Friday, February 23, 2007

Wasteful backyard water conservation efforts

Investing in a backyard water tank is one way of escaping the effects of water restrictions. But it is much more expensive than supplying water to households by investing more in the water supply system. This is hardly suprising given the enormous economies of scale economics identifies in the processes of storing and distributing water.

My former colleague Rob Dumsday pointed out to me that the rural newspaper, Weekly Times (17/1/07, page 5) estimates the capital costs per ML saved of various new water supply options for Melbourne are approximately:

1. Hume corridor pipeline $7,250 per ML.
2. Eastern Water Recycling pipeline $17,266.
3. Big River pipeline and tunnel $10,750.
4. Goulburn and Black Rivers pipeline and tunnel $13,257.

But a household water tank with capacity of 4,500L and with installation cost of $1,500 in Melbourne would cost 1,000,000/4500 = $333,000 per ML saved. Focusing on capital costs alone it seems that government subsidies designed to encourage householders to install such tanks are encouraging people to engage in unwise investments.

This would not be of concern if households correctly anticipated the costs and if they had access to water at the marginal cost of supplying it. But with water restrictions in place householders may still rationally make such foolish investments as a way of thinking they can profitably escape the effects of the restrictions.

They can in some circumstances but it remains mighty expensive water. Suppose, for example, that a water tank can be filled completely 3 times per year and the water collected, 13,500 L in total, is used on the household garden. For many families this will be at the upper end of the scale for which such water is required – in the main it will be sought in summer months when the natural supply of water from rainfall is scarce and 3 complete refills followed by usage is an optimistic estimate. The value of water supplied from the mains to realise this level of supply would be about $13-50. Assuming the water tank lasts forever and never requires maintenance this would be viable only at discount rates of less than $13.50/1500 or less than 0.01%.

In the absence of water restrictions such an investment will not make sense unless the water uses are very high-valued.

10 comments:

mlesich said...

What are the costs of building a new dam

conrad said...

That's really interesting and logical Harry, although somehow I don't think it is going to get much political traction.

lagerweys@optusnet.com.au said...

Harry Please tell my brother in law
We have been having this argument(along with many others) for ages

robert merkel said...

To actually get the government subsidy for a tank, you have to connect it to either your toilet, shower, or hot water service. If you do that, the amount of water that can be supplied by the tank goes up a great deal. According to this guy, in Melbourne your 4,500 litre tank would provide about 80,000 litres a year. Assuming a cost of capital of $150 a year, that's about $1.87 per kilolitre. Expensive, but not completely off the planet.

But as to rainwater tanks for gardening, you're quite right. I've just put in a tank (on the cheap; it only cost me about $600 because Dad bought it in the country and happens to be able to weld together a stand out of scrap metal), but like you say, the only reason I am doing so is because I want to be sure I can keep my plants alive if and when stage 4 water restrictions kick in. Economically, it's completely irrational, but what choice do I have? Not only did the plants cost money, it took quite a considerable time to purchase and put the plants in.

It seems I'm not the only one, though - customers are prepared to pay a great deal for water in this situation. Have a look at what everybody's favourite nurseryman in a tutu is selling, and for how much.

Sir Henry Casingbroke said...

A photographer I worked with is totally self-sufficient for water in an Adelaide suburb. He has a luxuriant backyard garden. He is still connected to mains but nominally so (for emergencies).
He has amortised his cost in three years. He says the water tastes much better out of his tap than it used to!

Furthermore, by installing a rainwater tank you are independent of any pricing movements in the future, which may be a political decision as much as an economic one.

Below please find a handy cost breakdown for Sydney coastal area (where I live) posted by Greg Cameron at The Forum online opinion journal
http://forum.onlineopinion.com.au/thread.asp?article=5421


"In Sydney, the cost of rainwater is $1.25/KL compared with $4/KL estimated by the government.

$1.25/KL is achieved if rainwater is collected from every roof and used in replacement of mains drinking water.

Sydney’s rainfall in 2006 of 993MM was 20% below the mean annual rainfall (1217MM).

$1.25/KL is based on Sydney continuing to receive 80% of its mean annual rainfall for 30 years, which will provide an average separate house with at least 75KL of rainwater each year.

All house downpipes can be connected to four interconnected rainwater tanks enabling water harvesting from the whole roof area.

The cost of supplying four 670 litre rainwater tanks, pressure pump, automatic switching valve (to maintain continuity of water supply), associated plumbing items, plumbing and electrical installation, is $2000. Estimated operating cost over 30 years is $800, mainly for three 3 additional pressure pumps.

85% of houses in NSW are located within 50KM of the coast (25% within 3km) and receive reliable rainfall.

