16 September 2008

Pricey Holes in the Ground

Two SoCal water districts plan to spend $200 million to treat wastewater and then let up to 5,000 AF percolate into the ground. Those numbers make San Diego's $12 million for 30TAF look like a deal, but the more-expensive project will be closer to final users instead of over a hundred miles away.

The pity is that none of these districts have tried to reduce demand by implementing higher prices. (I mean really higher conservation prices.) Right now, all they are doing is spending more to "increase" supply.* If demand keeps increasing -- whoops -- the "new" supplies will also be inadequate.

Bottom Line: Water managers need to pursue the cheapest option -- not the engineering option -- first.

* I say "increase" because supply may not go up as much as promised.

hattip to DW

7 comments:

dWj said...

In particular, once you've established that you're paying $40,000 per acre foot for water, it would seem you have a pretty good argument for charging $40,000 per acre foot of anyone who's using more than your subsistence-subsidy allotment.

David Zetland said...

That is one silver lining, but perhaps it would be better to charge $40,000/AF for water that cost you $200/AF :)

Francis said...

let's read the article a little more closely, shall we? The price tag covers (a) tertiary treatment of sewage [which San Diego needs to do anyway, because EPA is getting tired of granting exemptions], (b) the pipeline, (c) percolation ponds. The outcome is 5,000 AF of new water PER YEAR. (I'll bet that at the end of the day they can get more storage than 5K AF.)

The Semitropic deal was just for storage space.

So, on the one hand, you get all the infrastructure for a guaranteed supply of 5,000 AF annually of new water with minimal additional power costs. On the other, you get storage space in a bank on the wrong side of the Tehachapis which only gets water when there is surplus water in the California Aqueduct. Highly unreliable and very expensive water, in other words.

Next time, compare like with like.

Damn those elected officials for not seeing the world the way you do! How dare they obey the wishes of their constituents and keep prices low!

KRT said...

I think you are confusing volume with flow and contributing to some general confusion.

An Acre-Ft is normally referred to in storage sense, while MGD (Million Gallons per Day not Miller Genuine Draft) is a flow rate you can count on to supply a population.

FYI 1 MG =~ 3 Acre-ft

Purchasing storage is like buying a bathtub ($200) NOT like filling it up with water ($0.02).

Another factor (in addition to the fact this is part of a treatment process for wastewater): Most storage is not covered. Since this project is covered and evaporation is minimal, this increases the efficiency of the storage system by quite a bit.

Don't dog us engineers! Water rates are equivalent to taxes in most politicians eyes. Try to increase the water rates and you will find some stiff opposition from the local pols (competition for the taxes not necessarily protection of their constituents).

David Zetland said...

Francis & krt -- good points. I was vague, and there's a huge difference between storage and yield.

Helix will spend $200million for a yield of 5TAFY (and some other stuff)

SDCWA spent $12million for a SPACE that can yield 3-9TAFY (10-30% yield on 30TAF storage). SDCWA still has to get the water ($$) and move it ($$$).

OTOH, my bottom line remains -- demand side controls (higher prices) would "deliver" that much water without need to increase storage.

You both think that voters tell politicians to keep prices down. Fine -- the politicians need to tell the voter that the tradeoff of low prices is less reliability.

(BTW, I love engineers; I just don't like throwing engineering solutions at problems that could be solved more easily with economics -- tertiary treatment mostly excepted.)

KRT said...

No problem- point taken on engineering vs price controls.
I'd love our water agencies to be better funded so they can perform preventative maintenance on by far the largest source of inefficiency- their distribution networks!

Nevertheless, these are bad examples for determining a $/gal cost of water because water yield is not the purpose these projects.

SDWCA is looking to provide storage to supply for peak demand, and this pricey hole is supplying water as a secondary benefit to wastewater treatment as a conservation effort.

I admit I don't read your blog often, but what are the measured effects of incremental rate increases? Say you increase rates by 10% does consumption go down 10%? Whats the curve look like?

David Zetland said...

I'm reading a paper right now about Santa Barbara in the 87-91 drought where urban residential demand dropped by 50%. Peak prices were 12 times pre-drought prices (other conservation factors were also in place...)

As a rule of thumb, I'd say that elasticity (what you're talking about) is about -1.00 for outdoor irrigation and -0.2 for indoor use in SFRs, so a 10% increase (given 50% of water is for irrigation) would cut overall demand by 6%.