Economic analysis of rainwater harvesting systems comparing developing and developed countries: A case study of Australia and Kenya

Abstract

Rainwater is a naturally occurring potentially clean source of water. There has been an increased interest in rainwater harvesting (RWH) in both developing and developed nations. RWH can alleviate the effects of accelerated urbanisation and improve their water security in the face of uncertain future climate patterns. Australia's management of her millennium drought has proved the effectiveness of RWH systems. Success in Australia is promising for developing countries with inadequate water supply for drinking and sanitation and unreliable centralised water supply systems. However, there is little research on the economic analysis of RWH systems in developing countries. Here we have developed an economic analysis tool, called ERain, to combine daily performance analysis of RWH systems with life cycle cost analysis for use in economic evaluation. ERain has shown that the recent tendency towards smaller tanks in Australia is a poor choice economically, that RWH systems in Kenya can be economically beneficial if installed without reticulation, and that reliability (the percentage of days that the demand is met) can be a financial issue. ERain provides a realistic framework for establishing sustainable RWH solutions. The relationship between the benefit-cost ratio, reliability and efficiency (the percentage of available water used) is discussed as well as discrepancies between the benefit-cost ratio (BCR), and net present value (NPV) as economic indicators. Results highlight the need for innovation and reduction in capital and on-going costs associated with RWH systems in preference to increasing the price of water to increase their economic viability. The impact of paying elevated prices for water purchased from street vendors on the other hand demonstrates the dependency of RWH system economic viability on regional freshwater cost. Results also show that a rebate that matches tank size would be a good initiative to encourage the installation of larger tanks and increase water security, while relying on customer perspective of value will tend towards installation of smaller tanks and a superficial water security.