Economies of size in municipal water treatment technologies: Texas lower Rio Grande Valley

Abstract

As the U.S. population continues to increase, planning for future water quantity and quality needs is important. Historically, many municipalities have relied heavily on surface water as their major source of drinking water, but recently, technological advancements have improved the economic viability of reverse-osmosis (RO) desalination of brackish-groundwater as a potable water source. Brackish-groundwater may be an alternative water source that provides municipalities an opportunity to hedge against droughts, political shortfalls, and protection from potential surface-water contamination. This research specifically focuses on investigating economies of size for conventional surface-water treatment and brackish-groundwater desalination by using results from four water treatment facilities in the Texas Lower Rio Grande Valley (LRGV). The methodology and results can have direct implications on future water planning. Economic and financial life-cycle costs were estimated for a "small"- conventional-surface water facility (2.0 million gallons per day (mgd) Olmito facility) and a "small"-brackish-groundwater desalination facility (1.13 mgd La Sara facility). Prior analyses were modified to determine similar costs for a "medium"-sized conventional surface-water facility (8.25 mgd McAllen Northwest facility) and a "medium"-sized brackish-groundwater desalination facility (7.5 mgd Southmost facility). The life-cycle costs of the "small" Olmito facility are compared to the life-cycle costs of the "medium" Northwest facility and the life-cycle costs of the "small" La Sara facility are compared against the life-cycle costs of the "medium" Southmost facility to determine the existence of economies of size. This research was facilitated by the use of the CITY H20 ECONOMICS© and the DESAL ECONOMICS© Excel® spreadsheet models previously developed by Texas AgriLife Research and Texas AgriLife Extension Service agricultural economists. Although the results are applicable to the Texas LRGV, economies of size are apparent in conventional surface-water treatment and constant economies of size are evident in brackish-groundwater desalination. This research also concludes that RO desalination of brackish-groundwater is economically competitive with conventional surface-water treatment in this region.