In 2006, Badgerys Creek, 50KM west of Sydney, received 60% (483MM) of its mean annual rainfall (789MM). A house in Badgerys Creek would have obtained 48KL of rainwater in 2006. At 80% mean annual rainfall, the average yield would be 67KL/year at a cost of $1.40/KL. (Although Sydney’s mean annual rainfall is much higher than Badgerys Creek, there are also significantly larger losses, due to extreme rainfall events.)

The average turnover rate of housing is seven years and there are 1.7 million separate houses in NSW. It can be a requirement that every building must detain rainwater for a period of time before allowing it to enter the stormwater system. The requirement can apply at point of sale of all property, thereby providing the demand to underpin the significant investment that will be required in rainwater tank manufacturing capability and installation services."

I might add that my rainfall would be considerably higher than Badgery's Creek. Indeed, the Forest area has one of the highest rainfall figures for Sydney metrop. and hence my costs would be lower still.

Sir Henry Casingbroke said...

I forgot to add that my water bill shows my water price as being $1.2640 per kL

It may may make more sense economically H, at a "global" level, but if water is privatised via a known gouger like, say, Compagnie Generale des Eaux Australia, and Sydney water supply is even partially sourced from a desalinising plant, with the attendant energy costs and who knows, a carbon tax on top, then a tank in the back of the house seems like a fairly sensible hedge to me.

Even now I'm starting off a cent per kL better off, never mind the future.

hc said...

Robert and Sir Henry, As I say its not irrational as a way of escaping the effects of water restrictions -my point is just that the public water system can supply it much cheaper.

I think Sir Henry that 4*670 litre tanks would be hard pressed to collect 75 KL in a year.

Don Burke in the Bulletin this week makes much the same point regardiing the poor economics of backyard tanks. He does however suggest diverting water from your roof diirectly onto your garden rather than becoming storm water.

Sir Henry Casingbroke said...

I take your point about the notional concept public water system supplying it much cheaper.

It's the same economy of sale of the ecological footprint of people living in high rise units being but a fraction of people who live in houses with eco-gardens, living on sprouts and bicycling around in home-made sandals made from items where no animals were hurt in their manufacture.

But the figures I have quoted do not include any public subsidy. So that kind of makes your argument more esoteric.

My water bills shows that I have used 44 kL in 90 days.

Hence my annual water requirement seems to be:
365/90 * 44 = 178.4kL

On the face of it it is 2.3 times the 75kL yield as given by Greg Cameron in his calculation.

To work out my self-sufficiency figures without a subsidy and hence no cost to the public purse, all I need to do is go to my house reno spec files to retrieve the combined square meterage of my roof and shed (both conveniently clad in "Colorbond" metal sheeting), add the pipe and ancillary equipment costs plus labour if any.

After amortisation my ongoing costs would be electricity for the pressurisation of the supply and estimated life of the system.

All I have to do is show that my water will cost me less than $1.264 per kL.

Furthermore, I expect that price of domestic water will go up substantially, as I indicated in mt previous post above, as it will include the profit (rent) cost of the entrepreneurs who undertake the privatised water system, which will need to be a hybrid of desalination, Sholahaven pipe and some recycling of sewage and/or stormwater.

I expect the price of water to be realistically set at $2 per kL.

bill said...

I pay a marginal water charge of $1600 per megalitre (at the moment)in Melbourne. This is expected to go up significantly in the next few years. The costs compared to that stated by Harry Clarke for tank water, although extremely high, is not outrageous. Tanks are a much more environmentally friendly way of saving water than a desal plant!

Anonymous said...

Break-even point for a 2,000 litre water tank = 26 years!.
Here is some data for consideration. Substitute your own data to determine the cost/benefit analysis for your situation.

My latest water bill in Gippsland, Victoria includes 3 components:
1. Water usage = $35.78 / 126 days ~ = $0.28 per day
2. Wastewater Avail Connected = $211.67
3. Water Availability = $45.00
The actual water components is only 12.2% of the total bill.

An online website offers a 2,000 liter water tank $850 and a total installed cost of $2,650.
$2,650 divided by the daily cost of $0.28 would take 9,464 days or about 26 years to break even and pay for the tank by substituting tank water for water company water (assuming no rate increase – but there will be).

Here is an example of water usage for a given tank capacity:
My empirical evidence shows the flow from our tap through a 13mm polytube into a 9 litre bucket took 43 seconds.
At this rate, it would consume about 12.6 litres per minute (lpm).

Assume there are 3 garden areas that are watered 2 times a week for 15 minutes each or 90 minutes total.
1,134 litres would be consumed or 56.7% of the tank capacity.

Dropping the time from 15 minutes to 10 would be 60 minutes total and result in 756 litres consumed.

Another way to look at it is it would take 159.3 minutes to use the 2,000 litres or 2 hours and 39 minutes.