Economic analysis shows potable reuse is a competitive option for water security

While drought is a challenge faced by communities across the country, selecting and implementing options to ensure water security depend on population size and distribution, according to a recent cost-benefit analysis considering water recycling for rural New South Wales (NSW).

Presenting on the economics of sustainable water solutions at Ozwater’20 Online, The Balmoral Group Resource Economist Samuel Miller said the study aimed to evaluate whether water recycling for drinking water was a competitive option.

The results depend on population size, but, in some cases, the answer is affirmative. 

“Advanced water treatment plants have been politically off the table for a number of years now.  A lot of people like to point out that July 2006 was the beginning of the end of the potable water recycling debate in Australia,” he said.

“The community of Toowoomba rejected a proposal to install an advanced water treatment plant, effectively leading to a nation-wide policy ban on direct potable water reuse. 

“Fast forward to 2019, and we were back in severe drought, with lots of towns facing unprecedented water shortages. A lot of the low hanging fruit in water security has been exploited. As an option, perhaps water recycling could now be considered more seriously.” 

With unprecedented drought conditions expected to continue into the future, Miller said it was important to assess all water security options as a means of boosting water security.

“The recent drought conditions placed on Australia have been as severe as the Millennium Drought. Towns such as Orange and Bathurst, which have traditionally had good water security, are facing real uncertainty in the future,” he said. 

“All water security options should be available. Nothing should be off the table. The object of our research is to evaluate whether recycling for drinking water is a competitive water security option. Should it be considered alongside other water security alternatives?”

Potable reuse potential

The analysis included consideration of the installation of advanced water treatment for potable reuse, as well as pipeline and groundwater options available to communities. 

It also took into consideration the benefit-cost ratio (BCR) of different options for a range of population sizes, with the aim of achieving a score higher than one. 

Miller said the results indicated that more populous towns were unlikely to derive water security from a single option.

“We found that for towns of 850 households or fewer, none of the options achieve a BCR above one,” he said.

“At around 2700 households, the advanced water treatment plant almost reaches the BCR of one, but these towns usually rely on pipelines to water sources about 15 km away. As towns become larger, the benefits of potable reuse become larger. 

“What this might imply is that for a large town of 19,000 people that's already connected to water sources not too far away, one single water security option may not provide the silver bullet to help overcome water security issues. 

“But, for towns of 7000 and up, compared to other options such as pipelines and groundwater bores, potable reuse options are actually highly competitive. In some cases, advanced water treatment plants are the most beneficial option to society.”

Furthermore, Miller said the analysis showed that in the instance where water supply failure increases, potable reuse via wastewater treatment, in conjunction with other water security options, was most likely to be most cost effective and beneficial.

“If a water supply failure occurs more regularly, we found that the benefits of all the options increase. It makes it more likely that an advanced water treatment plant, and other options, will achieve a BCR of greater than one,” he said.

“Cost-benefit analysis, at its heart, really attempts to quantify where possible the total economic costs and benefits of a project over a number of years. 

“We found that, in some cases, advanced water treatments plants are a highly competitive water security option.”