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This paper studies the relationship between forest cover and drinking water chemical treatment costs using a unique survey by the American Water Works Association (AWWA). The survey gathers cost and water quality data for 37 treatment plants in forested ecoregions of the United States. We model the effect of forest conversion on the cost of water treatment using a two-step process. First, we examine the effect of changes in land use on water quality through an ecological production function. Second, we examine the effect of changes in water quality on cost of treatment through an economic benefits function. We find a strong negative relationship between forest cover and turbidity, but only a weak relationship between forest cover and total organic carbon (TOC). Converting 1% of a watershed from forested to developed land increases turbidity by 3.9%. A 1% increase in TOC increases chemical costs by 0.46%, and a 1% increase in turbidity increases chemicals costs by 0.19%.