5. Espacios recubridores 139
5.2. Grupo fundamental y espacios recubridores
A capital cost/NPV analysis provides a sense of whether an intervention is likely to make economic sense. Capital costs are the easiest costs to quantify. Costs of water supplied by the utility also can be calculated/estimated. If capital costs themselves exceed the value of the utility’s water not needed, then the intervention will not make sense unless other benefits are great. If the NPV exceeds an intervention’s capital cost then examination of operating, maintenance, and replacement costs is warranted.
However, as discussed in the Decision-Making Framework section above, many other factors also come into play, and the benefits of some may be indirect and possibly difficult to quantify. Possible indirect benefits include:
Rainwater harvesting systems could substantially lower stormwater runoff and the costs of its management.
Reliance on local groundwater could decrease EBMUD’s water treatment operating costs and capacity requirements.
Both rainwater and groundwater systems could decrease EBMUD’s need to search out and develop additional, more expensive water supply sources.
A more detailed discussion of some of the indirect, often difficult to quantify costs and benefits follows the NPV analysis.
The NPV analysis presented here is specific to the Oakland EcoBlock. Results could be very different in different climates, in utility situations where water pricing and supply adequacy are different, and at a different scale—for example, 1000 residents instead of 100.
Net Present Value Analysis
Estimated capital costs for the water systems considered were computed and compared with the estimated NPV of water saved or produced over the life of the system, using a discount rate of 1.5 percent. For all but the efficiency upgrades and greywater diversion, the team assumed a useful life of 30 years.
Two water value estimates were included. In the first, the price of water remains
constant over the 30-year period. In the second, water prices rise at an 8 percent annual rate—an increase that is within the range of price increases at many California utilities over the last several years (EBMUD 2017a; City of Sacramento 2017; City of Santa
Barbara 2017). Combined, these two assumptions provide reasonable bounds. The “year 0” value of water—$6.10/1000 gallons—equals EBMUD’s current base level volumetric charge for residential customers (EBMUD 2017b).
Results
The impacts of efficiency interventions are discussed first because they can
substantially decrease water demand and are often the most cost-effective interventions (Cooley and Phurisamban 2016a). Analyses of the all other interventions considered assume that effective efficiency interventions are in place.
The discount rate employed here, 1.5 percent per annum, is a rate currently applicable to green bonds. Industry analysts consider that with its investment-grade credit rating of Aa2, the City of Oakland could issue property-secured Green Municipal Bonds, backed by a CFD tax cash flow stream on the basis of an interest rates between 1.5 to
3.5 percent. That interest rate spread would change depending upon the credit-rating of different municipalities in California. This low rate maximizes the NPV of the water saved/produced. Rough estimates of NPVs for other discount rates can be calculated using Equation 2:
NPVx,y = NPV1.5%,y * Cx,y (Eq. 2)
where x is the discount rate, y is the number of years, and Cx,y is a constant. For lifetimes of 3, 15, or 30 years,
C3%,y = ~0.98, 0.9, or 0.8 C5%,y = ~0.95, 0.77, or 0.6 Efficiency
Table 4-4 summarizes the expected per capita indoor water use where highly water-efficient appliances are assumed to be in place. Current estimates of indoor use on the block are ~55 gpcd. The projected value of 29 gpcd represents a 45 percent demand reduction.
Table 4-4: Projected EcoBlock Indoor Water Use with Efficient Appliances Fixture Flow Rate Rate Units Duration Uses/day gpcd
Toilet(1) 0.80 g/flush - 5.0 4.0
Bathroom Faucet(2) 0.50 g/min 0.50 3.0 0.75
Bath Tub(3),(4),(5) 18 g/bath - 0.32 5.8
Showerhead(1) 0.70 g/min 7.8 0.69 3.8
Dishwasher(4) 1.7 g/cycle - 0.32 0.55
Kitchen Faucet(2) 0.50 g/min 7.8 1.0 3.9
Laundry(3) 7.0 g/cycle - 0.32 2.2
Leaks(6) 7.9 g/day - 1.0 7.9
Total 29
a gpcd: gallons per capita per day
Sources: 1 DeOreo 2016; 6 SFPUC 2017b 3 Heberger et al. 2014; 4 DeOreo et al. 2011; 5 Wilkes et al. 2005; 6 DeOreo et al.
