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Blog - Charles River Watershed Association

Water Transformation Part 11: Thoughts About Finances and Economics

Posted by Robert Zimmerman

5/7/15 4:15 PM


PREVIOUS POST: Water Transformation Part 10 - The Benefits

The transformation of water infrastructure I’ve laid out over my first 10 blogs is unique. Moving to distributed wastewater treatment, restored streams, and green infrastructure is only being actively investigated by CRWA.

The question from those who understand our premise and the design engineering we’re doing is “how much is this going to cost.” It is, of course, the key question.

We’ve been working on answering it for some time now. Like all such questions, it comes down to how one looks at the numbers, but let me set out first how we’re investigating the answer. There is no simple fix to the environmental issues that CRWA is endeavoring to address. I have laid out our guiding principal of restoring nature. I have introduced distributed wastewater treatment/energy generation plants as well as green infrastructure and restored streams. This and the next blogs will discuss some of the additional tools we have in our toolbox to make these projects implementable in our political climate and with our budget realities.

 reclaimed_water

A landscape irrigated by reclaimed water

Our Smart Sewer distributed wastewater treatment plants are one capital cost center and income producer. Each must pay for itself over a 20 year bond cycle. We are modeling several financing scenarios for two conceptual plants, from zero percent government loan-funded, publicly-owned plants, to privately owned and funded plants. Natural Systems Utilities, our plant design engineering partner, uses its proprietary financial model to test a myriad of scenarios. The model also accounts for varying income projections, from things like the value of reclaimed water at sale, to the income from electric generation or compressed natural gas, to the income from the sale of thermal energy to heat and cool buildings.

To fund the green infrastructure and restored streams, we are looking at a number of financing options. CRWA has created a stormwater trading website I will discuss in more detail in my next post. The site promotes the sale of credits from those who can capture and treat stormwater cheaply to reduce phosphorus to those regulated entities who have poor soils and would, if forced to treat stormwater runoff on their properties, pay a premium. The website allows property owners to choose between 10 stormwater controls, and then based on their property conditions (soils, slope, aesthetics) determine the cost for remediation. The software then recommends to the owner whether a trade might be a better option.

We are also looking at stormwater utilities, as well as some sort of utility/trading hybrid.

All of our work is being reviewed by Industrial Economics (IEc) of Cambridge. In the coming months, IEcwill provide a systemic comparison of our distributed approach, its costs and benefits, versus the continued operation of the existing centralized sewer system.

 

By its nature, however, the discussion of finances and economics will get into some speculation. Until now, I’ve avoided speculation and highlighted what CRWA has analyzed and tested. For instance, our trading program is not finished. The website at this juncture is more a proof of concept, and though we have a roadmap for completion, my discussion of how we anticipate it might work is pure speculation, particularly until trading rules are established by regulators.

As for IEc’s economic valuation, many distributed plants will cost more than staying the course. The questions are whether the new income the plants generate offset that additional cost, and whether the environmental benefits, like flood control and pollutant removal, are worth the investment in restored rivers and streams.

It’s all pretty interesting.

 

NEXT POST: Water Transformation Part 12 - Paying for Green Infrastructure and  Restored Streams

Topics: Charles River, Green Infrastructure, Smart Sewering, Distributed Wastewater, Blue Cities, Water Transformation Series, Low Impact Development

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About Charles River Watershed Association:

One of the country's oldest watershed organizations, Charles River Watershed Association (CRWA) was formed in 1965 in response to public concern about the declining condition of the Charles. Since its earliest days of advocacy, CRWA has figured prominently in major clean-up and watershed protection efforts, working with government officials and citizen groups from 35 Massachusetts watershed towns from Hopkinton to Boston. Initiatives over the last fifty years have dramatically improved the quality of water in the watershed and fundamentally changed approaches to water resource management.