9

Costs

Whether water reuse makes sense for a region depends, in part, on its cost compared with the costs of other feasible water management alternatives (e.g., new supplies, expanded conservation efforts) and the cost of not pursuing any water management changes. If a community chooses not to augment its water supply, it avoids those associated costs but also misses or postpones the benefits of doing so. Because new water supply options are likely to cost more than the existing supplies (assuming no more of the existing water supply is available), the costs of water reuse need to be compared to the cost of other new-supply options.

In this chapter, the concepts of financial and economic analysis are introduced, and the costs of reuse are categorized. As described in Chapters 4 and 5, a wide variety of treatment processes can be incorporated into a reuse system to meet specific water quality goals for intended uses and to address local site-specific constraints. Thus, it is difficult to make general statements about the cost of water reuse. The committee, instead, presents example costs from potable and nonpotable reuse facilities that responded to a committee questionnaire, and where feasible, compares the costs of water reuse against other alternative water supplies.

FINANCIAL AND ECONOMIC COSTS

When assessing the economic viability of a water supply project, it is important to understand the difference between economic costs and benefits and financial accounting of costs and benefits, which are rarely, if ever, the same (NRC, 2008b). Financial costs involve how much the utility has to pay to construct and operate the project, including interest costs. Economic costs account for all of the costs to whomever they may accrue. These include the financial costs of carrying out the project, as well as costs that take the form of impositions on or losses to anyone who is affected by the project. Examples of broadly experienced costs are odors, loss of open space, or additional greenhouse gas emissions. Examples of broadly experienced benefits are reduced nutrient discharge to surface waters and economic benefits provided by a reliable water supply.

The concept of economic cost has been captured in the idea of the “triple bottom line,” which encompasses the financial, social, and environmental impacts of a project. With a triple-bottom-line approach, the project sponsor is considered to have an obligation to examine environmental and social impacts, not just profitability. The analyses undertaken in environmental impact reviews are consistent with triple-bottom-line thinking, although environmental review as an obligation ends with project certification. In contrast, triple-bottom-line approaches call for ongoing review and analyses of financial, social, and environmental costs of a project, which are often summarized in annual reports. Triple-bottom-line accounting runs into the same challenges faced by economic valuation: the difficulty of valuing environmental and social impacts (Norman and MacDonald, 2004). This difficulty means that triple-bottom-line processes offer more guidance than quantitative comparative analysis, although the concept does alert business and public agency leaders that the public is aware of difficult-to-monetize im-



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9 Costs Whether water reuse makes sense for a region involve how much the utility has to pay to construct and depends, in part, on its cost compared with the costs operate the project, including interest costs. Economic of other feasible water management alternatives (e.g., costs account for all of the costs to whomever they may new supplies, expanded conservation efforts) and the accrue. These include the financial costs of carrying cost of not pursuing any water management changes. out the project, as well as costs that take the form of If a community chooses not to augment its water sup- impositions on or losses to anyone who is affected by ply, it avoids those associated costs but also misses or the project. Examples of broadly experienced costs are postpones the benefits of doing so. Because new water odors, loss of open space, or additional greenhouse gas supply options are likely to cost more than the exist- emissions. Examples of broadly experienced benefits ing supplies (assuming no more of the existing water are reduced nutrient discharge to surface waters and supply is available), the costs of water reuse need to be economic benefits provided by a reliable water supply. compared to the cost of other new-supply options. The concept of economic cost has been captured In this chapter, the concepts of financial and eco- in the idea of the “triple bottom line,” which encom- nomic analysis are introduced, and the costs of reuse are passes the financial, social, and environmental impacts categorized. As described in Chapters 4 and 5, a wide of a project. With a triple-bottom-line approach, the variety of treatment processes can be incorporated into project sponsor is considered to have an obligation to a reuse system to meet specific water quality goals for examine environmental and social impacts, not just intended uses and to address local site-specific con- profitability. The analyses undertaken in environmental straints. Thus, it is difficult to make general statements impact reviews are consistent with triple-bottom-line about the cost of water reuse. The committee, instead, thinking, although environmental review as an ob- presents example costs from potable and nonpotable ligation ends with project certification. In contrast, reuse facilities that responded to a committee question- triple-bottom-line approaches call for ongoing review naire, and where feasible, compares the costs of water and analyses of financial, social, and environmental reuse against other alternative water supplies. costs of a project, which are often summarized in an- nual reports. Triple-bottom-line accounting runs into the same challenges faced by economic valuation: the FINANCIAL AND ECONOMIC COSTS difficulty of valuing environmental and social impacts When assessing the economic viability of a wa- (Norman and MacDonald, 2004). This difficulty means ter supply project, it is important to understand the that triple-bottom-line processes offer more guidance difference between economic costs and benefits and than quantitative comparative analysis, although the financial accounting of costs and benefits, which are concept does alert business and public agency leaders rarely, if ever, the same (NRC, 2008b). Financial costs that the public is aware of difficult-to-monetize im- 145

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146 WATER REUSE pacts of their practices and the importance of striving BOX 9-1 for full accountability for one’s impacts on society and Federal Subsidies for Water Reuse the environment. Through the Title XVI Program Both financial and economic perspectives are needed when assessing water supply. If a region’s water The Title XVI program was originally launched in 1992 authority cannot afford a project, even one with net in the Reclamation Projects Authorization and Adjustment benefits to society, it will not get built. Subsidies are Act (Public Law 102-575). The act directed the Secretary of sometimes provided by local, state, or federal agencies Interior “to undertake a program to investigate and identify op- portunities for reclamation and reuse of municipal, industrial, to offset the financial costs for demonstration of new domestic, and agricultural wastewater, and naturally impaired technologies or for projects with broad economic ben- ground and surface waters” and to support, “the design efits that cannot be captured in an individual utility’s and construction of demonstration and permanent facilities rate structure. For example, the Metropolitan Water to reclaim and reuse wastewater.” The act also directed the District of Southern California has offered a $250 per Secretary “to conduct research, including desalting, for the acre-foot subsidy ($767 per million gallons; $200 per reclamation of wastewater and naturally impaired ground and surface waters.” The original act authorized cost sharing for thousand m3) for up to 25 years for local water develop- three feasibility studies and for the construction of five reuse ment to reduce the region’s dependence on imported projects, including three in Southern California, and the act Colorado River water. The Bureau of Reclamation’s has since been amended to authorize additional projects. Title Title XVI has also been a source of subsidies for water XVI has been administered through the Bureau of Reclamation. reuse projects since 1992 (see Box 9-1). Traditional As of November 2010, approximately $531 million has water supplies may also receive subsidies. been appropriated for Title XVI projects, mostly in California, including $135 million from the American Recovery and Reinvestment Act of 2009. Unless specified by Congress, FACTORS AFFECTING THE FINANCIAL federal funding support is limited to projects in the 17 western COSTS OF WATER REUSE PROJECTS continental states. The program has generally provided cost sharing for up to 25 percent of the total project costs, with a Whether reclaimed water is used for nonpotable project maximum of $20 million. These funds historically have or potable uses, there are several factors that affect helped reuse projects move forward more quickly than they might have otherwise. Of the 53 authorized projects, 42 have the costs of a water reuse program. These include the received some funding and 16 have either been completed or location of a reclaimed water source (i.e., the wastewa- have reached the maximum cost-shared funding limit. Three ter treatment facility), treatment infrastructure, plant additional projects have received at least 80 percent of their influent water quality, customer use requirements, authorized funding. As of the end of 2010, the program had a transmission and pumping, timing and storage needs, $630 million backlog for projects that have been authorized energy requirements, concentrate disposal, permitting, and are awaiting appropriations, a significant increase from the $354 million backlog in 2006 (Cody and Carter, 2010). and financing costs. Considering this growing backlog, the recent Congressional Research Service report by Cody and Carter (2010) examined Size and Location program priorities and the federal role in supporting reuse. In most cases, reclaimed water systems originate at a municipal wastewater treatment plant. Wastewa- ter treatment plants are typically constructed at lower elevations and within close proximity to a point of impacts on nearby land uses, and centralized technical discharge such as a river, lake, or ocean. As a result, management. there are pumping costs to bring reclaimed water to Centralized treatment facilities have been preferred the customers or to the water treatment plant, which throughout history, but the analysis of benefits changes is typically sited at higher elevations. In U.S. cities, when one thinks of a wastewater treatment system as a wastewater treatment plants have evolved into large- source of water instead of a location for disposal of wa- scale facilities serving extensive areas. This has provided ter. Multiple smaller, decentralized plants could provide economies of scale and equitable service, minimized several advantages as reuse systems because the location

