Pricing for recycling

Many water recycling schemes propose to provide customers with two distinct water supplies: A potable supply and a lower-quality recycled supply.

Isolated financial analyses of many such proposals often appear highly unfavourable. This is the result of the high infrastructure and operational costs associated with most advanced water treatment and distribution systems. Furthermore, revenue potential may appear low since recycled water is typically priced at a lower rate than the average cost-based rates for traditional potable supplies. Revenue projections in some areas may also suffer from a limited market of potential applications and customers for non-potable water supplies. Accordingly, it is often difficult for water supply agencies to make a ‘business case’ for water recycling projects based solely on an assessment of the agencies internal financial outcomes.

To address these difficulties, it is necessary to conduct some form of a ‘full social cost accounting’-based assessment of the benefits and costs of water recycling projects.

‘Full social cost accounting’ incorporates efforts to identify all the benefits and costs of a specified action or policy, regardless of who bears the impact, or whether the impact can be valued in terms of market prices. One application of this approach that has been widely adopted by Australian utilities and agencies is the ‘triple bottom line’ framework. This consists of a financial bottom line that reflects cash flow as well as second bottom line reflecting social impacts and a third ‘environmental’ bottom line.

A positive triple bottom line analysis of a proposed scheme may indicate an overall worth of a project. However, in most cases it is the single bottom line –the financial one- that will determine an agencies capability to implement such a scheme. A positive financial result for a water recycling scheme will almost always rely on recovering costs from a broader base than simply the sale of new alternative supply. Recovering the costs associated with additional treatment and distribution must be implemented in a manner that is perceived to be fair, sends appropriate price signals and effectively generates the necessary cash flow back to the agency.

Recycled water costs may be distributed between water and wastewater users, both through capital facility charges and usage rates. Carefully applied cost allocations can allow for economic incentives to attract current or future potable water users to replace some of this use with recycled water. The greatest challenge is to identify the most effective balance between pricing recycled water such that it is attractive while maintaining a nexus with the cost of service.

Tertiary treatment costs have historically been recovered from wastewater users (or ‘generators’), spreading the costs over the treatment authorities entire customer base. This approach has been logical since much of this tertiary treatment has been to facilitate a means of effluent disposal and thus a cost for managing wastewater. However, in many future situations, tertiary treatment may be implemented primarily to provide recycled water to offset demand on the drinking water supply. In such cases, the cost of tertiary treatment might logically be partially recovered from drinking water customers which may, or may not, be the same as the wastewater customers and may or may not be serviced by the same organisation.

A major obstacle to water recycling in Australia has been the widely acknowledged historic undervaluing and under-pricing of fresh water supplies. The relatively small financial costs incurred in the use and disposal of fresh water supplies have provided little market-force incentive for less competitive water recycling applications.

The low cost is partly the result of there being no requirement in pricing regimes to include catchment management and protection of effluent-receiving environments. In many cases, the consumer also pays sewerage charges that include the cost of treatment to a standard that is acceptable for discharge to the environment. These are separately accounted for and not integrated with the costs associated with producing and delivering potable water. The cost of producing and delivering recycled water is generally greater than the costs for fresh water. However, users are typically charged less for recycled water than for fresh water due it its more limited use.

My own recent water bill was for $133. Of this, $94 was a standard charge for access to the sewerage system. Nearly $20 was a further standard charge for access to the potable water service. That’s around $114 out of $133 that I have absolutely no control over regardless of how much potable water I use at home. My actual water usage cost was a mere $12. That leaves me with absolutely no (financial) incentive to save potable water. To save on this $12, I am going to need an extremely cost-effective solution. No on-site recycling system or dual reticulation scheme has any chance of recovering this $12 in a reasonable period of time.

But what about the largest component of my bill; -the $94? We could move some of that cost away from ‘access to the sewerage system’ and instead add it to the ‘water usage charge’. This would empower water consumers to make significant savings by minimising potable water use. Using recycled water as a replacement for potable water would instantly become more economically viable. Prolific water users may end up paying more, but efforts towards water frugality would be justly rewarded.

Such an alternative water-pricing framework would acknowledge the importance of applying consistent consideration of externalities associated with potable water, recycling water and sewage. It would include the provision of price signals that reflect the scarcity of resources as well as the costs associated with water treatment and delivery.

I’m no economist, but it makes a lot of sense to me.

Whadda you reckon?

Is potable always best?

