David Molitor, University of Illinois - Safe Drinking Water in America

Joint Melbourne Institute and Department of Economics Seminar

Title: Water Works: Causes and Consequences of Safe Drinking Water in America

Abstract: Since the 1974 Safe Drinking Water Act, the US has spent $2 trillion to provide safe drinking water, yet 10–20 percent of drinking water violates standards. We study trends, causes, and consequences of US drinking water pollution. The analysis uses 230 million readings on 1,800 pollutants over decades that we obtained from 48 states via dozens of Freedom of Information Act and associated requests. We link pollution geographically to administrative Medicare data on older Americans’ health outcomes. Three findings emerge. First, US drinking water pollution is declining rapidly. The share of readings exceeding current health standards, for example, fell by half from 2003–2019. Unregulated pollutants declined more slowly. Low-income areas have higher pollution; patterns for Black and Hispanic communities are more complex. Second, loans provided by the Safe Drinking Water Act to cities substantially reduce pollution. These loans could eliminate pollution above health standards for $36 annually per person. Third, these loans significantly reduce mortality rates of older Americans, at a cost of $124,000 per premature death avoided. Although fiscal federalism cautions against federal funding of local public goods with few inter-jurisdictional externalities like drinking water, we estimate enormous net benefits from Safe Drinking Water Act loans.

Presenter: David Molitor, University of Illinois

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