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147 COSTS of water treatment is closer to the customers, reducing considering that reclaimed water rates are typically less the cost of transmission and distribution infrastructure. than potable rates. In Scottsdale, Arizona, additional Multiple treatment facilities could also improve system treatment to lower the TDS in product water has been redundancy, and therefore reliability, through the inter- incorporated with use of reverse osmosis systems on a connection of more than one source of reclaimed water. portion of the effluent prior to distribution. The cost of Several smaller plants may also be able to accommodate operation of a reverse osmosis facility depends on many fluctuations in demand more effectively than one large factors, including quality of the source water (inflow), centralized plant. Retrofitting centralized treatment quality of the effluent, the cost of energy, and the cost facilities to provide redundancy can be costly if new of concentrate disposal (see also Chapter 4). As an infrastructure (e.g., transmission pipelines, pumping alternative, individual industrial reclaimed water users stations, and storage facilities) is required for the sole that have specific pollutants of concern (e.g., silica for purpose of interconnecting more than one system or industrial cooling water) can implement point-of-use service area (Gikas and Tchobanoglous, 2009). treatment systems to address these constituents, rather than requiring treatment at the water reclamation plant, thereby reducing a facility’s treatment costs. Treatment Infrastructure Potable reuse projects require substantially more In most cases, nonpotable uses of reclaimed water treatment and barriers within the treatment train, (e.g., irrigation, industrial) require a quality of water and therefore require larger investments in treatment that is not much different than what a typical second- infrastructure than nonpotable projects, although the ary or advanced wastewater treatment plant would costs can vary with the treatment components selected produce. For the most part, turbidity, biochemical (see Figure 4-1). Enhanced treatments steps, such as oxygen demand, and coliform standards are similar those used at the Orange County Water District (see between nonpotable reuse applications and secondary Box 2-11), have been key to gaining public acceptance treatment permit requirements, although there may be of major potable reuse projects. However, such exten- some variations in effluent quality requirements. Thus, sive treatment is also costly and energy intensive and the startup of a nonpotable reclaimed water program may not be viable in all potable reuse applications. typically does not require a large investment in addi- tional treatment facilities. Some facilities may need to Influent Water Quality incorporate improvements to existing infrastructure, such as improved filtration, additional chlorination for Incoming water quality is a crucial factor in the maintaining a residual, and more efficient technologies production costs of reclaimed water. Typically, the to meet regulatory requirements. source of water to a reclamation facility is the effluent of Some customers, however, may have specific wa- a wastewater treatment plant. Several factors can affect ter quality requirements that will necessitate a higher its quality, affecting overall treatment costs. level of treatment. Irrigation customers, golf courses • Consumer water softening. The increased use in particular, and industrial customers may impose quality restrictions that may considerably increase the of self-regenerating water softeners by customers has capital and operating costs of a reuse program. Water posed water quality challenges on wastewater treat- reclamation treatment processes can be designed to ment plants producing reclaimed water. High levels treat or remove constituents that negatively affect the of salts in reclaimed water may impair its use unless quality of the effluent or that are limited by contrac- additional pre- and/or post-treatment is implemented, tual commitments with the users. In arid states, total which increases the cost of producing reclaimed water. dissolved solids (TDS) of the reclaimed water can be F low diversion programs have been developed in cities a concern. For example, at El Paso Water Utilities, such as Las Vegas, where conductivity meters (used to potable water must sometimes be used to dilute the measure TDS) trigger automatic valves to divert high- reclaimed water produced to reduce TDS to acceptable conductivity wastewater effluent around satellite water levels. This dilution step becomes costly to the utility, reclamation facilities (Crook, 2007).

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148 WATER REUSE • Water conservation. As indoor water conserva- purple color coding is standardized for all reclaimed water pipes. In some states, reclaimed water pipelines tion programs become more effective, the volume of must be constructed with a minimum separation from wastewater discharges diminish, but the pollutant mass the potable water systems. For example, in Texas (30 often remains unaffected. As a result, the concentra- TAC § 210), the regulatory agency for reclaimed water tion of constituents in wastewater increases, requiring requires a minimum separation distance from a newly additional treatment and therefore additional costs at installed reclaimed water pipeline to a potable water the wastewater or reclaimed water facility on a volume line of 9 ft (2.7 m) horizontally and 2 ft (0.6 m) verti- basis. • Industrial pretreatment. Implementation of cally (Texas Commission on Environmental Quality, 1997). a pretreatment program can limit the discharge of The Southwest Florida Water Management Dis- constituents that would negatively affect the treatment trict (SWFWMD, 2006) estimated that transmission process and/or the quality of the effluent. In nearly all and distribution costs for reuse ranged from $5 per U.S. states, pretreatment programs are required, and inch diameter/linear foot in rural areas to $9 per inch certainly for those plants with a capacity greater than 5 million gallons per day (MGD; or 19,000 m3/d). The diameter/linear foot in urban areas (in 2006 dollars). In 2008, the SWFWMD estimated per lot residential intent of these programs is to detect and address the distribution capital costs from $1,090 to $1,440 in- existence of constituents that would affect the quality cluding the meter and related appurtenances, based on of the product, compliance with regulatory entities, recent reuse project data. The SWFWMD estimated or contractual requirements with users, which thereby that these costs could be reduced by 50 percent in new reduces reclaimed water production costs (see also subdivisions (SWFWMD, 2008). By treating water Box 10-1 for a discussion of the National Pretreatment to drinking water standards, potable reuse projects al- Program). leviate the need for costly separate water transmission, distribution, and storage systems. Transmission and Pumping Existing stream channels can also be used to convey reclaimed water from a wastewater treatment plant to Delivery of reclaimed water to consumers may add a downstream water treatment plant intake, assuming a substantial capital cost to a water reuse project based water rights laws allow for such conveyance. The El on the location of the treatment facility and the dis- Paso Water Utility and the Trinity River Authority tance to the service area(s). Extensive piping costs can discharge treated wastewater into streams while main- be required when separate transmission and distribu- taining rights to withdraw that water downstream for tion lines need to be installed for nonpotable reclaimed reuse under the Texas “Bed and Banks” statute (Texas water. Operating costs could also vary substantially Water Code § 11.042). This statute allows reclaimed for a system in a varied topography, where the source water to be transferred substantial distances without the (the wastewater treatment plant) is typically located at associated infrastructure costs required by Texas’ legal lower elevations and the customers are in the higher definition of “direct reuse,” where all reclaimed water elevations, requiring the delineation of multilayered must be transferred by constructed water infrastructure. pressure (service) zones for delivery of adequate system Reuse of this water allows the utilities to get the most pressures. Additional costs include service connections out of their existing water rights. See also Chapter 10 to the customers and an integrated billing system. for more detailed discussions of water rights and water The delivery of reclaimed water to individual reuse. c ustomers through a dedicated network of pipes, In some cases, regional collaborative initiatives have reservoirs, and pumping stations adds considerable been developed to enhance reuse while taking advan- economic burden. Construction of piping (transmission tage of natural conveyance systems. For example, the and distribution systems), pumping, and storage facili- Upper Trinity Regional Water District (See Box 2-3) ties is comparable to the cost of the same infrastructure discharges reclaimed water to the Trinity River which is for a drinking water system, although specific design then used as a water source for downstream municipal requirements must be observed. In the United States,

