Incorporating Consideration for Poor Households into U.S. Environmental Protection Agency Affordability Methodologies for Drinking Water Treatment

Abstract

In the 1996 Amendments to the Safe Drinking Water Act, Congress charged the U.S. Environmental Protection Agency (EPA) with developing affordability methodologies to determine if new drinking water treatment regulations will be affordable to consumers. In 1998, the EPA introduced a methodology based on the median household income (MHI). When the EPA proposed a new method in 2006, it kept the use of the MHI as an appropriate measure of household income but introduced additional criteria for identifying economically disadvantaged communities (EDCs) to also receive variances. However, the EPA’s continued use of the MHI ignores that poor households are the most burdened by new drinking water regulations. This thesis examines the use of a lower income threshold, the first quartile household income, and recommends that water treatment be deemed unaffordable if either the costs are predicted to exceed 2.5% of a community’s first quartile household income or if the system will be located in an economically disadvantaged community. This proposed rule would potentially qualify 12,000 drinking water systems. The EPA’s definition of EDCs is also examined as the current definition fluctuates over the business cycle, producing a situation in which it is harder for systems to receive variances during economic recessions, when they are most needed. Adjustments to the EDC criteria that set fixed thresholds based on MHI, poverty and unemployment rate in periods of economic growth or long-term averages are proposed to correct this. EDC definitions that use consumption measures, i.e. county food stamp program participation rates and share of households spending more than 35% of income, are investigated as well.