Association for Public Policy Analysis and Management

Association for Public Policy Analysis and Management Trouble in Happyville Author(s): Paul R. Portney Source: Journal of Policy Analysis and Management, Vol. 11, No. 1 (Winter, 1992), pp. 131-132 Published by: Wiley on behalf of Association for Public Policy Analysis and Management Stable URL: http://www.jstor.org/stable/3325137 Accessed: 08-09-2015 00:47 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/ info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Wiley and Association for Public Policy Analysis and Management are collaborating with JSTOR to digitize, preserve and extend access to Journal of Policy Analysis and Management. http://www.jstor.org This content downloaded from 50.181.93.15 on Tue, 08 Sep 2015 00:47:17 UTC All use subject to JSTOR Terms and Conditions INHAPPYVILLE TROUBLE PaulR. Portney Introduction About a year ago, I circulated the following hypothetical problem to my colleagues at Resources for the Future, economists and noneconomists alike. Their responses were quite interesting and, in some cases, surprising. I thought it might be interesting to try the experiment on a larger and more diverse group of readers. Several referees mercifully agreed and I hereby invite you to ponder the following. Is ItSafeto Drinkthe Water? You have a problem. You are Director of Environmental Protection in Happyville, a community of 1000 adults. The drinking water supply in Happyville is contaminated by a naturally occurring substance that each and every resident believes may be responsible for the above-average cancer rate observed there. So concerned are they that they insist you put in place a very expensive treatment system to remove the contaminant. Moreover, you know for a fact that each and every resident is truly willing to pay $1000 each year for the removal of the contaminant. The problem is this. You have asked the top ten risk assessors in the world to test the contaminant for carcinogenicity. To a person, these risk assessors-including several who work for the activist group, Campaign Against Environmental Cancer-find that the substance tests negative for carcinogenicity, even at much higher doses than those received by the residents of Happyville. These ten risk assessors tell you that while one could never prove that the substance is harmless, they would each stake their professional reputations on its being so. You have repeatedly and skillfully communicated this to the Happyville citizenry, but because of a deep-seated skepticism of all government officials, they remain completely unconvinced and truly frightened-still willing, that is, to fork over $1000 per person per year for water purification. TheQuestions First, what are the annual benefits of removing the contaminant from the Happyville drinking water system? (For you noneconomists, benefits are generally measured by willingness-to-pay). Are they $1,000,000? Zero? Some number in between? This is not a trick question, nor should you read more into it than I intend. I am simply interested in knowing what you think the "benefits" side of the benefit-cost ledger should look like. Second, suppose that: (1) the contaminant was not naturally occurring (as hypothesized above), but rather the result of industrial contamination; (2) our estimate of $1000 per person for annual willingness-to-pay for purification Journal of Policy Analysis and Management, Vol. 11, No. 1, 131-132 (1992) ? 1992 by the Association for Public Policy Analysis and Management CCC0276-8739/92/010131-02$04.00 Published by John Wiley & Sons, Inc. This content downloaded from 50.181.93.15 on Tue, 08 Sep 2015 00:47:17 UTC All use subject to JSTOR Terms and Conditions in Happyville 132 / Trouble was based on a state-of-the-artcontingent valuation study (a survey designed to elicit individuals' valuations of environmental programs);and (3) a lawsuit had been brought against the source of the contamination. If your answer to the first question was $1,000,000 in annual benefits, would you be willing to support a judgment of $1,000,000 in annual damages against that source, again assuming that the world's best risk assessors told you they could find no evidence of carcinogenicity? YourVerdict,Please Send me your responses at the address listed at the start of the "Insights" section. Please try to keep these responses brief; while the issues I raise are complicated ones, it will be impossible for me to plow through, much less summarize neatly, a large number of long answers. You may respond anonymously or with your name; I would prefer that you identify your disciplinary training even if you prefer not to give your name. All responses will be kept confidential, of course, although I do intend in a future issue to summarize the responses I get. Thanks very much from the residents of Happyville! PAULR. PORTNEYis Vice Presidentand Senior Fellow at Resourcesfor the Future. 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