5. Economic Valuation for Decision Making on the Protection of Water Sources

The purpose of this paper is to carry out an economic analysis of the required investments for the protection of natural water sources for the drinking water supply of the city of Quito, Ecuador. Although “producing” water or minerals has no cost since they naturally exist on the environment, the values of ecosystems’ services and functions can be estimated based on applications of a series of environmental economics methods. The Contingent Valuation Method is especially relevant, since it estimates the use and non-use values, which can correspond to the total economic value or benefits to society derived from protected water sources. This method is applied to a case involving the Water and Sanitation Company of the City of Quito (EPMAPS), which has made important investments for protection of the main water sources for the city of Quito. The results of the economic analysis demonstrate the economic feasibility of the required investments for the protection of water sources taking into account the costs involved and the total economic value or benefits calculated by means of the Contingent Valuation Method. This will allow its dissemination and training at all levels in order to internalize the environmental economic values on related individual and institutional decision making.