Date of Award

12-2005

Level of Access

Campus-Only Thesis

Degree Name

Master of Science (MS)

Department

Resource Economics and Policy

Advisor

Kevin J. Boyle

Second Committee Member

Kathleen P. Bell

Third Committee Member

Todd M. Gabe

Abstract

On January 22"" 2001, the Environmental Protection Agency lowered the maximum contaminant level for arsenic in drinking water to O.Olmg/L from 0.05mgL. This new standard will be adopted by public water systems beginning in January, 2006. This will reduce the adverse effects associated with elevated levels of arsenic in drinking water for 90 percent of the American population, assuming the ability of water systems to comply with this more stringent standard. Private wells, those serving less than 15 service connections per year, are not protected by the new arsenic standard. In Maine, approximately 50 percent of water systems are private. This research employs the hedonic method to estimate property owners' marginal willingness to pay (MWTP) for protection from elevated concentrations of arsenic in groundwater as well as welfare gains to property owners from reductions in arsenic concentrations in groundwater from elevated to "safe" levels. These estimates were generated from hedonic price equations which explain sales price of a property as a function of structural property characteristics and arsenic levels. The arsenic variable was specified with five alternate strategies using private well test data from the Maine Geological Survey and the Maine Health and Environmental Testing Lab. The arsenic specifications include property specific arsenic values, closest elevated (>O.OSmg/L) arsenic value, and average of arsenic concentrations within quarter-mile, half-mile and one-mile radii of a property. The study area for this thesis is Buxton and Hollis, Maine, two towns approximately 20 miles west of Portland. These towns generated statewide media attention in the early 1990s when private well tests in the area revealed arsenic concentrations above O.OSmg/L. Results of this research indicate that there does appear to be a negative effect on property values associated with arsenic contamination of groundwater. This effect varies by the specification of the arsenic variable employed in the hedonic model.

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