and costs when a community uses a schedule extension and I find that schedule extensions ultimately reduce the benefits of the improved water quality through delay. I offer an alternative payment structure based on economic principles that capture the benefits lost by extension and are sensitive to cost burden by income group.

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