Water Recycling Funding Program (WRFP)

ECONOMIC ANALYSIS TASK FORCE (EATF)

In 2002 the Governor convened the Recycled Water Task Force to examine how water recycling projects were funded by state and federal agencies and to make recommendations with the objective of promoting the use of recycled water. In June 2003, the Recycled Water Task Force published their findings in a report titled Water Recycling 2030 (Report). This report included a recommendation for the development of a uniform analytical method for economic analysis that could be used across funding agencies, and a recommendation to develop a mechanism for identifying equitable capital and operating funding schemes according to the beneficiaries based on allocation of the benefits and costs in the economic analysis.

In 2008 the State Water Resources Control Board (State Water Board) convened the Economic Analysis Task Force (EATF), to commence implementation of recommendations 5.1.1 and 5.2. The agencies represented on the EATF were the:

• State Water Resources Control Board
• California Department of Public Health
• California Department of Water Resources
• California Public Utilities Commission, and
• the US Bureau of Reclamation

The EATF employed University of California, Davis, staff to produce the guidance document and templates (available above). The Economic Analysis Guidance provides the theoretical background to the economic and financial analysis for water recycling projects and provides specific instructions on how to use the templates. The University also produced the Beneficiary Pays Analysis of Water Recycling Projects report that provides a recommended mechanism to allocate project capital and operating costs according to the benefits and costs developed in the economic analysis.

Resources

The following resource documents are available to view and download.

• Department of Water Resources
  • 2002 Recycled Water Task Force, Economics Work Group, Draft White Paper, Draft, California Department of Water Resources, State Water Resources Control Board, Department of Health Services, 18 November 2002.
  • California Department of Water Resources, Economic Analysis Guidelines, January 2008.
    • Main Report | Appendix A | Appendix B | Appendix C | Appendix D
  • Hoagland, Ray, Department of Water Resources, memorandum, Subject: Changing the Discount Rate, 29 October 1985
  • Recycled Water Task Force, Water Recycling 2030: Recommendations of California’s Recycled Water Task Force, California Department of Water Resources, Sacramento, June 2003, pp. 19, 47-50, 53, 60-61.
    • Excerpts | Full Report
• Department of Public Health
  • Evaluation of Cost Effectiveness for CDPH Drinking Water Funding Programs
• CALFED Bay-Delta Program
  • CALFED Bay-Delta Program, Economic Evaluation of Water Management Alternatives: Screening Analysis and Scenario Development, October 1999.
  • CALFED Bay-Delta Program, Water Use Efficiency Element, Final Report: Water Use Efficiency Comprehensive Evaluation, August 2006, Appendix 2D: Unit Cost Data and Assumptions, Appendix 2F: Regional and Statewide Marginal Costs, Stakeholder Comment Summary, Pacific Institute Comments.
• Federal
  • Hufschmidt, Maynard M., et al., The Interest Rate: Private and Social Rate Discount, from “Standards and criteria for formulating and evaluating Federal Water Resources Development - A report of Panel of Consultants to the Bureau of the Budget,” 1961.
  • Kitch, Harry E., Memorandum for Planning Community of Practice, Subject: Economic Guidance Memorandum, 07-01, Federal Interest Rates for Corps of Engineers Projects for Fiscal Year 2007, Department of the Army, U.S. Army Corps of Engineers, 8 November, 2006.
  • U. S. Code of Regulations, Title 18, Chapter VI, Part 704, Subpart E - Standards for Plan Formulation and Evaluation, Section 704.39 Discount Rate, 4-1-04 Edition, National Archives and Records Administration, 2004.
  • U. S. Code of Federal Regulations, Title 40, Appendix A to Subpart E of Part 35 - Cost-Effectiveness Analysis Guidelines, 7-1-06 Edition, National Archives and Records Administration, 2006.
  • U.S. Environmental Protection Agency and U.S. Agency for International Development, Guidelines for Water Reuse, EPA/625/R-04/108, Washington, D.C., September 2004, Chapter 6, Funding Water Reuse Systems.
    • Title and Table of Contents | Chapter 6
  • U. S. Water Resources Council, Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, 10 March 1983.
• California Urban Water Agencies and California Urban Water Conservation Council
  • Atwater, Richard, Frank Dryden, and Virginia Grebbien, Urban Water Recycling Feasibility Assessment Guidebook, Bookman-Edmonston Engineering, Inc, prepared for California Urban Water Agencies with assistance from WateReuse Association of California, September 1998, Section 3, Determining Cost-Effectiveness.
  • Barakat & Chamberlin, Inc., The Value of Water Supply Reliability: Results of a Contingent Valuation Survey of Residential Customers, California Urban Water Agencies, August 1994.
  • Barakat & Chamberlin, Inc., Summary, The Value of Water Supply Reliability: Results of a Contingent Valuation Survey of Residential Customers, California Urban Water Agencies, August 1994.
  • California Urban Water Conservation Council, Avoided Costs Project, “Framework for Analysis,” 7/19/04.
  • Chesnutt, Tom, and Gary Fiske, Development of Direct Utility Avoided Cost Methodology & Model
  • Coughlin, Katie, Calculation of the Environmental Benefits of Water Conservation BMP’s, presentation at CUWCC Workshops, 20-21 September 2006
  • Coughlin, Katie, et al., Valuing the Environmental Benefits of Urban Water Conservation: Final Report, prepared on behalf of California Urban Water Conservation Council, 27 March 2006.
  • CUWCC Environmental Benefits Model Operating Instructions Spreadsheet v5.0, [California Urban Water Conservation Council, March 2006.
  • Wade, William W., Julie A. Hewitt, and Matthew T. Nussbaum, Cost of Industrial Water Shortages, California Urban Water Agencies, November 1991.
• Pacific Institute for Studies in Development, Environment, and Security
  • Cooley, Heather, Peter H. Gleick, and Gary Wolff, Desalination, With a Grain of Salt: A California Perspective, Pacific Institute for Studies in Development, Environment, and Security, Oakland, June 2006.
    • Main Report |  Appendix D | Appendix F
  • Gleick, Peter, H. et al., Waste Not, Want Not: The Potential for Urban Water Conservation in California, Pacific Institute for Studies in Development, Environment, and Security, Oakland, November 2003.
  • Wolff, Gary, Recycled Water: Quantifying Some of Its Hidden Advantages, Pacific Institute, 9 March 2006, PowerPoint Presentation.
  • Wolff, Gary, Calculating Constant-Reliability Water Supply Unit Costs, 12 June. 2006
  • Wolff, Gary, and Steve Kasower, The Portfolio Approach to Water Supply: Some Examples and Guidance For Planners, Final Draft, 8 March 2006.

U.S. Bureau of Reclamation WaterSMART (Sustain and Manage America’s Resources for Tomorrow)

California faces an increasing set of water resource challenges. Aging infrastructure, rapid population growth, depletion of groundwater resources, impaired water quality associated with particular land uses and land covers, water needed for human and environmental uses, and climate variability and change, all play a role in determining the amount of fresh water available at any given place and time. These water issues are exacerbating the challenges facing traditional water management approaches which no longer meet today’s water management needs. The growing competition for water resources has driven the need for new water management strategies to aid water resource managers. The US Department of Interior, Bureau of Reclamation’s (USBR) WaterSMART program is working to achieve a sustainable water strategy to meet the Nation’s water needs. Go to the USBR WaterSMART Website.

Further Information

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(Updated 9/17/13)