Land use impact on water quality: valuing forest services in terms of the water supply sector

The aim of this paper is to quantify the impact of the forest on raw water quality within the framework of other land uses. On the basis of measurements of quality parameters that were identified as being the most problematic (i.e., pesticides and nitrates), we modeled how water quality is influenced by land uses. In order to assess the benefits provided by the forest in terms of improved water quality, we used variations of drinking water prices that were determined by the operating costs of water supply services (WSS). Given the variability of links between forests and water quality, we chose to cover all of France using data observed in each administrative department (France is divided into 95 départements), including a description of WSS and information on land uses. We designed a model that describes the impact of land uses on water quality, as well as the operation of WSS and prices. This bioeconomic model was estimated by the generalized method of moments (GMM) to account for endogeneity and heteroscedasticity issues. We showed that the forest has a positive effect on raw water quality compared to other land uses, with an indirect impact on water prices, making them lower for consumers.