Costs and Benefits. The Analysis of Both Is Key to Sound Decisions on Plant Improvements

Cost-benefit analysis can play an important role in making decisions about water and wastewater plant improvement projects.

All environmental improvements come at a cost. The question that’s not always answered and sometimes not even asked is: At what cost exactly and to what benefit? And after that: Does the benefit justify the cost?

The cost versus benefit question comes up at various times in wastewater treatment, perhaps most often as it relates to nutrient removal. Phosphorus discharges into streams and lakes can seriously degrade water quality, feeding excessive growth of weeds and algae. In marine waters, nitrogen loadings have been responsible low-oxygen dead zones in Chesapeake Bay and the Gulf of Mexico, and elsewhere.

The nutrients come from various sources: urban stormwater, agricultural runoff, wastewater treatment plant effluent, and natural processes. The question then becomes: What is the most cost-effective way to mitigate the problem? In other words, what remedies will create the biggest bang for the buck?

Similar questions can also arise around whether a clean-water agency should reclaim water to use for landscape irrigation, industrial process water, groundwater recharge, or potable reuse — direct or indirect.

Avoiding extremes

Discussions on such issues often slip into arguments between extremes. On one side are industries affected by proposed regulations, claiming that the cost of compliance will drive them out of business and cost hundreds or thousands of jobs. On the opposite side are environmental advocates, claiming that without extremely strict regulations, precious resources will be destroyed and lost for all time.

That’s a caricature, of course, but we’ve all seen such arguments play out to some degree. Fortunately, there’s a better way, and it goes by the name of cost-benefit analysis. Not every issue can be broken down purely into dollars and cents, but if sound policy is to be made, then economics must be part of the discussion.

On the question of nutrients, notably phosphorus, there has been good progress in that direction. Regulators’ first instinct was to impose strict effluent phosphorus limits on clean-water plants. Plant upgrades to meet those limits can cost many millions of dollars, even for small communities — and may not make a big dent in the total phosphorus entering the water from all sources.

Outside the box

So enlightened regulators asked: What if we gave utilities the option to address other, larger phosphorus sources? And so the concept of adaptive management was born. Now in some states, instead of upgrading a treatment plant, a utility can work with farms and communities upstream to reduce phosphorus from nonpoint sources by an agreed-upon amount. More good gets done for less money.

That’s an example of cost-benefit analysis being put to work. But more generally speaking, what’s involved in such an analysis? Here’s an example from the world of water reclamation and reuse for farm irrigation that I found in a paper published in the International Journal of Environmental Protection and Policy (

On the cost side of the ledger were the land required, the treatment works, the piping, the conveyance system for delivering the water to farms, and the costs to operate and maintain the system. On the benefit side of the ledger were:

Resources gained from supplying moisture and nutrients to the crops.

The agricultural benefit from improved crop production.

The benefits from jobs created by the treatment works and the irrigation system.

The environmental benefits of reduced pollutant loading to waters, improved public health and lower impact on downstream aquatic ecosystems.

That last item isn’t easy to translate into dollars and cents. Still, the paper gives a good example of how a cost-benefit analysis can be conducted for any project involving environmental regulation.

The paper in question is titled, “Development of a cost-benefit analysis approach for water reuse in irrigation.” You can read it if you want more detail. What do the costs and benefits look like for the next project you plan to undertake at your facility?


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