Economic Issues in the Design and Analysis of a Wastewater Treatment Project

Abstract

A wastewater treatment plant is often planned as one small part in a greater system to manage ambient water quality. Indeed, that is probably the best role for wastewater treatment, since the benefits of treatment are not secured unless all current and future pollution sources nearby are also controlled. When a comprehensive and effective system for managing water quality is in place, economic analysis of an individual treatment plant will not reveal the full motivation or justification for a plant. Instead, economic analysis should focus first on the greater system to manage water quality. If the system as a whole is economically justified, then any constraint imposed on an individual project can be taken as given. In that case, economic analysis of a project would consider only whether the project meets the constraints at least cost. Standard economic theory shows that least-cost wastewater management can be achieved if all point sources are controlled and face a charge set at the marginal cost of processing wastewater at the central treatment plant. These conditions can be easily obtained through the design and management of the plant. As such, both least-cost wastewater management and the economic justification for the plant can be directly built into a project.