This is a question that I recently addressed as a witness to the NSW Parliamentary Inquiry into A Sustainable Water Supply for Sydney. I was quoted in the final report as saying:

“Indirect potable in some ways might be considered an ideal reuse approach because it means delivering water to one destination and having this one reservoir, or whatever, to retain the water and to treat it and put it back through the entire supply without having to implement a lot of major extra infrastructure. However, I wonder whether it really is the ideal approach in all circumstances. For example, it is a high-energy approach; it requires high treatment. All of that phosphorus and nitrogen that we are talking about discharging out of the outfalls has to be removed for indirect potable reuse. However, if we are looking at agricultural uses, maybe we can make use of some of the nutrients that are already in that water and not need to invest so much energy in upgrading it to a potable standard”.

The remainder of my quote did not make it into the final Inquiry report, but appears in the official transcript:

“Also, realistically speaking, Sydney’s water issues at the moment are urgent and they need to be addressed quickly, but are we going to see the political courage to implement an indirect potable reuse scheme in the short-term? I am not sure that we are. So I think maybe we should be looking at alternative forms of reuse, at least in the meantime, and forms of reuse that can supplement our drinking water supply; replace water that is currently potable water in our drinking water rather than having to put the recycled water directly back into the dams immediately”.

Although I didn't say it very clearly, I think you can get the gist of where I was coming from. I think these are reasonable comments and I stand by them (although I may be proved wrong about the lack of “political courage” in some circumstances!). Nonetheless, what is ultimately the best approach will depend on many local circumstances and exactly what is hoped to be achieved.

In these times of severe drought, it is easy to forget that many current water recycling schemes were never intended as a means of conserving drinking-water supplies. An obvious example is the Rouse Hill (Western Sydney) dual reticulation scheme. This scheme was planned with the sole aim of preventing a sensitive waterway from being polluted by treated effluent discharge. As a result, the current benefits of the scheme for conserving dinking-water are questionable. I don’t have accurate data to report, but it has previously been acknowledged that the use of the recycled water from Rouse Hill has been greater than the equivalent uses of potable water in other comparable areas. In fact, the recycled water use has been so great that the system has, on numerous occasions, had to be topped-up with potable supplies.

The residents serviced by the Rouse Hill scheme are prolific users of recycled water. And why wouldn’t they be? They pay only about one third of the price for water supplied through purple pipes compared to the price for water delivered via the potable supply system. This is regardless of the fact that the real (financial) costs of providing the recycled water to the scheme are significantly greater than the cost of providing potable water.

Indirect potable reuse provides a more direct benefit when it comes to supplementing potable supplies. It is also a considerably more economically viable solution.

But planned indirect potable reuse certainly has its down-sides. For example, I am aware that many people are concerned about potential public health risks. I am confident that such concerns are unfounded, but acknowledge that I will not convince all readers to share my confidence.

Toowoomba councillor, Lyle Shelton, recently commented on this blog that the current debate in that city has “ripped our community apart, it has divided friends”. This is a very significant social cost that must be recognised by all proponents of water recycling, -myself included. While I think open debate is extremely healthy, I sincerely hope to never see a replay of the acrimonious discourse now apparently permeating the Garden City.

During this week, we have heard plans from the Queensland State Government to build a pipeline to take recycled water from Luggage Point and deliver it for industrial uses, primarily electricity production. Some members of the community have expressed suspicion for the fact that the pipeline will pass very close to Wivenhoe Dam. I don’t know anything more than anyone else does, but to me this suggests excellent planning on behalf of the Queensland Government. In the short term, it frees up fresh water supplies for potable use. But it also leaves open the possibility for future potable recycling, should environmental conditions necessitate it and should the community eventually come to accept it as a viable solution to the challenges faced by much of South East Queensland.

I think it is prudent for scientists, public officials and community leaders to enhance efforts to provide accurate information to the community. Indirect potable recycling can offer significant benefits to some areas. But we need to be careful that the benefits we are promoting outweigh the inherent costs. Let’s do this properly and not tear communities apart in the process.

I'd be grateful to know your opinions

Ozone and UV

Many people will have noticed the inclusion of ultraviolet (UV) radiation treatment for the proposed Toowoomba scheme and ozone treatment for the proposed Goulburn scheme. Since Australians generally do not have much experience with UV or ozone for water treatment, I thought it would be useful to instigate some discussion.

UV treatment and ozone treatment can have two distinct purposes. The most common is disinfection. That is, inactivating microorganisms such as viruses, bacteria and protozoa. The second use is ‘advanced oxidation’, which involves breaking down (oxidising) organic chemicals in the water.

