A framework for making economic evaluations of control improvement projects in urban drainage systems
by Sadie McEvoy
A framework has been developed for making economic evaluations of control improvement projects (CIPs) in urban drainage systems. The framework uses a modified cost benefit analysis approach to combine best economic practices with pragmatic limitations on benefit valuation. The framework aims to standardize evaluations to ensure that projects are assessed correctly and produce useful information for further understanding. Foremost, the framework is a practical way of providing relevant information to advise decision makers on investments in CIPs.
Around the world, many cities with combined sewers are currently facing the need to improve their urban drainage systems to meet new water quality standards and address growing challenges from urbanization and climate change. Costly infrastructure expansions are the traditional way of increasing system capacity to reduce combined sewer overflows (CSOs). An alternative approach, however, is to better use the infrastructure that already exists.
Most urban drainage systems are controlled by structures and operational rules that do not optimize or integrate the sewer, wastewater treatment plant and surface waters. Using advanced control schemes to do this can improve system performance with less capital investment. As water managers begin considering control improvement as a way to reduce CSO emissions, these projects need to be evaluated and compared to conventional infrastructure solutions. Economic assessments play an important role in such processes, but these are not straightforward to make and there is no established standard. This thesis aims to provide a practical framework for making economic evaluations of CIPs in urban drainage systems, in order to inform decision makers.
A literature review was made to establish the present status of control applications in urban drainage systems, as well as current theories in economic valuation of water resources and project evaluation techniques. Eleven cases from North America, Europe and Japan were then studied to gain insight into how assessments are being made and projects are being implemented in practice.
The findings of the literature reviews indicate that the current lack of standards for evaluating CIPs has led to inconsistencies in how projects are assessed and the way that costs and performance results are reported. This makes it difficult to analyse and compare projects. One key problem is that, in most cases, control improvement is part of a wider project that includes elements of optimization, control and infrastructure expansion. The performance results and costs, however, are reported holistically, making the contribution of the control difficult to determine. Another problem is that the different starting points and control potential of projects are not made clear in the evaluations. This makes the results ambiguous and misleading.
In order be usable, the framework must conform to practical limitations. One significant constraint is the lack of a reliable way to value the benefits of CIPs in economic terms. Another constraint is a lack of motivation to make comprehensive economic assessments, since decision makers are mainly motivated to meet a regulatory standard and not to optimize their investment.
Finally, the framework must address the difference in the timing of investments for control and infrastructure projects, since the upfront costs associated with CIPs can be offputting.
The framework suggests a modified cost benefit analysis (CBA) approach to standardize economic evaluations in a practical way. The main features are:
1. Least cost analysis (LCA).
(a). A special case of CBA, in which benefits are not valued, because they are the same for every alternative. This is appropriate because regulation as the main driver of CIPs means that the performance (benefits) of all viable alternatives must be the same.
(b). This avoids the difficult task of valuing benefits in economic terms.
2. A two-step assessment.
(a). The purpose of the first step is to rationalize the upfront costs of investigating whether a control improvement option should be included in the project alternatives.
(b). The purpose of the second step is to compare project alternatives with comparable performance levels, using a least cost analysis.
3. A categorized and marginal approach.
(a). Three categories are identified in CIPs: optimization, control and capital improvement. The purpose of the categories is to isolate the costs and performance results attributable to the control aspects of a project.
(b). Five benchmark control levels are identified to measure the marginal performance gains for the incremental improvements in control. The purpose of the marginal approach is to minimize the bias in reported costs and results due to different starting points and control potential. The marginal approach may also help identify points of diminishing return (in performance results) for investment in control.
The framework offers a pragmatic standard for making economic evaluations of control improvement projects, in order to inform decision makers.
Student: Sadie McEvoy
Committee:
- Prof. dr. ir. N.C. van de Giesen
- Dr. ir. O.A.C. Hoes
- Dr.ir. P.E.R.M. van Leeuwen
- Dr. R.R.P. van Nooyen
- Dr.ir. J.S. Timmermans
- Ir. E. van Velzen
For further information please contact the section Water Management, +31 (0)15 278 1646
Email: e.g.rothfusz@tudelft.nl