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149 COSTS customers. The quantity of water available to municipal allotted summer demand. This is an incentive to keep customers is based in part on those utilities’ returned peak demands as low as possible and reduce the need wastewater flows. Numerous agreements involving state to provide additional storage to meet these demands. and regional water agencies were needed in this collab- Widely variable seasonal demand can add to the overall orative initiative. Similarly, the City of Las Vegas earns costs of the water reuse project; thus, advanced planning gallon-for-gallon return-flow credits for advanced- to minimize the unused capacity in nonpotable reuse treated water returned to Lake Mead. systems is essential to optimizing the cost-effectiveness of a nonpotable reuse project. Decreases in reclaimed water demand create an- Timing and Storage Needs other challenge: lower water quality due to primary In a typical drinking water system, the distribu- productivity (e.g., algal growth) and the release of taste tion and storage system is designed to convey water to and odor compounds during the longer storage time. the customer to meet peak customer demand, which Some storage facilities incorporate a recirculation sys- reflects an aggregate of residential, industrial, and ir- tem to allow for continuous mixing of the water and rigation uses. In nonpotable reclaimed water systems, in some cases have provisions for addition of chemicals the distribution and storage system is typically designed such as sodium hypochlorite to prevent growth of or- to meet a more specific customer demand, which can ganisms. Some systems include equipment that can al- create challenges for the system design. For example, low pipelines to drain any water that does not meet the facilities that primarily produce reclaimed water for ir- required quality controls back to the plant for treatment rigation purposes face the dilemma of extra production via sanitary sewer systems. These extra treatment costs during winter months when irrigation is at its lowest are part of the overall cost of reclaimed water. (Figure 9-1). Alternatives to mitigate this problem Nonpotable reuse customers also have different include increased discharge into surface waterways diurnal demand patterns. Industrial customers may also or subsurface injection to reduce seawater intrusion. impose specific time-of-day requirements on the sup- At Laguna de Santa Rosa, California, low irrigation ply. Diurnal peak demands are typically met through demands are offset by additional supply for industrial a series of storage reservoirs throughout the system, purposes at the Geysers Project, a geothermal power which adds to a system’s overall costs. However, by station (Crook, 2007). Agencies also take steps to limit moving irrigation needs out of potable water systems to peak demand for reclaimed water. Dunedin, Florida, a separate nonpotable reuse systems, peak demands on imposes a fee on customers that use more than the the potable system will be reduced. Industrial customers may also impose specific time-of-day requirements on the potable supply. Energy Requirements Energy is needed in many phases of the reclaimed water production cycle, including wastewater treat- ment, transmission to the water reclamation plant, ad- vanced treatment, distribution, and possible subsurface injection and removal costs. Many of the wastewater treatment costs would be incurred anyway to meet wastewater discharge requirements. Therefore, this section focuses on only the additional energy costs incurred by water reuse projects beyond that required FIGURE 9-1 Seasonal demand curve for a hypothetical non- for wastewater discharge. potable reuse system, showing large unused supplies in winter The energy costs in reuse projects are widely months. variable and site specific. Variables that affect energy SOURCE: CSDWD (2006).

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150 WATER REUSE costs include the distance of the reclamation facility gions in the south and west, and mid-state agriculture. from the wastewater treatment plant, the treatment According to CEC (2005), wastewater treatment uses technologies applied, the size of the facility (see Fig- 1 percent of the state’s electricity. Energy requirements ure 9-2), the product water quality objectives, the extent of reclaimed water treatment and conveyance beyond of dual distribution systems, the topography of the that required for wastewater discharge ranged from 0.4 service area (related to the energy required for pump- to 1.2 kWh/ kilogallon (kgal) (or 0.38 to 1.1 megajoule [MJ]/m3), compared to as low as 0.1 kWh/ kgal (0.095 ing), and pumping requirements for reclaimed water MJ/m3) for traditional raw water treatment.1 GEI injection and withdrawal in any underground storage components. Overall energy costs are also influenced Consutants/Navigant Consulting (2010) estimated by the price of energy. Understanding water reuse’s the energy requirements of seawater desalination at energy-use profile therefore requires a comparative 12.2 kWh/kgal and inland brackish water desalination approach: How much energy does water reuse require at 4.0-5.5 kWh/kgal. See Table 9-1 for estimates of in a given location compared with the feasible water water-reuse–related energy consumption for several supply alternatives? Generalizations on the energy cost Southern California utilities (Table 9-1). of water supply are less useful than individual analyses Several local comparisons of energy requirements of specific regions. h ave been published for water reuse scenarios in The amount of energy needed for water supply California. The Equinox Center (2010) estimates that matters because it is a surprisingly large portion of en- potable and nonpotable reuse in San Diego requires ergy use in some regions. In California, water-related substantially less energy than seawater desalination and energy uses consume roughly 19 percent of all elec- water importation, and nonpotable reuse has energy re- tricity used in the state and 32 percent of natural gas quirements similar those for local surface and ground- (CEC, 2005; GEI Consutants/Navigant Consulting, water use (Figure 9-3). Some reuse applications also 2010). Large proportions of this consumption go to require the installation of a unique distribution system conveyance costs and summer groundwater pumping. dedicated to reclaimed water, as is the case for West California has one of the most extensive water convey- Basin Municipal Water District in Southern Califor- ance systems in the world, linking high-precipitation nia, which supplies highly treated reclaimed water to regions in the north and east with high-population re- chemical refineries. There is also a one-time energy cost incurred with the building of the needed infrastructure. Stokes and Horvath (2009) calculated comparative total energy use, considering life-cycle costs, for a hy- pothetical Southern California facility, and found that reclaimed water was comparable to water importation, but significantly lower than desalination (see Box 9-2). From a policy perspective, this level of consump- tion of energy for water supply is insignificant from a residential consumer’s point of view, because the energy cost of delivered water to a home is only a few cents per month. But in the aggregate, it influences important regional and national energy policy questions, includ- ing whether and how to expand power grids, build new power generation facilities, and meet greenhouse gas reduction targets. FIGURE 9-2 Variations in electricity consumption with size and wastewater treatment processes. NOTE For this analysis, advanced treatment “is similar to the activated sludge process, but includes additional treatment in the 1 Adding the energy required for wastewater treatment increases form of filtration prior to discharge.” the total energy use for wastewater reclamation to a range of 1.5 to SOURCE: EPRI (2002). 5.8 kWh/kgal (1.4 to 5.5 MJ/m3).

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151 COSTS TABLE 9-1 Estimates of Energy Intensity of Water Reclamation and Reuse at Three Southern California Utilities Compared with Seawater Desalination Energy Intensity of Water Estimated Energy Cost Project Description Reuse Project (assuming $0.25/kWh) Inland Empire Utilities Agency Nonpotable reuse; distribution of advanced-treated (Title 22) 1.02 kWh/kgal $0.25/kgal (0.97 MJ/m3) ($0.07/m3) wastewater distribution only San Diego Nonpotable reuse; additional treatment necessary above current 3.53 kWh/kgal $0.88/kgal (3.36 MJ/m3) ($0.23/m3) primary and/or secondary discharge standards, and distribution treatment and distribution Los Angeles Nonpotable reuse; additional treatment necessary above current 1.84 kWh/kgal $0.46/kgal (1.75 MJ/m3) ($0.12/m3) secondary discharge standards, and distribution treatment and distribution Seawater desalination Conservative estimate for seawater desalination and distribution 12 kWh/kgal $3.10/kgal (11.4 MJ/m3) ($0.82/m3) treatment and distribution NOTES: Energy requirements associated with wastewater treatment required for discharge are not included in these totals. Thus, the entry for Inland Empire Utilities Agency, which is required to treat all wastewater to California’s Title 22 standards, only includes energy costs associated with distribution. SOURCE: California Sustainability Alliance (2008). Concentrate Disposal Costs cost, and concentrate quality. For inland desalination systems, concentrate disposal costs have been reported Some reuse projects need to remove TDS to meet as high as twice that of the desalination process cost end-use requirements, and membrane treatment is (NRC, 2008b). the most commonly used method to accomplish this Technologies are being studied that reduce the goal. Membrane treatment, such as reverse osmosis, volume of concentrate produced during desalination requires that facilities manage the resultant concen- activities. Use of pretreatment additives to decrease trate, which represents between 15 and 50 percent of concentrate production (i.e., increase water recovery) the feedwater (Asano et al., 2007). Because the salinity may reduce the concentrate volume destined for dis- of membrane concentrate from wastewater reclamation posal. Increasing feedwater temperatures to lower wa- is much lower than the salinity of concentrate from ter viscosity and increase flux may also increase water seawater desalination, little concern is associated with recovery, although sometimes at the expense of water its coastal discharge (see NRC [2008b] for detailed quality (i.e., allowing more salt to pass through the discussions of the environmental impacts of brackish membrane). However, the energy required to increase and seawater desalination concentrate disposal alterna- inflow temperature may be costly and typically will tives). Currently, inland brackish desalination facilities exceed the savings unless a lower-cost energy source dispose of concentrate through deep-well injection, is proved to offset capital investment (Tarquin, 2009). discharge to a wastewater treatment facility via sanitary sewer systems, discharge to surface water bodies, or Permitting and Environmental Review evaporation ponds with burial in place or disposal via landfilling (TWDB, 2009). With water reuse systems, Nearly all water supply augmentation projects the most common and lowest cost alternative for in- require permitting and environmental review. A reuse land concentrate disposal—blending and diluting the project differs from ocean and brackish desalination in concentrate with wastewater effluent prior to surface that it also requires public health review. The permit- water discharge so that it meets local water quality ting and review process poses direct costs to the utility, standards—may not be available because the waste- but another cost frequently noted by water utility rep- water effluent is being reused. Costs of concentrate resentatives is the cost of delay due to public opposition disposal operations vary widely based on local factors, to a proposed project. Costs of delay include additional such as land costs, hydrogeological conditions, energy months or years of not enjoying the full benefit of the