2016
Table 4-5 provides an assessment of the net present value of these efficiency savings.
Note three things:
The NPV values are per person—in many residences at least some toilets, showers, dishwashers, and other facilities are shared.
For showers, dishwashers, and laundry, the $ Saved column includes the energy savings associated with the fact that less water is heated (EERE 2017).
The numbers do not include any subsidies provided by utilities, governments, or other entities.
Table 4-5. Efficiency Upgrades, Net Present Value
1 NPV discount rate = 3.5%. At 0%, the water price stays constant; at 8%, the water price increases 8%/year.
2 $ saved in 2017 at EBMUD rates; includes energy savings for dishwasher, laundry, and showerhead
Sources: a: Koeller & Company 2005; B: PG&E 2014; c: California Statewide Utility Codes and Program 2011; and d: NAHB 2007
Benefits are greater than costs for the faucet interventions, and probably for toilet and shower replacements (use by more than one person). Costs substantially exceed benefits for dishwasher and laundry replacements.
Current outdoor water use appears to be approaching what would be expected for a drought tolerant landscape with a highly efficient irrigation system. The team assumes that landscaping interventions would not be part of the interventions.
Other alternative water sources
Table 4-6 summarizes costs, water savings, and other issues associated with nine of the alternative water systems. For all analyses, it is assumed that water efficiency steps have been taken so that indoor water use is ~30 gpcd.
Currently it is not known what the residents’ desired outdoor water use is; it could be anywhere from 200,000 to 800,000 gallons per year. Our cost analyses assume
300,000 gallons per year, which is somewhat greater than current, possibly drought impacted, use. Costs for the two block-scale irrigation systems considered (sewage and groundwater) are essentially independent of how much water is produced. The NPVs are directly proportional to the amount of water produced, so calculating the value of water supplied for different irrigation quantities is straightforward. The rainwater irrigation assessments differ only in the amount of storage (1,000 or 10,000 gallons) at each residence.
Table 4-6: System Net Present Value Summary
Capital Annual Net Present Value
Cost Production Value water saved $,0002,3 O& M Regulatory Public
System Identifier $,000 ,000 gallons $,0001 0% 8% Costs4 Barriers4 Governance4 Acceptance5
Greywater Diversion GD $5.9 55 $0.3 $3.9 $7.0 1 1 1 1
Sewer Mining Irrigation SMI $1,240 300 $1.8 $34 $111 5 4 4 4
Groundwater Irrigation GWI $330 300 $1.8 $34 $111 1 2 2 1
Groundwater Potable GWP $350 1,500 $17 $310 $1,000 4 4 3 3
Rainwater Irrigation 10006 RWI $68 30 $0.18 $3.4 $11.1 1 1 1 1
Rainwater Irrigation 10,0006 RWI $189 300 $1.8 $34 $111 1 1 1 1
Rainwater Potable Private7 RWP-P $240 330 $2.0 $38 $122 3 2 2 3
Rainwater Potable Block7 RWP-B $860 330 $2.0 $38 $122 4 4 3 3
Rainwater DPR RWDPR $1,900 1,100 $30 $570 $1,840 5 5 5 5
1 Based on 2017 EBMUD prices / 1000 gallons: $11 for Groundwater Potable, $27 for Rainwater DPR, and $6.10 for all others; see text for details
2 Discount rate: 3.5%; useful life 15 years for greywater diversion; otherwise, 30 years
3 0% column assumes the water price stays constant; 8% assumes water price increases 8% annually
4 Scale 1 to 5. 1: inconsequential, 5: critical consideration
5 Scale 1 to 5. 1: well-accepted, 5: no acceptance
6 Assumes that all 27 residences put in a 1,000- or 10,000-gallon tank per residence
7 Assumes a total of 40,000 gallons of storage at the residences Source: UC Berkeley
The value of each unit of water produced depends on the system being considered. For all but two systems, block residents would continue to use (and pay for) the current potable water and wastewater infrastructure, and therefore the value of water saved is equal to EBMUD’s 2018 volume charge of $6.10 per thousand gallons. The value of the water produced by the groundwater for potable use system is $11 per thousand gallons because block residents would be disconnected from EBMUD’s potable water system and not subject to the monthly connection fee (currently $20.75 per month for single-family units). Residents would continue to use (and pay for) the wastewater infrastructure. If the rainwater-based DPR system were employed, the block would be completely
independent of both the water and wastewater infrastructure resulting in a water value of about $27 for a single-family unit.
