THE PRODUCTION OF WATER FROM GEOTHERMAL RESERVOIRS: SOME ECONOMIC CONSIDERATIONS1

ABSTRACT: Liquid dominated geothermal systems are expected to account for most of the growth in geothermal energy production in the coming decades. Production of water from such systems could significantly augment fresh water supplies. The feasibility of water exploitation is clouded by potential problems related to seismic impacts, land subsidence and the composition of geothermal brines. If these problems can be overcome at little cost, desalination of brines may be feasible. Estimates of water production costs are presented for a variety of desalination technologies, plant sizes and brine water compositions. These estimates show that production costs will range from $139.10/A.F. to $436.00/A.F. at the plant boundary. Economies of scale and brine composition are important determinants of cost. Production costs are substantially in excess of the value of water in alternative uses. However, in certain unique situations, it may be efficient to desalt brines for use in upgrading the quality of municipal water, industrial process water and irrigation water. Unique situations aside, geothermal brines are not likely to provide an economical source of fresh water in the absence of striking changes in the patterns of supply and demand for water.     

A LINEAR ANALYSIS OF AN URBAN WATER SUPPLY SYSTEM1

The use of linear programming as a planning tool for determining the optimal long-range development of an urban water supply system was explored. A stochastic trace of water demand was synthesized and used as an input to the model. This permitted evaluating the feasibility of imposing demand restrictions as an effective cost reduction mechanism. The City of Lincoln, Nebraska, was used as the urban model. The fundamental problem was to allocate limited water supplies from several sources to an urban load center to minimize costs and comply with system constraints. The study period covered twenty years, and findings indicate the planning direction for stage development during this period. Sensitivity analyses were performed on cost coefficients and demands. Thirteen sources were included in the initial computations. Conclusions were that linear programming and generated demand traces are useful tools for both short- and long-term urban water supply planning. Lowering peak demands results in long-range development of fewer sources of supply and more economic and efficient use of the supplies developed.     

Household use of and satisfaction with alternative water sources in Victoria Australia

Climate change is increasing the variability of rainfall, and thus the availability of water supplies in many areas of the world. These impacts are already being felt in the state of Victoria, Australia where a 12 year drought period was recently experienced. Restrictions to water use have been implemented, as one component of a broad policy approach to manage the drought. While anecdotal evidence suggests that the substitution of centralised water supplies is occurring, this has not been proven empirically. This paper reports results from a survey of households in Victoria regarding their use of alternative water sources. The study found that substitution is occurring. Garden watering is the purpose which has the highest rate of alternative water source use. In total 41.6% of respondents always, and 33.2% sometimes use an alternative water source for garden watering. The most commonly used alternative source of water for garden watering is water previously used in the laundry (30.7%). The alternative source of water used was found to vary depending on the purpose of the water use. High levels of satisfaction were found for all alternative water sources used. Several barriers were found to the use of alternative water sources, the main of which were: inflexibility of existing infrastructure, cost, policy, and housing status. The results have implications for water retailers, policy makers and governments in locations facing water shortage.     

BENEFITS FROM WATER CONSERVATION DEPEND ON COMPREHENSIVE PLANNING1

: Substantial reductions in municipal water use are feasible without reducing the quality of life. If conservation measures are preplanned, properly engineered, and coordinated, reductions in utility bills for water, waste water, and energy are estimated at $30+per person per year. Installation of devices to reduce water use, engineering plans to prevent malfunctioning of collecting sewers, and engineered process modifications of treatment facilities must be coordinated to achieve full benefits of water conservation. Pollutant discharges to the aquatic environment are reduced in direct proportion to the reduction in water use.     

COMPETING WATER USES IN THE SOUTHWESTERN UNITED STATES: VALUING DROUGHT DAMAGES1

ABSTRACT: Economic benefit functions of water resource use are estimated for all major offstream and instream uses of Colorado River water. Specific benefit estimates are developed for numerous agricultural regions, for municipal uses, and for cooling water in thermal energy generation. Economic benefits of hydropower generation are given, as are those for recreation on Colorado River reservoirs and on one free-flowing reach. Marginal and total benefit estimates for Colorado River water use are provided. The estimates presented here represent a synthesis of previous work, providing in total a comprehensive set of economic demand functions for competing uses of Colorado River water. Non-use values (e.g., benefits of preserving endangered species) are not estimated.     