The disinfectants that we are more familiar with in Australia are chlorine-based. Usually either chlorine gas or chlorine dioxide are added to drinking water (or to wastewater prior to disposal). Chlorine is very toxic and also reacts with other naturally occurring chemicals in water to form a wide range of byproducts. Some chlorine disinfection byproducts called trihalomethanes (THMs) and haloacetic acids (HAAs) are known or suspected to cause cancer at sufficient lifetime doses. As a way of minimising the formation of THMs and HAAs, it is common to react the chlorine with ammonia to form ‘chloramines’. These chloramines are much weaker disinfectants than chlorine, but are also less toxic. They are known to form fewer THMs and HAAs, however recent studies have shown that another extremely potent cancer-causing byproduct (NDMA) can be formed while forming chloramines.

Now that I have made chlorine sound like a gift from Satan, you may wonder why we use it at all. Well, chlorine has a number of advantages:

1) Its effective for many microorganisms
2) Its cheap
3) It stays in drinking-water while it is being delivered to our homes, thus continues to disinfect organisms that might turn up in the distribution pipes.

UV disinfection and ozone disinfection are generally more expensive than chlorine disinfection. Furthermore, these agents don’t stay in the water once it has left the treatment plant, -so there is no ongoing disinfection in the distribution pipes. On the other hand, they do have a number of advantages:

1) They are more effective than chlorine for many organisms
2) They are believed to form fewer toxic byproducts (under appropriate conditions)
3) No trace of ozone (or UV radiation) is left in drinking water

A number of countries in Europe rely on UV or ozone for disinfection of their drinking water supplies. They don’t use chlorine at all, primarily because of its toxicity and the toxicity of byproducts. However, such an approach may be more difficult in Australia due to our warmer climate. The warmth encourages bacteria to grow in the distribution pipes and ‘residual’ chlorine (or chloramines) is required to prevent it.

Traditionally, Australian sewage treatment plants have also disinfected effluents with chlorine before discharging them to waterways. However, because of the toxicity of chlorine towards fish and other organisms, many have begun to switch to UV disinfection.

Toxicity towards the environment and the problem of disinfection byproducts would be the main reasons that chlorine has not been selected as the primary disinfectant at Goulburn and Toowoomba (however, it would be added later at the drinking water treatment plant). An additional benefit is the enhanced effectiveness of UV and ozone for many organisms (including Cryptosporidium and Giardia).

But UV and ozone can also provide a secondary benefit of “advanced oxidation”. Normally, this requires higher doses of UV or ozone to be applied, along with some additional chemical (usually hydrogen peroxide). This combination can form very reactive species called ‘free radicals’. (I have just realised how much panic I will probably create by using that term! Oh well), however the free radicals are very short-lived and will be long-gone before the water leaves the treatment plant. The free radicals are very powerful for quickly breaking down large organic chemicals to smaller, simpler molecules.

These smaller molecules are often much more biodegradable than the larger molecules from which they came. Therefore, they can be quickly removed in the environment or by processes such as ‘biological activated carbon’ (BAC). If advanced oxidation is applied to very pure water (such as post-reverse osmosis), it can be possible to apply sufficient dose to mineralise any remaining chemicals, -that is, turn them into carbon dioxide and other non-organic species.

I should mention that in some places, ozone can also form a nasty byproduct called ‘bromate’. However, the formation of bromate relies on the presence of bromine in the water, which is only typical in coastal areas where there is seawater-intrusion into water sources. This is unlikely to be an issue in most Australian circumstances.

As you may have detected, I like ozone and UV disinfection so much that I would be happy to say goodbye to chlorinated drinking-water for ever. If only we could find an alternative solution to control bacterial growth in our drinking-water distribution pipes!

Any good ideas?

What’s so bad about “unplanned” recycling?

Water recycling proponents often like to remind the sceptics that all water is eventually recycled. What goes around, comes around. In many instances, the cycle from drinking-water to sewage and back again can be very short. Throughout the world, the vast majority of such situations tend to be classified as “unplanned” potable recycling. Strangely, there is an apparent perception that unplanned potable recycling is generally accepted to be “bad practice”.

I disagree on two grounds. First, I think it is naïve to assume that most such situations are truly “unplanned”, -I suspect “unacknowledged” might be a more accurate term. But more importantly, the suggestion that this is “bad practice” needs to be considered in respect of the alternative.

There is probably not a river in the world that is at least 100 km long and does not have an upstream wastewater discharge and a downstream potable extraction. That is simply the way we live and it is the only way most cities on the planet can survive.