The NPV analysis suggests that benefits from the greywater diversion—laundry to landscape, groundwater for potable use, and rainwater-based direct potable reuse (DPR) strategies could exceed capital costs. Of the options considered, greywater diversion would offset EBMUD supplies the least, but it is quite simple to apply (it is quite
possible that several of these systems already exist on the block). For Oakland residents the greywater diversion systems look even better since they can claim a $50 rebate, lowering capital costs by ~20 percent (EBMUD 2018a).
Though the groundwater for potable use system looks promising, the system would require metering, fee collection, water quality testing, and the formation of a utility. In addition, the block’s groundwater may exceed secondary drinking water standards (500 milligrams per liter) for total dissolved solids (TDS) (U.S. EPA 2017a). Secondary
standards deal with “nuisance” constituents. Waters with constituents that exceed the standards do not endanger health, but may affect aesthetics, such as taste, odor, and color. High salt (TDS) contents may give the water an unpalatable taste and thus be unacceptable to residents.
If water rates continue to rise rapidly the net present value of rainwater-based DPR could exceed the NPV of capital costs. However, just as for groundwater for potable use systems, there would be significant recurring expenditures (at least $50,000/year for O&M). In addition these systems are not currently permitted in California, and the block residents would not accept this option.
For all other systems shown in Table 4-6, capital costs alone appear to exceed the NPV of strict economic benefits. Indirect benefits, subsidies, or rebates (Oakland’s laundry-to-landscape rebate, for instance) may, in some cases, increase the benefit/cost ratio to a value greater than 1. Rainwater harvesting can provide stormwater benefits and can increase the sustainability and resilience of existing water supply systems. The city of Austin, Texas, will cover up to half the cost of a rainwater harvesting system (up to a maximum rebate of $5,000) (Austin Water 2018).
Though most of the systems evaluated do not appear to make economic sense for the EcoBlock, it is worth considering the following questions:
Could the block achieve zero net water?
Could the block go completely off the water grid?
Figure 4-9 and the ensuing discussion shows the potential of various combinations of efficiency interventions and one or more of the systems shown in Table 4-6 to decrease the block’s reliance on EBMUD. Given the uncertainty discussed above regarding outdoor use, its value is shown by the range 200,000 (solid orange) to 500,000 (dashed orange) gallons per year. The greywater diversion—laundry-to-landscape strategy can be a component of any of the six possibilities shown.
Figure 4-9: Block EBMUD Water Use for Various System Combinations
Source: UC Berkeley
A shows the effect of installing highly efficient appliances. The reduction,
approximately 900,000 gallons per year represents over one-third of residents’ current consumption.
In B, installation of highly efficient appliances is coupled with large-scale adoption of potable rainwater use (either through rainwater harvesting with treatment at individual residences, or through block-scale treatment). This reduces the EcoBlock’s annual EBMUD water use by an additional 330,000 gallons per year (1.2 million gallons per year in total).