50 It is not easy to derive economic values for damage costs of water pollutants. The complexity of the way in which pollutants entering the water environment affect chemical water quality and ecological status means that it is difficult to devise simple dose-response functions. Furthermore, there are several ways in which the benefits of improving water quality are location-dependent and it is not easy to determine the relevant population to use for grossing up values, or how to take account of decay functions to represent 'distance decay'.28 Therefore, water valuation studies do not generally produce 'marginal damage cost' estimates for specific pollutants; they are more geared towards producing values for observable changes in environmental quality.
51 Numerous studies have attempted to estimate the economic value of changes to water quality or flow rates/levels in water bodies,29 but establishing values that can be transferred is difficult. New research is planned by Defra, the Environment Agency and Ofwat to value the environmental benefits of changes in water quality.
_____________________________________________________________________________
28 "Distance decay" refers to the observation that people living further away from an environmental impact care less about it and therefore express lower valuations.
29 For example, "Valuation of Benefits to England and Wales of a Revised Bathing Water Quality Directive and Other Beach Characteristics Using the Choice Experiment Methodology", Eftec report to Defra, 2002. Also, the Environment Agency has a register of 50 water valuation studies which covers values for recreation water quality, flood defence, navigation and fishing (Netcen 1998)