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Cost Benefit Analysis of building desalination plant for Adelaide
Report prepared by
WU SZE MAN (1155398)
Introduction
The state government has decided to develop a $1.4 billon desalination plant in Port Stanvac in order to secure South Australian water Supply. The Adelaide Desalination Project will deliver up to 50 billion litres of water each year - about a quarter of Adelaide’s water supply. The plant will be expandable up to 100 billion litres a year. This will bring up a new three-tier pricing structure and the price will increase by 12.7 percent in real terms.
Approach to Evaluation
The report estimates the cost and benefits of the desalination plant for Adelaide. These estimated costs and benefits over the period will be presented in the form of net present value (NPV) which is after all costs and benefits have been discounted till the present and when NPV is greater than zero, the project is described as efficient.
Constraints and Alternatives
To set up a desalination plant in Port Stanvac, the main constraints are the technology used for the process of desalination since it is really energy intensive. Alternatives is that, banning the plan for the desalination plant and simply take water rationing as a control for water in South Australia.
Main Costs and Main Benefits
In this section, the major five costs and benefits will be identified respectively. For the costs, the cost to monitor discharge of highly concentrated saline solution is very necessary in order to prevent increasing level of salinity of the ocean. High energy use implies that a cost of energy use needed to be address, cost to monitor greenhouse gas emissions might be also one of the cost needed to aware of if renewable energy was not used in the project. Furthermore, the maintaining cost of a desalination plant is necessary and cannot be ignored. The cost of the implementation and management of the plant is also critical.
For the benefits, the plant will do nothing harmful to the environment and climate and the government might have avoided some monitoring costs for the environment. Second, it will secure water supply of South Australia even there is a decline of rain fall. The cost of buying water from other state can be avoided. The new pricing structure will also encourage people to use water wisely and this will bring benefit to the whole society. This plant will also bring a number of job opportunities which means there will be reduction in unemployment. The 12.7% increase in the price of water might bring revenues to the government.
|Costs |Value per year |
|Monitoring discharge of concentrated saline solution | |
|Energy used | |
|Monitoring green gas emission | |
|Maintenance | |
|Implementation and Management | |
|Labour | |
|Total | |
|Benefits | |
|Avoided cost : Buying water from other state | |
|Avoided cost: Environmental monitoring | |
|Increased job opportunities | |
|Revenue | |
|Promote awareness of saving water | |
|Total | |
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