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152 WATER REUSE BOX 9-2 Life-Cycle Assessments of Energy and Environmental Effects The results of full “life-cycle” cost analysis of water reuse will be highly site specific, but there are a few case studies in the literature that as- sess some of the life-cycle environmental and energy impacts of utility operations and expansion plans, including water reuse (Lundie et al., 2004; Stokes and Horvath, 2006, 2009). These illustrate the importance of taking a holistic approach to understanding how water supply investments affect economic, financial, and environmental outcomes. A systems or life-cycle approach emphasizes two especially attractive features of water reuse alternatives. First, water reuse typically reduces the quantities of bulk water supply that a utility must obtain from external raw water sources (e.g., rivers, groundwater). Second, the amount of treated wastewater discharged to aquatic ecosystems is reduced. These environmental benefits of lower raw water abstractions and reduced wastewater discharges are highly site specific, but in a particular location can be quite important. Lundie et al. (2004) used a life-cycle assessment approach to model water supply planning options for the water and wastewater utility in Sydney, Australia (“Sydney Water”). One investment option they examined was increasing the level of treatment at wastewater treatment plants along the coast from primary to advanced. Lundie et al. (2004) concluded that this would increase total energy use and greenhouse gas emissions without any significant environmental benefits in terms of improved quality of the receiving water body. Their life-cycle assessment showed that this option of moving toward increased wastewater treatment would not be justified unless “additional environmental benefits can be generated by offsetting the demand for potable water through water recycling.” Stokes and Horvath (2006) used a hybrid life-cycle cost assessment approach to evaluate the energy use of three different water supply alter- natives for two utilities—importation, nonpotable reuse, and desalination (seawater desalination for the Marin Municipal Water District [MMWD] in Northern California and brackish groundwater desalination for the Oceanside Water Department [OWD] in San Diego County, California). Their analyses showed that the “global warming potential” of nonpotable reuse was substantially less than desalination, but larger than water importation, largely due to the distribution system pumping requirements (Figure below). Carbon dioxide (in megagrams) produced per unit of water supplied for three water supply alternatives in Northern California (Marin Municipal Water District [MMWD]) and Southern California (Oceanside Water Department [OWD]). The analysis considered seawater desalination at MMWD, brackish groundwater desalination at OWD, and nonpotable reuse for both locations. SOURCE: Stokes and Horvath (2006). Stokes and Horvath (2009) conducted a similar analysis focused on the energy use, air emissions, and greenhouse gas effects from different water supply alternatives in a hypothetical Southern California case study. No other environmental effects or nonmonetized benefits were included in the analysis. The authors concluded that nonpotable reuse was comparable, if slightly lower, than the imported water case scenario in energy use and greenhouse gas emissions, and was much lower in these factors than brackish water or seawater desalination (see table below). Life-Cycle Assessment Results Comparing Air Emissions from Five Water Supply Alternatives Energy GHG NOx PM SOx Water Source (MJ/m3) (g CO2 equiv/m3) (g/m3) (g/m3) (g/m3) Imported water 18 1093 1.9 0.40 2.9 Desalinated ocean water, conventional pretreatment 42 2465 3.4 0.77 6.9 Desalinated ocean water, membrane pretreatment 41 2395 2.9 0.71 9.4 Desalination brackish groundwater 27 1628 2.0 0.41 4.2 Reclaimed water 17 1023 1.0 0.48 2.9 SOURCE: Stokes and Horvath (2009).

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153 COSTS completed project and possible cost increases over time This approach is beyond the reach of most agencies in construction, as well as possible additional interest given the high capital costs of water treatment systems. expenses. The cost of personnel, consultants, and legal Agencies can draw down existing investment pools, counsel may significantly add to the cost of a project, identify and pursue interest and capital subsidies (e.g., especially when the permitting process and environ- state revolving funds), raise water rates, and enter the mental review are prolonged. Typically, assuming a short- and long-term capital markets in an effort to project is not categorically excluded from the National minimize the cost of a system without exposing the Environmental Policy Act process, it takes a minimum agency to excessive financial risk. of 1 year to complete an environmental assessment and may take significantly longer if there is strong opposi- NONMONETIZED COSTS AND tion. Public review of proposed projects is a right that BENEFITS OF REUSE the committee does not dispute, but it is important to evaluate the efficiency of the review process. The impacts of water reuse projects are both positive and negative, with amounts varying project by project, but many of the benefits and some of the costs Reclamation System Financing are difficult to monetize. Some of the economic, envi- A water agency will use its existing financial re- ronmental, and social considerations that are frequently sources (i.e., savings and revenue flows), its preferred not monetized, which may or may not apply to a par- bond status (if such status exists), and its access to ticular reuse project, are listed in Table 9-2. Although state and federal grants and loans to finance water factors such as improved reliability are frequently not reuse projects. Medium- to large-sized water custom- monetized, methods exist to develop estimates of its ers committing to long-term agreements helps secure value (e.g., see Kidson et al., 2009). Also, scientists have the bonds by securing the revenue sources. Reclama- used life-cycle assessment approaches to evaluate the tion facilities typically cannot cover their costs in their relative environmental impacts, including greenhouse early years while expanding their customer base. Bond gas emissions, from various water supply alternatives financing and other agency revenues cover the cost dif- (see Box 9-2). ference during this period. Provision of state and federal subsidies shortens this time period. Greenhouse Gas Emissions The choice to invest in water reclamation draws down an agency’s financial ability to make other capital An environmental impact of growing interest is investments. The processes of planning, financing, and the carbon footprint, or greenhouse-gas emissions, building a facility are themselves costly. Launching a resulting from water reuse. The impacts of greenhouse water reuse program requires a review of the agency’s gases are largely not monetized in the United States, overall investment priorities to confirm that reuse is although several other countries have established or the top investment priority at the time (Asano and are developing carbon taxes (e.g., India, Australia) Mills, 1998). An otherwise desirable reuse project may or emissions trading schemes (e.g., the European be beyond the means of a water agency if certain cost Union, China). In the absence of a system to monetize categories, such as separate piping for nonpotable use, greenhouse gas emissions, the energy requirements of are too high. In addition to reviewing investment pri- various water supply alternatives, discussed earlier in orities, an agency should realistically assess the market this chapter, can serve as an analog for comparing the for nonpotable reclaimed water and what it can expect carbon footprint of water supply alternatives, assuming in terms of revenues from water sales (Asano and Mills, that all facilities are powered by traditional sources of 1998). electricity. Like energy costs, greenhouse gas emissions Forms of financing themselves impose differential from the complete life cycle of water reuse projects will costs on an agency. The lowest cost financing is a “pay be widely variable and site specific, based on factors as you go” approach, because no interest fees or invest- such as the level of treatment (see Figure 9-2), pump- ment placement and management fees are required. ing requirements, and new pipeline required. Thus, no