WATER USE RELATIONSHIPS AND PROJECTION CORRESPONDING WITH REGIONAL GROWTH,SEATTLE REGION1

ABSTRACT: The paper outlines both the methods used and the results obtained in a study of the demand for municipal and industrial water for the Seattle region. The study was made as part of a regional water management study program, one objective of which is to “… identify, quantify, and set priorities for all current and future water uses …”. A basic concept in the study of municipal and industrial water use is that the demand for water is derived from the demand for output and the direct services that water provides. Principal characteristics of the study are: (1) Water use is studied by type - residential, commercial, industrial and public -with identification of factors affecting each; (2) Water demands are studied by season as well as on an annual basis; (3) Projections of future water use are tied directly to projections of economic change in the service area; and (4) The effects of alternative policies on water use are estimated. Water use levels are projected under alternative regional growth assumptions provided by the Puget Sound Governmental Conference, a regional planning agency. Thus, the water use planning is consistent with other regional planning programs in this respect. The results can be varied according to changes in specific factors affecting water use. The factors considered in the present study include: single-family residential lot size, distribution of population between single- and multi-family units, per capita water use by multi-family unit residents, and industrial and commercial water use per employee. An income elasticity of demand was estimated for single-family residential water use.     

A Benefit‐Cost Analysis of Total Maximum Daily Load Implementation1

Abstract: Total Maximum Daily Load (TMDL) implementation generates benefits and costs from water quality improvements, which are rarely quantified. This analysis examines a TMDL written to address bacteria and aquatic‐life‐use impairments on Abrams and Opequon Creeks in Virginia. Benefits were estimated using a contingent valuation survey of local residents. Costs were based on the number and type of best management practices (BMPs) necessary to achieve TMDL pollution reduction goals. BMPs were quantified using watershed‐scale water quality simulation models (Generalized Watershed Loading Function and Hydrological Simulation Program‐FORTRAN). Based on our projections, the costs to achieve TMDL induced pollution reduction goals outweigh the estimated benefits. Benefit‐cost ratios ranged between 0.1 and 0.3.     

WEATHER MODIFICATION: AN ECONOMIC ALTERNATIVE FOR AUGMENTING WATER SUPPLIES1

ABSTRACT. Experimental results of cloud seeding in Southwestern Colorado suggest that runoff can be increased by 25 percent over a 3,300 mile area. There is a need to estimate the economic consequences in the Colorado River Basin. The evidence presented suggests that weather modification is an economically feasible means to provide additional water for the basin. Compared with other proposed means of augmenting water supplies, weather modifications appear to be one of the least cost alternatives. A very low proportion of weather modification costs are fixed; thus the program is easily reversible. Also, a relatively small increase in daily precipitation covers the direct costs of operation. Benefits of water produced by weather modification included power production and irrigation of forage crops. In the long run, if additional water is used for higher valued fruit and vegetable production, or for domestic and industrial purposes, its value would rise sharply. Preliminary investigation of extra-market costs and benefits suggests that while they have little effect on the benefit-cost ratio, they may be very important to individuals and groups affected. The distribution of costs and benefits is important as the benefits accrue to downstream users and some of the costs are incurred by Coloradoans. There is a need for further research on the long-run economic effects of weather modification programs, particularly with respect to extra-market factors.     

MUNICIPAL WATER USE AND WATER RATES DRIVEN BY SEVERE DROUGHT: A CASE STUDY1

ABSTRACT: This paper synthesizes and interprets data pertaining to the evolution of average water revenue, water use, and the average cost of water supply in the City of Santa Barbara, California, from 1986 to 1996, a period which included one of the most devastating droughts in California this century. The 1987–1992 drought hit the study area particularly hard. The City of Santa Barbara was dependent exclusively on local sources for its water supply. That made it vulnerable as the regional climate is prone to extreme variability and recurrent droughts. The 1986–1992 drought provided a rare opportunity to assess the sensitivity of municipal water use to pricing, conservation, and other water management measures under extreme drought conditions. Our analysis indicates that the average cost of water rose more than three-fold in real terms from 1986 to 1996, while the gap between the average cost of supply and the average revenue per unit of water (= 100 cubic feet) rose in real terms from $0.14 in 1986 to $ 0.75 in 1996. The rise of $3.08 in the average cost of supplying one unit of water between 1986 and 1996 measures the cost of hedging drought risk in the study area. Water use dropped 46 percent at the height of the drought relative to pro-drought water use, and remains at 61 percent of the pre-drought level. The data derived from the 1987–1992 California drought are unique and valuable insofar as shedding light on drought/water demand adaptive interactions. The experience garnered on drought management during that unique period points to the possibilities available for future water management in the Arid West where dwindling water supplies and burgeoning populations are facts that we must deal with.     

