Recycled water ‘willingness to pay’ study released

What are businesses willing to pay for wastewater in an area where both land and water use are well established? That’s what our IRP2 team explored for Perth’s Subiaco Wastewater Treatment Plant (WWTP).

Subiaco WWTP is one of the largest treatment plants in Western Australia, servicing a catchment of around 240,000 people that includes the Perth CBD. The Strategic Resource Precinct (SRP) concept re-imagines WWTPs as water resource recovery plants (WRRPs) that generate valuable resources, as opposed to dealing with waste, and encourages a land use planning approach that recognises and facilitates linkages between the plant and land users around the precinct. Despite the benefits it could provide, the SRP concept has not yet been thoroughly tested, and it’s this knowledge gap that our IRP2 team sought to address.

The IRP2 used contingent valuation and contingent behaviour methods, which are stated preference non-market valuation techniques, for estimating willingness to pay for recycled water (a non-market resource) among 20 non-residential organisations located in or near the odour buffer zone surrounding the Subiaco WWTP. The sample included local councils, educational institutions, golf courses and miscellaneous others that hold a groundwater extraction licence.

Using contingent valuation, the researchers assessed the non-market values associated with changes in the quality or quantity of a recycled water as a whole. And they used contingent behaviour to assess changes in environmental conditions (in this case, groundwater availability), rather than price.

The findings are now published in the final case study report, and we’ve summarised them here:

Three factors affect willingness to pay for recycled water at the Subiaco WWTP

The IRP2 team found three factors are affecting businesses willing to pay for recycled water at the location:

1. Land and water use are well established in the suburbs surrounding the SRP, and unlikely to undergo substantial change in the foreseeable future, irrespective of recycled water availability.
2. There is currently little opportunity to substitute recycled water for existing sources, because it is not appropriate for the uses to which the respondents are currently applying Scheme water.
3. Recycled water can’t offer a price advantage over groundwater (which costs $0.16 per kL, on average) unless subsidised.

The findings are not surprising in the context

Given the context, the results are not surprising:

1. There is low willingness-to-pay for recycled water among existing non-residential land users (no more than $0.08 per kL, on average).
2. This low willingness-to-pay is unlikely to justify the development of additional treatment and distribution infrastructure.

But the results offer valuable insights for other WWTPs

The Subiaco WWTP case study indicates that willingness-to-pay is closely linked to both the price and availability of groundwater. In most cases, organisations do not differentiate between stormwater and treated wastewater in terms of willingness-to-pay, provided quality and safety standards are met.

Some recommendations from the case study shed more light for WWTPs and SRPs too:

• Policymakers could consider compiling information from existing recycled water users about their experiences using it, although variability between locations might mean that some experiences might not be applicable at other sites.
• Providing this information to prospective buyers in an easily accessible and understandable format is likely to greatly enhance their willingness to consider using/paying for recycled water.
• Recycled water policy can incorporate captured stormwater in addition to treated wastewater, given the evidence suggests organisations view the two sources as functionally equivalent.
• Strategic planning is likely to be critical for creating SRPs, to ensure that land availability is enough to facilitate co-location of adjacent suitable land uses that can use wastewater treatment by-products; and that such land uses are compatible with odour buffer zone requirements.

As well as identifying their willingness-to-pay, survey respondents identified features they think are important for a successful water recycling scheme, including:

• reliability of supply and communication about interruptions
• consistency of water quality
• timely and accurate information about existing users’ experience over several years
• assistance to upgrade infrastructure
• a realistic price for recycled water.

Get a copy of the final case study report for more information.