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154 WATER REUSE TABLE 9-2 Possible Nonmonetized Costs and Benefits of Reuse Nonmonetized Benefits and Costs of Reuse Description Nonmonetized Benefits Improved reliability Wastewater reuse provides a reliable, local supply of water during regional shortages. By diversifying a utility’s water supply portfolio, a community is better able to meet the needs of its water users and the environment in both wet and dry periods and under other stresses. Enhanced self-sufficiency By reducing dependence on water imports and providing a local water supply, water reuse can increase a community’s self-sufficiency (see Rygaard et al., 2011). Enhanced reputation for By embracing water reuse, communities can gain positive recognition for their environmental stewardship. environmental stewardship Enhanced regional economic vitality By meeting increased water demands with new sources, communities may enhance local economic growth. Increased water for the environment If some existing surface or groundwater supplies are replaced by water reuse, more water can be made available to meet environmental needs (e.g., instream flows for environmental restoration, reducing withdrawals of overtapped aquifers). Improved surface water quality By diverting discharge of nutrient-laden waters from sensitive surface waters or estuaries to landscape or agricultural irrigation, the net discharge of nutrients to surface water can be reduced. Irrigation with reclaimed water may also reduce the need for additional fertilizers. Nonmonetized Costs Effects on the overall carbon Unless offset by low-carbon energy sources, some water reuse approaches may increase the overall carbon footprint footprint of water supplies of a water supply compared to existing supplies. Public health effects Poor cross-connection control (see Box 6-4) or inadequate protections against equipment failures (see Chapter 5) could expose the public to pathogens causing acute gastrointestinal illness or low levels of hazardous chemicals. Public perception of reduced quality Public concern over the perceived lower quality of the drinking water supply could lead to increased stress among some individuals and increased expenditures on bottled water. See also Chapter 10. Effects on downstream flows If reclaimed water is used for irrigation or other consumptive uses, water reuse will reduce downstream flows, with potential adverse ecological effects (such as in surface water or estuarine ecosystems) and reduced supply to downstream water users. Where “return flow credits” are offered, as in the Colorado River, water reuse can reduce these credits. Water quality impacts If reclaimed water irrigation rates exceed the capacity for the plants to take up the nutrients, groundwater and surface water can become nutrient-enriched, which can lead to human health effects and environmental impacts, such as eutrophication and algal blooms. See also Chapter 3. Multiple cycles of nonconsumptive water reuse can increase the salinity and contaminant load in the water unless treatment is designed to remove it. Effects on soils and plants Excess salinity can be detrimental to plant growth and high levels of sodium can adversely impact soil structure. SOURCES: Asano et al. (2007); EPA (2008b). universal conclusion can be made about the relative Understanding greenhouse gas emissions also greenhouse gas emissions of water reuse versus other requires an examination of the energy sources used in water supply sources, although some generalizations are the region (e.g., fossil fuels, nuclear) and the costs and possible. From the comparative energy analyses noted availability of low-carbon energy supplies. Some water in this chapter (see Tables 9-1. Figures 9-3, and the fig- utilities, such as Santa Cruz, California, are building ure and table in Box 9-2), the energy use and resulting solar energy systems in advance of expansion of water greenhouse gas emissions from potable and nonpotable treatment facilities to offset or mitigate increases in water reuse can be significantly less than from desali- carbon emissions. In Perth, Australia, a major seawater nation. In studies of Southern California, greenhouse desalination facility is powered by wind energy to ad- gas emissions for nonpotable reuse were comparable or dress concerns about the greenhouse gas implications greater than for water importation when considering of this energy-intensive water supply. life-cycle costs (see figure and table in Box 9-2; Stokes and Horvath, 2006, 2009).

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155 COSTS error into the final capital cost data. It should also be 18 noted that the committee was not able to audit the data 16 reported by the individual utilities, although Tables 14 12 9-3 and 9-4 were sent to each of the utilities for fact KWH/kgal 10 checking. 8 Wastewater treatment is required before effluent 6 can be discharged, and the discharge requirements can 4 vary widely depending on the sensitivity of local sur- 2 face water ecosystems and state and local regulations. 0 Therefore, the committee designed the cost question- naire to separate the capital and operating costs associ- ated with (or required for) effluent discharge into the environment from the costs of additional treatment or distribution lines associated with nonpotable or potable FIGURE 9-3 Power consumption for water supply alternatives reuse projects. Treatment costs required for wastewa- for San Diego County. ter discharge into the environment are not included SOURCE: Data from Equinox Center (2010). in the costs reported here because these costs would be incurred regardless of whether reuse projects were implemented. Capital Costs REPORTED REUSE COSTS Reported capital costs for potable and nonpotable Because of the dearth of information in the litera- facilities include the design and construction of treat- ture on the costs of water reuse facilities, the commit- ment plants, distribution pipelines, well fields, and en- tee chose to address its task question (see Box S-1) on gineered natural systems as well as related administra- reuse costs by requesting this information from utilities tive costs. All costs are reported as dollars per kilogram directly. National Research Council (NRC) staff sent capacity per year in 2009 dollars (Tables 9-3 and 9-4). a questionnaire (see Appendix C) to 20 water utilities Hypothetical annual costs amortized at 6 percent inter- known to supply reclaimed water, reflecting both large est over 20 years are also presented to allow comparison and small utilities and potable or nonpotable applica- with O&M costs. tions (or both). This questionnaire was not developed to achieve a statistically defensible estimate of reuse costs but to identify an approximate range of cost across Nonpotable Reuse a variety of different treatment processes. Fourteen Reported capital costs for nonpotable reuse vary utilities responded and cost data for nine utilities were widely, from $1.14 to $18.75/kgal capacity per year. complete enough for general comparison purposes, Despite this wide variability, several conclusions about representing seven nonpotable reuse operations and cost can be made. For example, the specific nonpotable six potable reuse operations (see Tables 9-3 and 9-4). applications affect the degree of additional treatment Among those who responded to the questionnaire, costs. Of the six facilities listed in Table 9-3 that pro- projects dated back as far as 1962, although most re- vided detailed capital costs, two reported capital costs claimed water projects described were implemented associated with additional treatment beyond that re- after the year 2000. Reported capital costs were con- quired for wastewater discharge. For example, Denver verted to 2009 dollars based on the Consumer Price provides additional treatment for cooling applications Index. These inflation adjustments were based on the (see Box 2-5), and West Basin provides a range of midpoint of the construction period provided for a treatment levels to meet several end uses, including ir- particular phase or project. The committee recognizes rigation and industrial cooling. Four facilities reported that this is an assumption that may introduce some

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TABLE 9-3 Financial Costs from Nonpotable Reuse Facilities 156 Durango Hills Desert Breeze Trinity River Las Vegas, NV Las Vegas, NV Authority, TX Denver, CO West Basin, CA Tucson, AZ Inland Empire, CA Capacity (MGD) 10 5 16.4 30 40 30 40 Average output 3.0 2.9 1 6 18 15.2 15.2 (MGD) Reclaimed water uses Landscape irrigation Landscape irrigation Landscape irrigation, Landscape irrigation, Irrigation; cooling Landscape irrigation, Irrigation, industrial amenity reservoirs industrial cooling, zoo and boilers with toilet flushing cooling, laundry, paper additional treatment processing Treatment Activated sludge Activated sludge Advanced activated Biologically aerated Coagulation, Filtration or activated Activated sludge secondary treatment, secondary treatment, sludge treatment. filters, flocculation, flocculation, sludge treatment via secondary treatment automatic backwash automatic backwash sedimentation, mono- sedimentation, mono- membrane bioreactor, with biological nutrient filters, ultraviolet filters, ultraviolet media filtration, media filtration, chlorine disinfection removal, filtration, disinfection disinfection disinfection disinfection chlorine disinfection Year constructed 1999-2004 2001-2004 1987 2000-present 1995-2006 1982+ 2001-2010 O&M costs ($/kgal) in 2009 dollars Personnel 0.07 0.05 0.01 0.54 0.20 0.13 1.00 Energy 0.36 0.21 0.01 0.19 0.22 0.25 0.18 Other 0.25 0.09 0.03 0.33 0.60 0.12 0.00 Total O&M 0.68 0.35 0.05 1.06 1.02 0.50 1.18 ($/kgal) Capital Costs ($/kgal capacity/yr) in 2009 dollars Treatment facility 0.00 0.00 0.00 8.12 9.62 0.00 Not reported Pipelines 4.23 5.73 1.14 3.58 9.14 9.77 Not reported Other 1.88 Total capital costs in 2009 4.23 5.73 1.14 13.57 18.75 9.77 Unable to correct for dollars ($/kgal per year) inflation Annualized capital cost in 0.37a 0.50a 0.10a 1.18a 1.63a 0.85a Unable to calculate $/kgala Total Annual Costs (Annualized Capital + O&M) in $/kgal in 2009 dollars (also shown in $/m3) Total Annual cost in $/kgala 1.05 0.85 0.15 2.24 2.65 2.35 Unable to calculate ($/m3) (0.28) (0.22) (0.04) (0.59) (0.70) (0.62) NOTE: The capital costs are reported prior to any subsidies received. aAssumes amortization at 6 percent over 20 years. Facilities each have different interest rates, but for the sake of comparison, a common interest rate was applied.

