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The Economics of Water Quality Policy

The Economics of Water Quality Policy

Getting into Soil and Water 2020

Ada Hayden Heritage Park in Ames, Iowa. (Courtesy of Andrew Zalasky)

When one thinks about what a professional in the field of water science looks like, they might envision a biologist, chemist, or other scientist working in the laboratory or in the field. However, there are many other types of professionals besides those studying our water and working to improve its quality. Dr. David Keiser, a professor of economics at Iowa State University, focuses on the economics of water quality policies, and analyzes the effectiveness of current policies and how to improve them.

When he was younger, Dr. Keiser wasn’t initially sure of what his career path would be. He studied various topics as an undergraduate and decided to pursue a Master’s in applied economics at the University of Georgia after seeing the kind of work an economist does. There, he became intrigued about environmental economics, specifically water resource economics. After completing his Ph.D. at Yale University, he found his calling in academia.

Currently, Dr. Keiser’s research interests are in environmental and natural resource economics, mostly focusing on the economics of water quality policies. “These policies include legislation such as the Clean Water Act that governs surface waters – lakes, rivers, streams – and the Safe Drinking Water Act that governs drinking water quality,” he says. Dr. Keiser cites his interest in nature and love for outdoor recreation – such as swimming, fishing, and boating – as well as his enjoyment of math-based problem solving and statistics, as the reasons behind his research interests. “Economics utilizes a lot of quantitative tools to help society figure out how
best to allocate scarce resources, such as government funds. The combination of my interests in economics and the environment were a perfect fit,” he says.

Dr. Keiser’s work helps federal and state agencies understand the costs and benefits of certain actions directed toward improving water quality. For example, his work helps the U.S. Department of Agriculture understand where and how much money should be invested to have the greatest impact in helping reduce agricultural runoff. This, in turn, effects recreational and drinking waters, things that everyone experiences and relies on.

When asked about his research methodology, Dr. Keiser answered, “A lot of my work combines very large datasets with advanced statistical methods to understand how effective water quality policies have been.” Speaking about one of his papers on the Clean Water Act, he said his team “compiled nearly 50 million records on pollution to study how a large federal grants program impacted water quality and housing values.” Why did they study housing values? “The reason we looked at housing values is that they are believed to reflect what people are willing to pay for changes in the environment. Environmental quality, like clean water, is not something that we can buy and sell in stores, so economists must use other ways to infer how much society values it. In the Clean Water Act paper, we assume that housing values reflect how much people valued local improvements due to the federal grants program. Their benefits can then be compared against their costs.” However, he also points out that other factors may affect the end conclusion, such as “the fact that these local benefits exclude any benefits society places on improvements in water quality even if they might not use the resource. For example, even though we live here in Iowa, we might be willing to donate money to improve water quality in the Gulf of Mexico to know that it helps aquatic species there.”

For those who are unfamiliar with the intersectionality of water quality and economics, Dr. Keiser explains that economics is crucial in examining the effectiveness of our country’s policies and spending regarding our water resources, given that the United States has spent almost $5 trillion on water quality programs since the 1970s. Furthermore, economics is also utilized in other STEM fields, especially those related to energy, engineering, and the environment. So, even if someone is interested in contributing to the study of water quality but isn’t keen on a STEM career, there are other ways to be involved in this field.

The impact of Dr. Keiser’s work is significant, affecting many levels of government and ultimately the communities within the United States. Water is vital to our everyday lives, and the work of economists such as Dr. Keiser is helping us understand how to best act to protect this important resource.

Hannah Huang

Ames High School Spirit of the Water Essay Contest Winner



Keiser, David. “Interview Questions for Spirit of the Water Essay Contest.” Received by Hannah Huang, 27 January 2019. Email Interview.

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