River Water Quality Improvement and Economics of Soft Interventions in the Yamato-Gawa River Basin

Abstract

Water quality conditions in the Yamato-Gawa River, Japan, in 1963 might be Pareto optimum because biological oxygen demand (BOD) concentration was smaller than the BOD criteria, 5 mg l-1, which was determined in 1970, however, water quality deterioration in 1963-1970, up to 22 for average or 32 mg l-1 for 75% value, might not be Pareto optimum. River water quality has improved in these decades especially in this decade in the Yamato-Gawa River. The river water quality improvement has been effects of both hard and soft interventions, i.e. development of municipal wastewater treatment plants (WWTPs) and river water purification facilities, and soft interventions in households to reduce pollutants discharge. Annual 75% value and average BOD of the eight monitoring point in the main river improved to 3.0 mg l-1 and 2.8 mg l-1, respectively, in 2010. In the last year presentation, the effects of soft interventions on micro- and macro-economics have been roughly estimated using the Input-Output (I-O) Table. In this presentation, Pareto optimality, market failure (MF), government failure (GF) and institutional failure (IF) are discussed on the water quality deterioration in 1963-1970 and its improvement in 1970-2010. Quantitative analysis was conducted to obtain some prices in 2010 with consumer price index (CPI), i.e. water supply investments to import water from other river basins (JPY 425 billion, AU$ 5.31 billion), fishery industry decrease in 1973-1998 (JPY 16.0 billion, AU$ 201 million) and environmental water value in the river basin (JPY 13.1 billion, AU$ 164 million). The water quality deterioration in 1963-1970 might be a mixed effect of MF, GF and IF causes. The total investments of wastewater treatment, river water purification, dissemination of soft interventions and water supply system development have further exceeded the valuation of water environment improvement of JPY 13.1 billion (AU$ 164 million).

Keywords: government failure, institutional failure, market failure, Pareto optimality, river water quality

JEL Classification: D12, D43, D57, H11, H53, H72, N85, Q25