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TABLE 9-4 Financial Costs from Potable Reuse Facilities Casey WRF/ Orange Co. GWRS, Huie Wetlands Shoal Creek/Panhandle California El Paso, Texas Clayton Co., GA Clayton Co., GA West Basin, CA Inland Empire, CA Capacity (MGD) 70 10 24 4.4 12.5 20 Average output (MGD) 5.5 17.4 9 7.1 Not reported Not reported Treatment Enhanced primary Activated sludge Activated sludge Activated sludge Microfiltration, reverse Activated sludge secondary treatment, activated secondary treatment secondary treatment secondary treatment osmosis, advanced treatment with biological sludge and trickling filter with denitrification, with biological nutrient with biological nutrient oxidation (ultraviolet light nutrient removal, filtration, secondary treatment, anaerobic digestion, lime removal, sodium removal ultraviolet and hydrogen peroxide), chlorine disinfection, soil microfiltration, reverse treatment, sand filtration, hypochlorite disinfection; disinfection; treatment corrosion control aquifer treatment osmosis, advanced ozonation, biologically treatment wetlands wetlands oxidation (ultraviolet light active granular activated and hydrogen peroxide) carbon filtration, final disinfection Year(s) constructed 2004-2008 1984 2004-2010 2002-2003 1995-2006 2001-2010 O&M Costs ($/kgal) in 2009 Dollars Personnel 0.14 0.13 0.16 0.14 0.70 1.00 Energy 0.57 0.06 0.08 0.08 0.41 0.18 Other 0.45 0.14 0.11 0.09 1.27 0.00 Total O&M ($/kgal) 1.16 0.33 0.35 0.31 2.38 1.18 Capital Costs ($/kgal capacity/yr) in 2009 Dollars Treatment 12.42 3.92a 5.53a 28.98 1.49 Not reported Pipelines 2.63 1.74 9.77 Not reported Not reported Not reported Other costs 4.95 Total Capital costs in 2009 20.00 23.46 3.92a 5.53a 30.72 11.26 dollars ($/kgal/yr) Annualized capital cost ($/ 1.74b 2.05b 0.34b 0.48b 2.68b 0.98b kgal)b Total Annual Costs (Annualized Capital + O&M) in $/kgal in 2009 dollars ($/m3) Total annual cost in $/kgalb 2.90 2.38 0.69 0.79 5.06 2.16 ($/m3) (0.77) (0.63) (0.18) (0.21) (1.34) (0.57) NOTE: The capital costs are reported prior to any subsidies received. aIncludes engineered wetlands, and cost per thousand gallons for UV disinfection at drinking water plant. bAssumes amortization at 6 percent over 20 years. Facilities each have different interest rates, but for the sake of comparison, a common interest rate was applied. 157

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158 WATER REUSE that they incur no additional treatment costs for their BOX 9-3 nonpotable applications beyond that required for ef- West Basin Municipal Water District fluent discharge. Distribution lines make up a sizeable Reuse Costs extent of the capital costs of nonpotable reuse facilities, making up between 26 and 100 percent of the capital West Basin Water Recycling Program provides reclaimed costs for the seven facilities. Projects where the efflu- water for nonpotable and potable reuse applications. The ent is used at or near the treatment plant are much less program was developed in three phases. The first phase was costly than systems with many miles of pipeline. completed in 1995, the second in 1997, and the last major phase was completed in 2006. West Basin’s recycled water estimated annual production capacity is 27 MGD (100,000 Potable Reuse m3/d), of which 18 MGD (68,000 m3/d) are for nonpotable uses that include irrigation and industrial applications and 9 Capital costs for potable reuse projects are also MGD (34,000 m3/d) for potable water uses, such as ground- widely ranging, from $3.90 to $31/kgal capacity per water recharge. year in 2009 dollars (Table 9-4). The dataset demon- Treatment processes for nonpotable uses include coagula- tion, flocculation, sedimentation, monomedia filtration, and strates the variability in capacity and technologies that disinfection. The potable reuse component of the program characterize water reuse today. Water reuse is a rapidly includes treatment of secondary effluent plus additional growing and technologically changing endeavor, and treatments that include microfiltration, reverse osmosis, the evolution is reflected in the widely varying capital disinfection with ultraviolet radiation and hydrogen peroxide, costs. The varying cost data suggest that future projects and corrosion control. also will vary widely in cost, depending on the many West Basin has received subsidies to support its reuse program from the Bureau of Reclamation (Title XVI; $50M), factors raised in this chapter. California Department of Water Resources ($9.4M), U.S. Army Corps of Engineers ($23.5M), Los Angeles Department of O&M Costs Water and Power ($2.7M), and the Metropolitan Water District ($91M), totaling approximately $177 million. In addition, it Reported operation and maintenance costs also received over $168 million from the Uniform Standby Charge, contain substantial variability. Total O&M costs for a tax on undeveloped land parcels. Capital cost and operating costs are shown in Tables 9-3 nonpotable reuse facilities range from $0.05/kgal to and 9-4. Approximately 5 percent of the total cost is attributed $1.18/kgal (Table 9-3), with an average of $0.69/kgal. to concentrate management. Brine is disposed of through an Reported O&M costs for potable reuse facilities ranged existing 5-mile outfall that is owned and operated by the City from $0.31/kgal to $2.38/kgal (Table 9-4), with an av- of Los Angeles. erage of $0.95/kgal. For nonpotable facilities, personnel Reclaimed water is billed at $1.34/kgal for irrigation cus- costs account for about 40 percent, energy for about 30 tomers inside the West Basin Service Area. This represents the highest tier of a declining tiered rate structure that encourages percent, and all other costs at 30 percent of the total users to purchase more reclaimed water. Potable reclaimed O&M budget. These percentages are quite similar to water for the barrier project is billed at $1.41/kgal. These are the percentages for reported potable reuse O&M costs approximately two-third the cost of traditional potable water, (40 percent personnel, 24 percent energy, 36 percent which is billed at $2.11/kgal. other). Energy costs are affected by the extent of treat- ment required and the degree of pumping required to SOURCE: Mary-Ann Rexroad, Budget and Finance Officer, West Basin Municipal District. transmit the reclaimed water to the end user. Facilities using reverse osmosis reported much higher O&M costs than the other potable reuse facilities, although it should be noted that the dataset is too small to draw firm conclusions. entities. These subsidies ranged from $7.5 million to $344.6 million. The Bureau of Reclamation’s Title XVI Subsidies program (see Box 9-1) contributed grant funding to the six projects, ranging from $7.5 million to $50 million, Six of the nine utilities reported capital subsidies but those facilities with large subsidies relied on mul- in the form of grants from federal, state, and local

