waste-water disposal, by nature of the constraints on the model, approximated 

 1970 economic activity in the basin. These two objectives provided the basis for 

 most of the analysis. 



In all cases examined and analyzed, more water-supply and waste-water 

 treatment facilities were shown to be needed beyond those presently found in the 

 Ashuelot Basin. In spite of this fact, the disposal of untreated household waste 

 water, particularly from rural households, directly into the river was consistent 

 with maximizing net benefits in all cases except low river-flow conditions and 

 median August, B-class level of river-water quality. At high-flow levels for 

 August and for B-class level, this direct discharge of raw sewage into the river was 

 economically optimal for many rural households and for some of the small 

 communities found along tributaries. These economic optima of net benefits are 

 not consistent with the objective of no untreated sewage being directly discharged 

 into the river. It appears then that neither internalizing externalities, tax levies 

 based on damages to some second party, nor quality standards would achieve 

 this latter goal. 



River-Flow Level, Classification, and Projected Influences 



At high-flow levels (high precipitation), the river appeared to have untaxed 

 assimilation capacity. As river flow decreased, more treatment facilities and more 

 effective treatments were required. The implied price for one pound of BOD 

 (biochemical oxygen demand) at the median-flow level based on maximizing net 

 benefits to the basin reached 56 cents per pound for current quality levels and 

 $7.08 per pound at low levels. At these lower flow levels, the assimilation 

 capacity of the river is taxed. 



During the low river-flow months, perverse procurement and waste-water 

 treatment activities resulted when net benefits were optimized. The Ashuelot 

 River, located in western New Hampshire, was used for water supply by Keene 

 and small communities for purposes of reducing BOD and coliform bacteria 

 through the use of treatment facilities. Small communities, called intensive 

 residential areas, shifted from public treatment to septic tank treatment to 

 further reduce BOD and coliform bacteria discharged into the river. The incidence 

 of costs also varied between median- and high-river flow. 



Measures for increasing river flow during periods of low flow were evaluated 

 based on maximized net benefits. The results indicated that 1,000 gallons of 

 water for flow augmentation were worth about five cents in terms of imputed 

 variable costs. 



The Ashuelot River waters in the central area were reclassified B class in the 

 late 1960's. For analysis purposes all waters below the Surry Mountain Dam 

 were assumed to have been classified B-class level in the late 1960's. During a low- 

 flow period there is some question If this level of quality can be attained. During 

 these low-flow periods, the current quality level was attainable by reducing 

 tanning manufacturing output. This reclassification, with decisions based on 

 minimizing public and private cost, would mean an increase in basin operating 

 costs of about 30 percent; if based on maximizing net benefits, only 10 to 20 

 percent. 



At all flow levels, costs and extent of treatment were allocated to those 

 sectors with lowest costs. For each area, including the basin, constraints were the 

 same for all sectors, and the imputed costs for meeting these quality constraints 

 were the same for all sectors. As river-flow level decreased or as quality class in- 

 creased, the imputed cost of waste-water treatment also increased. The imputed 



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