PEAKING STORAGE TANKS FOR WATER SUPPLY SYSTEMS1

ABSTRACT: Construction of a “peaking storage tank” may reduce the operational cost of municipal water in the availability of a time-of-use energy rate. A peaking storage tank is used for storing water that is pumped from wells or other sources of supply during off-peak periods when energy costs are less for use during periods of on-peak water demand. The optimal size of a peaking storage tank is that which results in the minimum total cost, which includes both the storage construction cost and the cost of operation of the pumps. The operational cost for a given time-of-use rate is determined by help of a pipe network simulation model solved by the Newton-Raphson technique and a dynamic programming optimization model. A more simplified method is also introduced. Analyses show that low off-peak energy costs make the construction of peaking storage tanks economically attractive and reduce on-peak energy use, which results in electrical load leveling.     

AN IMPLICIT APPROACH TO PRICING AGRICULTURAL WATER TRANSFERS TO URBAN USES1

ABSTRACT: The increased agricultural efficiency of the American farmer has been a substantial impetus to this nation's rapid urbanization. In many western regions where total water supplies are limited, urbanization has required the transfer of heretofore agricultural water rights to the urban use. A major problem in such transfers has been the value or price of the water. A management level model of a typical urban water system was developed to optimize water supply, distribution, and wastewater treatment alternatives. The values of agricultural transfers were determined as the cost advantages of increasing allowable reuse levels of urban effluents which imply the use of a downstream right. This procedure is justified by the economic theory of alternative cost. Results for a test application to the Denver, Colorado area indicate values on the order of $1,000 per acre-foot of transferable water depending on effluent water quality restrictions and operational policies.     

ASSESSMENT ANALYSIS FOR WATER SUPPLY ALTERNATIVES1

ABSTRACT Providing adequate water supplies of good quality is becoming a serious problem in many areas of the United States. Some of the alternatives proposed for meeting the growing shortage of clean-water or cheap-water are reallocation, reuse, and importation. This paper outlines a methodology to assess all of these water supply alternatives by examining the amount and time-staging for development of water sources. In conceptualizing the problem, sources of supply are classified in three categories: primary or base supplies, secondary or effluent supplies, and supplementary or imported supplies. A model of the water system is formulated as a “transportation problem” in linear programming depicting the possible sources of supply which can be used to satisfy the requirements of various water users. The optimizing objective in the model is to minimize the cost of water under various assumptions for operating the system. A case study of the Salt Lake Qty, Utah, area is used to illustrate the application of the model in obtaining optimal water supply allocations for projected future demands. Assessment of alternatives in the study include redistribution of supplies, time-staging of supplies and related treatment facilities, and sensitivity of allocations to changes in costs.     

VALUING URBAN WATER ACQUISITIONS1

ABSTRACT: Municipalities typically seek additional water supplies whenever prospective population and economic growth suggests the inadequacy of currently available water supply. The benefit of supply enhancement is usually construed as avoiding debilitating water scarcity. A more effective approach to planning is to compare the benefits and costs of supply augmentation. The net present value of benefits for a supply increase in a representative Texas community is calculated for alternative scenarios relating to population growth, rate growth, and the temporal distribution of the increased supply. Consumer surplus measures are sensitive to all three of these factors and vary from $0 to over $4000 per acre-foot. A notable finding is that the added supply may offer zero values in cases where real water prices increase at an annualized rate of 4 percent (or greater) which is half the rate occurring in Texas from 1981–1985.     

THE ECONOMIC VALUE OF GROUND WATER RECHARGE FOR IRRIGATION USE1

ABSTRACT: Artificial recharge as a means of augmenting water sup plies for irrigation is a management alternative which policy makers in ground water decline areas are beginning to consider seriously. A conceptual model is developed to evaluate the economic benefits from ground water recharge under conditions where the major water use is irrigation. The methodology presented separates recharge benefits into two components: pumping cost savings and aquifer extension benefits. This model is then applied to a Nebraska case to approximate the value of recharge benefits as a function of aquifer response. discount rate, and commodity prices. It was found that recharge benefits vary from less than $2 to over $6 an acre foot recharged.     

ESTIMATING THE VALUE OF WATER AMONG REGIONAL ECONOMIC SECTORS USING THE 1972 NATIONAL INTERINDUSTRY FORMAT1

ABSTRACT: Recent growth in irrigated agriculture and metropolitan areas of the Western United States suggests that if growth continues, there will be a potential shortage in future water resources. Compound the expansion of agriculture and municipal demands with possible enaction of instream flow requirements, a method to allocate water among alternative economic sectors in the West is needed. In this study, an interindustry-linear programming model based on the 1972 national model format is used to allocate scarce water supplies among competing regional economic sectors. The shadow price of water and the sectorial value of water at different availabilities for each competing sector is derived. Also, economic sectors are ranked by value of water at different water availabilities.     