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159 COSTS tiple sources of funding to help offset the project costs, and contributions from Orange County Sanitation including state and local funds (see Box 9-3). The three District were applied; $3.16/kgal not counting these Southern California utilities receive annual subsidies offsets) was similar to that of imported water—$1.84/ from the Metropolitan Water District of Southern kgal. This cost was substantially lower than the cost California based on the volume of water produced. The of seawater desalination ($3.68/kgal in 2010 dollars) costs reported in Tables 9-3 and 9-4 do not consider (Shivaji Deshmukh, Orange County Water District, subsidies received by the utilities. personal communication, 2010). Given the limited comparative cost data obtained from the committee’s questionnaire, the committee COMPARATIVE COSTS OF also researched other comparative cost information SUPPLY ALTERNATIVES available. California’s Legislative Analyst’s Office (CA Because site conditions vary significantly, the LAO, 2008) published a comparison of water supply costs of reuse can best be assessed by comparing these alternatives for the state of California. Among the eight projects against the costs of local water supply and options considered, water reuse had the second-lowest conservation alternatives. Most of the utilities who median costs, above urban water use efficiency (Fig- responded to the committee’s questionnaire, however, ure 9-4). A similar analysis by the Los Angeles County did not provide costs of alternative water supplies Economic Development Corporation (Freeman et al., considered. Cost was cited by approximately one-third 2008) to assess Southern California’s water strategies of the responding utilities as an advantage, but it was reported that potable water reuse (based on OCWD rarely the deciding factor in these reuse projects. Other GWRS data) is less costly than seawater desalination, factors reported by utilities as key factors that led to the comparable to brackish groundwater desalination and decision to implement reuse included surface storage, and more costly than urban water con- servation, groundwater storage (Freeman et al., 2008; • providing a means to diversify water supplies, see Table 9-6). Comparative costs for the City of San • creating a drought-resistant water supply, Diego are shown in Box 9-6. • public support, • quality of the water, and RECLAIMED WATER RATES • limited alternative sources. In this chapter, the many factors affecting the total Among those who did provide comparative costs, cost of producing and delivering reclaimed water have El Paso Water Utility reported that the costs of re- been described. Reclaimed water rates can offset these claimed water were slightly higher than inland de- costs, but because the cost of treatment and distribu- salination. Reclaimed water was much more expensive tion is generally higher for reclaimed water than for than traditional (but limited) groundwater and surface conventional water sources, reclaimed water rates are water sources but less expensive than imported water frequently set at a level that does not cover the full (see text and figure in Box 9-4). The extent of the dis- cost of treatment. Nonpotable reclaimed water rates tribution and concentrate disposal costs had a major are frequently set lower than conventional drinking impact on the overall cost of reclaimed water relative to water rates to encourage its use, even though drinking desalination. Denver Water provided comparative costs water rates in many cases do not cover the full cost (see Box 9-5; Table 9-5), which costs show that nonpo- of conventional water treatment, delivery, and infra- table reuse costs in the Denver region would be more structure maintenance (EPA, 2002). According to a expensive than potable reuse, considering the need to 2007 American Water Works Association survey of expand the service area with costly dual distribution approximately 30 reuse facilities, more than one-third systems, either to residential areas or major industries. of reuse facilities stated that they recovered less than Orange County Water District also provided one-quarter of their operating costs from reclaimed comparative costs. They reported that the total cost of water rates, while approximately 25 percent of utilities reclaimed water to the utility ($1.80/kgal after subsidies reported that they recovered 100 percent of their op-

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160 WATER REUSE BOX 9-4 El Paso Water Utilities’ Fred Hervey Water Reclamation Facility El Paso’s Fred Hervey Water Reclamation plant was built in 1984, along with a series of 10 injection wells for recharge in the Hueco Bolson. The 10-MGD (38,000-m3/d) capacity plant provides water for four main uses: maintenance of wetlands of ecological interest, irrigation of parks and a golf course, aquifer recharge (infiltration basins and injection wells), and industrial uses (e.g., cooling tower makeup water). Treatment processes for wastewater treatment include primary clarification, flow equalization, two-stage activated sludge with denitrification, anaerobic digestion, and biosolids dewatering/disposal. In addition, wastewater is treated to achieve potable water standards through lime treatment, sand filtration, ozona - tion, biologically active GAC filtration, and final disinfection. The final effluent (potable water quality) is made available for irrigation and industrial uses through the transmission system that also recharges the aquifer. Capital and O&M costs are provided in Tables 9-3 and 9-4. All reclaimed water, regardless of intended use, distance from source, or quality of water, is billed at $1.24/kgal. This is substantially lower than the potable water tiered rate that ranges from $1.93 to $6.49/kgal. El Paso currently reclaims a combined 10 percent of all treated wastewater from its four wastewater facilities with a goal to increase reclaimed water supply to 15 percent of all wastewater treated. The reclamation plant is undergoing a major expansion to incorporate a third treatment train that would provide redundancy to the treatment process and increase the plant’s capacity by approximately 2.5 MGD (9,500 m3/d). Other water supply alternatives were considered; however, the decisive factor for implementation of this program was based on cost and need to conserve the water. Comparative costs of water supply alternative are shown in the figure below. Comparative costs for alternative water supplies for El Paso Water Utilities, from 2010. This figure includes relatively low costs for desalination concentrate disposal (via deep-well injection) for the brackish groundwater desalination system. SOURCE: Irazema Solis Rojas, P.E., EPWU Water Reclamation Engineer. R02129 Figure 9-5 erating costs (Figure 9-5). However, annualized capital bitmapped otable reuse facilities combined their water supplies p costs may be equal to or greater than operating costs. such that no separate charge was applied, two utilities The state of Florida reports that 72 of its 176 utilities charged separate rates to potable reclaimed water cus- (41 percent) provide reclaimed water to users free of tomers. Like the nonpotable reuse rates, these potable charge (FDEP, 2010). reclaimed water rates represented only a fraction (17 Of the nine utilities who provided data to the and 67 percent) of the traditional potable supply rates. committee on their nonpotable reuse rates, on aver- Given the small size of this dataset, these data are not age, the reclaimed water rates represented 39 percent presumed to be representative of reuse rates across of the rates for traditional potable sources (with ratios the United States. Because the driving motivation for ranging from 11 to 75 percent).2 W hile most of the water reuse is shifting from environmentally sound wastewater disposal to water supply for water-limited regions, reclaimed water rates are likely to climb so that 2 W hen utilities reported tiered water rates, the committee con- reclaimed water resources are used as efficiently as the sidered the third tiered potable rate for comparison, considering potable water supplies they are designed to augment. that most nonpotable reuse customers are large volume irrigators.

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161 COSTS TABLE 9-5 Example Range of Unit Costs for Water BOX 9-5 Supply and Conservation Options in Denver, Colorado Denver Water Reuse Costs Net Present Value Water Supply Alternative ($/kgal/yr) Denver’s 30-MGD (110,000-m3/d) recycling plant was Reuse built between 2000 and 2004 and obtains secondary effluent Expand existing nonpotable system $250 to 300 from the adjacent Denver Metro Wastewater Reclamation Indirect potable $90 to 150 District’s treatment plant (see Box 2-5 for specific treatment Direct potable $90 to 150 Greywater $30 to 150 approaches). Although it is still operating at less than its design capacity, currently delivering approximately 6 MGD Conservation (23,000 m3/d) for nonpotable reuse applications, expansion Advanced metering $90 to 900 to 45 MGD (170,000 m3/d) has been planned for 2012. Water Plumbing fixture changes $6 to 60 reuse in Denver is limited by water rights law to the amount of Landscape changes $90 to 770 water imported from outside the basin. The customer base and New supply distribution system are continuously expanding. Nonpotable Storage projects $9 to 300 reuse applications include irrigation of parks, schools, and Pumping projects $90 to 600 golf courses; industrial cooling at the Xcel Energy power plant NOTE: Estimated net present value of capital, operations, and maintenance (see Box 2-5); and irrigation for the Denver Zoo. The Denver costs over 40 years divided by the annual water yield of project. Customer Museum of Nature and Science is planning to use reclaimed costs are included in conservation costs. These data are preliminary. water in a new geothermal heating and cooling system. The SOURCE: Marc Waage, Denver Water, August 2011. Denver International Airport was constructed with dual plumb- ing, but the transmission lines to convey reclaimed water to though a price may be significantly lower than potable the airport have not yet been constructed. water supplies, it still may not be attractive enough if Capital and O&M costs are provided in Tables 9-3 and 9-4. upfront costs such as installation fees, backflow pre- Customers within the Denver area pay $0.89/kgal of reclaimed vention, and thermal expansion units are more than water, while customers outside the Denver Water’s combined service area pay $0.91/kgal. This is a significant difference from the average potable water rate of $2.97/kgal (2009 fig- ures). A recent analysis of comparative costs of future water supplies in Denver showed that potable reuse was estimated to cost approximately half of the costs of an expanded nonpotable reuse system (see Table 9-5). SOURCE: Brian Good, Denver Water, personal communica- tion, 2010. Other revenue options can be considered when establishing reclaimed water rates, including standby fees, property taxes, monthly minimum fees, and utility subsidies from water and wastewater fees. Organiza- tions that provide both water and sewer services have the ability to spread some of the cost of the reuse pro- gram to wastewater treatment and/or drinking water FIGURE 9-4 Costs of various water supply alternatives in the programs, which sometimes have associated decreases state of California. Cost estimates calculated by the California in treatment and distribution costs with increased water Department of Water Resources. reuse. By sharing the costs, utilities can set a reclaimed aReflects the midrange of estimates of water supply develop- ment potential of particular solutions identified in the California water rate that is competitive with potable water and at- Water Plan 2005. tractive enough to prospective customers to encourage bIncludes integrated management of groundwater and sur- R02129 them to invest in the infrastructure to connect to the face water. Figure 9-6 nonpotable distribution system. In some instances, even SOURCE: CA LAO (2008). bitmapped

