December 3, 2001

Economic impact of Walkerton crisis assessed at over $64.5 million

The economic impact of the May, 2000 Walkerton contaminated water crisis has been calculated at over $64.5 million. The study by Dr John Livernois of the University of Guelph economics department was prepared as a discussion paper for the Walkerton Inquiry.

The study seeks to assign a tangible dollar value to the wide-ranging effects of the E coli contamination of the town's water system. The impacts of the crisis, notes Dr Livernois, were multi-sectoral and wide-ranging, extending beyond the town itself into neighbouring communities and regions.

The costs to businesses in the town were calculated at approximately $651,400, with lost business revenues for the May 1, 2000-April 30, 2001 period set at nearly $2.7 million. This figure was based on a survey of 134 Walkerton businesses, representing about 73% of the town's business establishments, done during May 2001. The study also estimates $1.23 million in lost productivity.

The cost of remedial work to clean up the contamination has been estimated at $9.22 million. This includes emergency services provided by the Ontario Clean Water Agency (OCWA), watermain replacement, well rehabilitation and operation and maintenance of the water system. Water testing, laboratory and auditing costs added another $655,000.

The cost to individual Walkerton households averaged an estimated $3,700, with the total cost to all households estimated at nearly $6.88 million. Interviews with household representatives produced a breakdown of extra costs incurred such as travel for treatment, boiling water, medication and extra groceries. A decline in residential real estate values, attributable to the crisis, has been valued at $1.1 million.

Other cost estimates include: $9 million for the inquiry itself; $2.5 million in long-term health costs; $5 million for the Walkerton health study; $6.54 million in administrative costs to the municipality of Brockton; $11.1 million in other agency costs; and $1 million in private legal expenses.

The purpose of the study, explained Dr Livernois, was "to capture all of the relevant tangible costs that are attributable to the water crisis. Many of these have been incurred already and some are ongoing." The study acknowledges that assigning cost values to the diverse impacts of the crisis is a daunting undertaking, but important in helping determine the value of investing public resources in water treatment and safety practices. Such an exercise can also assist governments in making future resource allocation decisions.

The 60-page study report describes how the cost estimates were arrived at and what was taken into account in evaluating the cost of each particular impact. The document may be viewed on the Internet at www.walkertoninquiry.com, under Part 2, General Documents, List of Commissioned Issue Papers (No 14). More information is also available from Peter Rehak at 416/327-9168.

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