Puts Price Tag on Walkerton Water Tragedy
Direct costs $64 million, society would pay
another $91 million to prevent recurrence
It was a daunting task, but economics professor
John Livernois has finally put a price tag on the Walkerton
water tragedy that left seven people dead and 2,300 ill.
He estimates the direct costs of the crisis at $64 million,
but says society would be willing to spend another $91 million
to prevent future loss of life and illness similar to what
the town suffered.
Livernois, an expert in environmental and natural resource
economics, spent nearly a year researching and analysing
the tragedy to come up with those figures.
"It was a major undertaking and different from anything
I have done in the past," he says. Although it wasn't
the first time he'd been involved with such a public and
political issue, "this was so sensitive and we had
to tread very carefully because there were a lot of legal
issues to worry about."
Livernois was commissioned by the Walkerton judicial inquiry
to determine the economic impact of the May 2000 water crisis.
His report, released in late November, was based on anonymous
surveys of hundreds of Walkerton residents and businesses,
conducted by U of G graduate students. Prof. Fred Evers,
Sociology and Anthropology, assisted with the resident surveys;
Livernois headed the business end and compiled data from
both sections into a final report.
Since the report was made public, Livernois has repeated
the total $155-million price tag dozens of times - to Walkerton
Inquiry officials; to newspaper, radio and television reporters;
and to colleagues, students and friends. He can even rattle
off the top of his head the smaller numbers that make up
that bottom line: how much real estate depreciated, the
expense of making trips back and forth to hospitals and
doctors - right down to the cost of having to drive and
pick up bottled water for eight months.
But it's obvious that even after sorting out all the details
and doing the math, Livernois is not entirely comfortable
talking about that $155-million estimate without careful
explanation. He wants to make it clear that he has not placed
a value on the seven lives that were lost. That, he says,
"No finite sum of money would be sufficient. The real
costs of what happened in Walkerton - people lost their
lives and others will be sick the rest of their lives -
cannot be quantified."
At the same time, however, trying to measure the costs
of a crisis like Walkerton without recognizing the illness
and loss of life it caused is unrealistic and unreasonable,
he says. "It would tell only half the story."
So in his reports, Livernois breaks down the cost of the
water tragedy into two categories: tangible costs (those
that can be measured directly), estimated at about $64 million,
and intangible costs (such as preventing human suffering),
estimated at close to $91 million.
"Although it's pointless to try to estimate the value
of a life, it is quite a different thing to ask what society
is willing to pay to reduce the risk of a lost life,"
To come up with that figure, Livernois used existing economic
models that determine "statistical values of life."
These models have shown that people are willing to pay a
substantial amount - between $5 million and $15 million
- to prevent the loss of one "statistical life"
and about $15,000 to prevent one serious "statistical
illness." Livernois used an average of $8 million per
statistical life and the $15,000 per statistical illness
in his analysis.
"We're saying that the amount of money society is
willing to pay to prevent a death and illness from a similar
tragedy in the future is about $91 million. That's quite
a different thing than saying the lives that were lost were
worth $91 million."
In terms of tangible costs, the study shows that each of
Walkerton's 5,000 residents spent an average of $4,000 as
a result of the water contamination, for a total of $6.9
million. In addition, property values fell by about $1.1
million because of the crisis, and local businesses lost
about $2.7 million in revenues and spent more than $650,000
for things like bottled water and replacing equipment. In
addition, the cost of emergency services such as water-main
replacement and rehabilitation was more than $9 million.
The study does not include insurance, court settlements
or any other type of compensation because those are considered
transfers of monies rather than a loss of resources, Livernois
"We're saying the value of preventing a future water
tragedy similar to Walkerton is $155 million. This report
is intended to provide a context for future action, allowing
people to weigh the costs and benefits of investing resources
into providing safer drinking water."
Livernois says the most challenging part of the study was
keeping track of all the details. "It was true bean
counting. We wanted to make sure we didn't miss anything.
Because it's so sensitive and political and because there
are legal and emotional issues, I felt more pressure and
demands to make sure I did the job correctly."
He adds that he also felt a special commitment to the residents
who took part in the surveys.
"Almost everyone was very co-operative and friendly
and very emotional. I think a lot of people found it a cathartic
experience to have someone listen and write down and record
their trials and tribulations."