If cities from Minneapolis to Memphis did not return at least some of the water they extract from the Mississippi, there certainly would not be sufficient water to sustain cities from Memphis to New Orleans.

Some important rivers in Europe can flow at around 70% treated effluent during dry weather periods (and, of course, less during wet weather). Examples include the Thames (London’s major water source) and the Spree (Berlin’s major source). If Spanish cities did not return effluent to rivers after use, most of southern Portugal would surely be uninhabitable.

Water belongs to all of us to share and it is our responsibility to keep the world’s rivers flowing as the principal means of distribution. Use it wisely and put what you don’t need back, I say. This is especially important for inland towns and cities.

Cities like Toowoomba and Goulburn have an incentive to grow and clearly water is a necessary factor for growth. “Planned” water recycling offers opportunities for these cities to supplement existing supplies. However, we must remember that all water used for “planned” water recycling is no longer available for “unplanned” water recycling. This is an important trade-off that we must keep a close eye on.

However, the situation is different for coastal cities. Those such as Sydney, Brisbane, Melbourne and Perth discharge most of their used water directly into the ocean, cancelling any opportunity for recycling. These are the cities which have an obligation to implement sustainable water recycling schemes to make sure that they squeeze every opportunity from every valuable drop.

Most major Australian cities are at the bottom of their water catchments, with few significant populations upstream. Thus, on world-standards we are extremely poor “unplanned” water recyclers. We waste our most valuable resource by using it just once and then dumping it straight into the ocean. Our major cities, therefore must instead become world-leaders of “planned” water recycling. This is the only way that we can hope to live in a vaguely water-sustainable way.

Water recycling promises significant benefits for Toowoomba and Goulburn, but is absolutely essential for Sydney, Brisbane, Perth and Melbourne.

Feel free to click ‘comments’ below and tell me I’m a goose.

Goulburn – The Pioneer Inland City

Goulburn is Australia’s pioneer inland city. It was proclaimed a city in 1864 and since then has faced and overcome countless hardships and challenges for its survival. However, arguably nothing has previously threatened the city’s viability and potential growth like its current water shortages.

Goulburn’s largest dam, Pejar (9000 megalitres capacity), is officially empty with just an inaccessible 3 megalitre puddle on the bottom. Combined reserves in the remaining two storages (Sooley dam and Rossi weir) are dismal with less than 4000 megalitres to sustain a city of more than 20 thousand people. Faced with the pressure of Level 5 water restrictions, current daily consumption is around 5 to 6 megalitres. This represents a massive achievement by the community being around half of the previous 5-year average. The City Council has relaxed normal restrictions on household greywater recycling, increased groundwater extraction, built a pipeline to pump water from local ponds, and (optimistically) increased dam wall heights. But still the potable supplies continue to plummet. If rainfall patterns continue, Goulburn could be waterless by this time next year.

Pejar Dam - November 2005 (note weir in foreground!)

So what is a pioneer rural Australian city to do when faced with such adversity? One identified option is to truck potable water in from outside the region. This is estimated to require 40 semi-trailers working almost around the clock at a cost of $1million per week. I expect to hear at least a few people arguing that this is the preferred option sometime soon.

The other identified solution for Goulburn residents involves indirect potable recycling. The touted scheme would entail reclaiming 20 per cent of the city’s treated effluent and cleaning it to a very high quality by established advanced water treatment processes. This water would then be transported back up into the catchment to eventually find its way, via a series of ponds and wetlands, into Sooley dam.

The greatest obstacle, of course, will be winning public favour for the plan. The likely level of public favour is yet to be properly tested in Goulburn and the proposal will surely have its detractors. But can the city’s practical and resilient population work cooperatively to find a solution?

The most important factors will be the willingness and ability of the City Council to engage the community. This will require high levels of openness, transparency and accurate information provision. Any intelligent community will naturally have concerns and questions. It will be the council’s responsibility to address these honestly and completely. With something as important as water supply, people are entitled to have their concerns properly responded to in order to be fully assured that potential risks to public health are comprehensively managed and controlled.

Like Toowoomba, Goulburn has applied for Commonwealth Government assistance to fund the development of a potential potable water recycling scheme. However, having perhaps seen the error of forcing a divisive early referendum on the community, the Government have provided Goulburn with an initial $50,000 funding towards a community consultation process. This approach should be applauded as an absolutely essential first step.

Media reports this week suggest that Goulburn may be the pioneer Australian city to implement a planned potable water recycling scheme. Somehow I suspect they may be correct.

Whadda you reckon?