Reusing wastewater to cope with water scarcity: Economic, social and environmental considerations for decision-making

Abstract

Wastewater reuse has been recognized as an encouraging solution to cope with the problem of water scarcity around the globe. Adopting Integrated Water Resources Management principles will ensure that the implementation of wastewater reuse projects will take into account all the various types of affected stakeholders, accounting in addition for the external costs and benefits derived from the reuse decision. The objective of this paper is to analyze the economic, social and environmental aspects surrounding the concept of wastewater reuse in order to assist policy-makers and managers on the implementation of economic instruments for decision-making. This study proposes a methodological framework for conducting cost-benefit analysis, which is later exemplified by the Yarqon Recycling Project case study in Israel. In this case study application, 3 different scenarios (“pessimistic”, “base-case” and “optimistic”) with a range of parameters values, were used to estimate the most relevant internal and external costs and benefits. Additionally, the most influential parameters were identified using a sensitivity analysis that included both Monte Carlo simulations and the standardized regression coefficients method. For the “base-case” scenario, the net present value obtained was approximately $4.83 million. Although the feasibility of the project is demonstrated, the sensitivity analysis results were less favorable (likelihood of obtaining a positive result was only 64.28%), being the external recreational costs derived from irrigating with reclaimed wastewater the most influential parameter. The results of this analysis led to the conclusion that including the relevant externalities might have a strong impact on the economic feasibility of the wastewater reuse projects. The proposed methodological framework aims to guide decision-makers in evaluating their success with respect to Integrated Water Resources Management in economic terms.