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162 WATER REUSE TABLE 9-6 Estimates of Costs of Southern California water to irrigation or industrial cooling operations Water Supply Alternatives located in close proximity to the wastewater treatment plant. Data on reuse costs are limited in the published Initial Annual Annualized Costs literature, although the chapter provides reported capi- Water Supply Capital Costs O&M Costs O ver 30 Years Alternatives (million $) (million $) ($/kgal) tal and O&M costs for nine utilities (representing 13 Urban water 0 0.5 0.64 facilities) that responded to a committee questionnaire. conservation Distribution system costs can be the most sig- Local stormwater 40-63 1-3.5 1.10 capture nificant component of costs for nonpotable reuse Potable reuse 480 30 3.10 systems. Projects that minimize those costs and use Ocean desalination 300 37 3.10+ effluent from existing wastewater treatment plants are Brackish groundwater 24 0.7 2.30-3.68 desalination frequently cost-effective because of the minimal addi- Transfers: agriculture na na 2.10+ tional treatment needed for most nonpotable applica- to urban Groundwater storage 68-135 13 1.80 tions beyond typical wastewater disposal requirements. Surface storage 2,500 7.5-15.5 2.30-4.30 W hen large nonpotable reuse customers are located SOURCE: Freeman et al. (2008). far from the water reclamation plant, the total costs of nonpotable projects can be significantly greater than potable reuse projects, which do not require separate customers are willing to spend. In these cases, utilities distribution lines. must balance the need to attract customers with the Although each project’s costs are site specific, costs of further subsidizing reclaimed water. comparative cost analyses suggest that reuse projects Special negotiated rates may also be considered tend to be more expensive than most water conserva- for large customers who provide a guaranteed steady tion options and less expensive than seawater desali- demand over an extended period of time (e.g., large nation. The costs of reuse can be higher or lower than industries). These customers offer an advantage of brackish water desalination, depending on concentrate constant demand throughout the year and practically disposal and distribution costs. Water reuse costs are guaranteed demand for reclaimed water from one year typically much higher than those for existing water to the next. However, customers that require a reliable sources. The comparative costs of new water storage supply of reclaimed water at all times may lead to in- alternatives, including groundwater storage, are widely creased costs for the utility if additional infrastructure variable but can be less than those for reuse. must be installed to provide uninterrupted service (e.g., To determine the most socially, environmentally, a redundant distribution system or provision of an al- and economically feasible alternative, water manag- ternate water supply) (Holliman, 2009). ers and planners should consider nonmonetized costs and benefits of reuse projects in their comparative cost analyses of water supply alternatives. Water reuse CONCLUSIONS AND RECOMMENDATIONS projects offer numerous benefits that are frequently Financial costs of water reuse are widely variable not monetized in the assessment of project costs. For because they are dependent on site-specific factors. example, water reuse systems used in conjunction with a F inancial costs are influenced by size, location, in- water conservation program can be effective in reducing coming water quality, expectations, and/or regulatory seasonal peak demands on the potable system, which requirements for product water quality, treatment train, reduces capital and operating costs and prolongs exist- method of concentrate disposal, extent of transmission ing drinking water resources. Water reuse projects can lines and pumping requirements, timing and storage re- also offer improved reliability, especially in drought, quirements, costs of energy, interest rates, subsidies, and and can reduce dependence on imported water supplies. the complexity of the permitting and approval process. Depending on the specific designs and pumping re- Capital costs in particular are site specific and can vary quirements, reuse projects may have a larger or smaller markedly from one community to another. The lowest carbon footprint than existing supply alternatives. They cost water reuse systems supply nonpotable reclaimed

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163 COSTS BOX 9-6 San Diego Reclaimed Water Project The City of San Diego’s recycling water program dates back to the 1980s when three small pilot plants (0.025 to 1 MGD [95 to 3,800 m3/d]) were built for irrigation and research purposes. Two larger wastewater reclamation plants (WRPs) were built in 1997 and 2000 (North City WRP and South Bay WRP respectively) committed to delivering 30 MGD (110,000 m3/d) total of nonpotable reclaimed water to large customers. The construction of these facilities was primarily driven by wastewater management issues and later to fulfill a Settlement Agreement with environmental stakeholders. In 1993, the city and the San Diego Water Authority proposed an 18 MGD (68,000 m3/d) potable reuse project with advance treatment and blending with imported water in a local surface water reservoir. The project was cancelled 7 years later because of public opposition. After the potable reuse project was canceled, the City of San Diego restructured its efforts to maximize the use of reclaimed water through nonpotable use. By 2006, its customer base included over 360 connections to the reclaimed water system using 11.6 MGD (44,000 m3/d) of the 24 MGD (91,000 m3/d) North City WRP’s production capacity and 1.25 of the South Bay WRP’s 13.5 MGD (4,700 of 51,000 m3/d) capacity. With an anticipated 50 percent population increase from 2005 to 2030, the city of San Diego estimated the water supply would need to be increased about 25 percent (approximately 50 MGD [190,000 m3/d]) combined with aggressive conservation efforts. As of 2005, about 90 percent of the city’s water needs were met through water importation from the Colorado River and California State Water Project. Thus, San Diego needed to expand its water supply portfolio. In 2004, San Diego City Council issued a directive for the evaluation of options to increase the beneficial use of the city’s reclaimed water program to meet current and future water demands. The city released a study documenting various reuse alterna - tives (CSDWD, 2006) and is currently conducting a demonstration project to determine if potable reuse with reservoir augmentation is a feasible alternative for San Diego. The demonstration project is estimated to be completed by 2013.a Comparative cost data considering O&M costs and annualized capital costs for San Diego’s water supply alternatives show that nonpotable reclaimed water is comparable to the cost of seawater desalination, largely due to the high cost of the distribution system. Estimated potable reuse costs are lower than nonpotable reuse and desalination but substantially larger than conservation and the current costs of imported water. However, the cost of importing water is anticipated to rise faster than the other supplies, such that by 2030, the cost of potable reuse is anticipated to be comparable to imported water (Equinox Center, 2010). ahttp://www.sandiego.gov/water/waterreuse/demo. Estimated marginal costs for water in 2010 (in dollars per acre-feet) in the County of San Diego. SOURCE: Equinox Center (2010). R02129 Figure 9-7 bitmapped

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164 WATER REUSE can also reduce water flows to downstream users and ecosystems. Current reclaimed water rates do not typically return the full cost of treating and delivering re - claimed water to customers. Nonpotable water reuse customers are often required to pay for the connec- tion to the reclaimed water lines; therefore, some cost incentive is needed to attract customers for a product FIGURE 9-5 Percentage of annual operating costs recovered that is perceived to be of lower quality based on its from reclaimed water rates. origin. Frequently, other revenue streams, including SOURCE: AWWA (2008). fees, drinking water programs, and subsidies, are used to offset the low rates. As the need for new water supplies in water-limited regions becomes the driving R02129 motivation for water reuse, reclaimed water rates are Figure 9-8 likely to climb so that reclaimed water resources are bitmapped used as efficiently as the potable water supplies they are designed to augment.