ECONOMIC EVALUATION OF RIPARIAN BUFFERS IN AN AGRICULTURAL WATERSHED1

ABSTRACT: This study determines the most cost effective spatial pattern of farming systems for improving water quality and evaluates the economic value of riparian buffers in reducing agricultural nonpoint source pollution in a Midwestern agricultural watershed. Economic and water quality impacts of alternative farming systems are evaluated using the CARE and SWAT models, respectively. The water quality benefits of riparian buffers are estimated by combining experimental data and simulated water quality impacts of fanning systems obtained using SWAT. The net economic value of riparian buffers in improving water quality is estimated by total watershed net return with riparian buffers minus total watershed net return without riparian buffers minus the opportunity cost of riparian buffers. Exclusive of maintenance cost, the net economic value of riparian buffers in reducing atrazine concentration from 45 to 24 ppb is $612,117 and the savings in government cost is $631,710. Results strongly support efforts that encourage farmers to develop or maintain riparian buffers adjacent to streams.     

VALUE OF WATER IN IRRIGATED CROP PRODUCTION USING DERIVED DEMAND FUNCTIONS: A CASE STUDY OF SOUTH SASKATCHEWAN RIVER IRRIGATION DISTRICT1

ABSTRACT: Water abundance has led most North American societies to use water freely without priorizing its use. As water scarcity becomes reality in the southern part of Saskatchewan, planners and managers of water require information about the value of water in irrigation, as well as in alternative uses. In this study, the value of water to the producer in irrigation is developed both for the short and long run. The basis of this imputation is a derived demand function for water using linear programming. Water demand was bound to be inelastic at lower prices, and highly elastic at higher prices. The short-run value of water varied between $0.44 and $127.82 (1986 dollars) per acre-foot for different levels of product prices. However, the long-run value was estimated between zero and $1.59 per acre-foot of water.     

SPECIAL CASES OF WATER SUPPLY INTERFERENCE CAUSED BY URBAN DEVELOPMENT NEAR TORONTO,ONTARIO, CANADA1

Since 1961, control over water-supply interference problems in the Province of Ontario has been provided under The Ontario Water Resources Commission Act. A section of The Act requires persons taking more than 10,000 imperial gallons per day of water for purposes other than domestic, stock or fire-fighting to have a permit and to take the water in accordance with specified terms and conditions. Construction of some new wells, sewers, and roads to meet the needs of urban development has caused interference with both ground- and surface-water supplies. In cases of serious interference, the Commission has required that steps be taken to restore water supplies or prevent continued interference. Two cases are described where municipalities in the Toronto area restored supplies to overcome serious interference with several private wells and streamflow during testing and operation of a 500-imperial gpm municipal well adjacent to a normally effluent stream, and varying degrees of interference with private wells caused by dewatering at rates up to 2000-imperial gpm for the installation of a trunk sewer.     

Potential Economic Impacts of Environmental Flows Following a Possible Listing of Endangered Texas Freshwater Mussels

Texas water resources, already taxed by drought and population growth, could be further stressed by possible listings of endangered aquatic species. This study estimated potential economic impacts of environmental flows (EFs) for five freshwater unionid mussels in three Central Texas basins (Brazos, Colorado, and Guadalupe‐San Antonio Rivers) that encompass 36% of Texas (~246,000 km²). A water availability model projected reductions in water supply to power, commercial and industrial, municipal, and agriculture sectors in response to possible EFs for mussels. Single‐year economic impacts were calculated using publicly available data with and without water transfers. Benefits of EFs should also be assessed, should critical habitat be proposed. Potential economic losses were highest during droughts, but were nominal (<$1 M) in wetter years — even with high EFs. Reduced supplies to San Antonio area power plants caused worst‐case impacts of a single‐year shutdown up to $107 million (M) during drought with high EFs. For other sectors in the study area, water transfers reduced worst‐case losses from $80 to $11 M per year. Implementing innovative water management strategies such as water markets, conjunctive use of surface water and groundwater, aquifer storage and recovery could mitigate economic impacts if mussels — or other widely distributed aquatic species — were listed. However, approaches for defining EFs and strategies for mitigating economic impacts of EFs are needed.     

OPTIMIZATION OF WATER RESOURCES FOR IRRIGATION IN EAST JORDAN1

The paper describes an approach towards optimal allocation of surface and ground water resources to three agricultural areas in the Jordan Valley under conditions of scarce water supply. The optimizing model allocates water from three main rivers, each with reservoir storage, and from two ground water sources to three irrigation regions. Productivity of irrigation water, expressed as the net present value of the regional agricultural output, but allowing for crop water deficits, is first maximized using nonlinear programming. The allocation process then adopts techniques of linear programming to determine the least cost alternative based on the unit cost of water from each resource at each destination, as it varies with time.