EPA910/R-9G-011
&EPA
United States
Environmental Protection
Agency
Region 10
1200 Sixth Avenue
Seattle WA 98101
Alaska
Idaho
Oregon
Washington
Office of Water
Ground Water Protection Unit
November 1996
Economic Feasibility of
Selected Alternate Sources of
Drinking Water for the
Eastern Columbia Plateau
Aquifer System
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Economic Feasibility of Selected Alternative Sources of Drinking Water
for the Eastern Columbia Plateau Aquifer System
Elliot Rosenberg, Regional Economist
Calvin Terada, Environmental Protection Specialist
U.S. EPA Region 10
Seattle, Washington
910-R-96-011
November 15, 1996
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Executive Summary
This report was prepared by the Environmental Protection Agency (EPA) to
provide a response to specific public comments that were received during the public
participation phase of the Eastern Columbia Plateau Sole Source Aquifer System
petition review. During this phase, nine public comments were received suggesting
that there were other economically feasible alternative sources of drinking water in this
petitioned area. Specifically, five communities, near known Bureau of Reclamation
(BOR) Columbia Basin Irrigation Project (CBIP) canals, had claimed that water from the
BOR CBIP could be used as an economically feasible alternative source of drinking
water.
In addition, public comments were also received suggesting that drilling drinking
water wells to deeper areas within the aquifer system could provide an economically
feasible alternative source of drinking water. This analyses in this report were used to
determine if either alternative source, i.e., BOR CBIP water or drilling deeper wells,
could be considered economically feasible for the population in this region.
To assess the economic feasibility of both suggested alternatives, two separate
analyses were performed. A study was undertaken to determine the base costs
associated with the design and construction of a new surface water treatment system
as well as base costs for drilling deeper drinking water wells. These base costs were
then compared to the mean household income to determine the relative burden of
either of the suggested alternatives on each community.
While the analyses recognizes the need for additional costs in installing and/or
maintaining other drinking water treatment components, such as transmission piping,
distribution system upgrades, and other forms of treatment technology, these additional
costs were not included into the final economic analysis. In addition, this analysis also
does not incorporate the costs that would be associated with the design and
construction of a winter water storage system and/or any operating and maintenance
(O&M) costs that would be associated with the treatment system. Therefore it should
be recognized that the true total costs associated with the use of BOR CBIP water for
drinking water would be substantially greater than the base cost that will be determined
by this analysis.
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Findings
Upon the determination of the base costs for either alternative, the costs were
compared to the mean household income to determine the relative burden to undertake
such a project. A threshold level of 0.6% of each community's mean household income
was used to determine the economic feasibility for the alternative sources. That is, if
these costs exceeded the 0.6% threshold level figure for a community, then the source
would be considered by EPA to be economically infeasible.
The analyses found that the annualized capital costs, i.e. the base costs, for the
surface water treatment system for each community exceeded the 0.6% mean
household income threshold, as shown in Table 1. Therefore, the proposal as applied
to each community is considered to be economically infeasible.
Table 1
Economic Feasibility of Using Columbia Basin Irrigation Project Water as an
Alternative Source of Drinking Water
(Summarized from Table 4)
Community
Coulee City
Moses Lake
Othello
Soap Lake
Warden
MINIMUM
Annualized Cost per
Household
($)
542
203
496
503
492
0.6% of Mean
Household Income (MHI)
($)
135
165
169
118
141
Exceeds 0.6% of
MHI
YES
YES
YES
YES
YES
Economically
Feasible
NO
NO
NO
NO
NO
An analysis was also performed to determine that economic feasibility of drilling
a deeper well as an alternative source of drinking water. Using 150 feet as an average
depth for a deep private water supply well in the Eastern Columbia Plateau area, the
total average cost (excluding O&M) for drilling a private well was $3,585 per well per
household. When comparing this cost to the 0.6% threshold of mean household
income as shown in Table 1, it can be seen that this alternative approach is also
economically infeasible (see Table 5 ).
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Introduction
During the public participation phase of the Environmental Protection Agency
(EPA) Eastern Columbia Plateau Sole Source Aquifer System petition review, public
comments were received suggesting that there were other economically feasible
alternative sources of drinking water in the Eastern Columbia Plateau area. During this
phase, nine specific comments were received from locally elected community
representatives claiming that water from the Bureau of Reclamation (BOR) Columbia
Basin Irrigation Project (CBIP) could be used as an economically feasible alternative
source of drinking water.
In addition, public comments were also received suggesting that drilling drinking
water wells to deeper areas within the aquifer system could also provide an
economically feasible alternative source of drinking water. An analysis was performed
to determine if such alternative sources, i.e., BOR CBIP water or drilling deeper wells,
could be considered economically feasible for the population in this region.
In conducting the economic study of using water from the BOR CBIP or drilling to
deeper aquifers, two separate analyses were performed to determine'the minimum or
base costs for the suggested alternatives.1 For example, in the case of a surface water
treatment system, the capital costs reflecting the construction of a filtration and
disinfection system (which is required by regulation) is used as the base cost
necessary in converting from a ground water to a surface water source. Similarly,
specified costs of those activities related to drilling of the water well would be the base
costs in modifying the existing ground water source. After deriving the base costs,
analyses were performed to compare the mean household income thresholds to the
base costs in order to determine the relative economic burden of either of the
suggested alternatives on the respective communities.
Based on the results of the analyses, EPA will be able to determine whether the
suggested alternatives could represent an economically feasible source of drinking
water for the population in the Eastern Columbia Plateau area.
"Base costs" represent only those capital costs noted herein and not all of the capital or any of the O&M
costs necessary for the completion and the ongoing activity of that project. Accordingly, the base costs
reflect a minimum though not complete figure for that project - and therefore, the total dollar amount
required for that project has to be greater than the base cost.
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Evaluation of Alternative 1: Using Water from the BOR CBIP
The first step in evaluating the alternative of using water from the BOR CBIP
was to select the relevant communities. Selection of a community was based on (1)
submittal of public comments specifically referring to the use of BOR CBIP water as an
economically feasible source of drinking water and (2), whether the community was
within reasonable proximity to a BOR CBIP canal. Of the nine communities that
submitted specific comments, five of the communities met both criteria: Coulee City,
Moses Lake, Othello, Soap Lake, and Warden. The study assumed that these
communities were within a reasonable distance to a BOR CBIP canal and that
transmission system costs did not substantially add to the total capital costs of the
proposal.
The four remaining communities that did submit specific comments but were not
included in this study are Creston, Oakesdale, Mattawa, and Ritzville. These
communities were not included in the study since they are considerably further from a
BOR CBIP canal and accordingly, the economic burden of constructing a surface water
treatment system would be compounded by the installation of a lengthy transmission
system necessary to supply the community with enough water from the BOR CBIP
The second step in determining the economic feasibility of using water from the
BOR CBIP or drilling deeper drinking water wells is to develop a method of analysis,
which may include a series of processes and the development of a model, to determine
the base costs. In the case of developing a surface water treatment facility the
processes involved in the analysis included defining relevant terms and conditions,
making appropriate assumptions, development of a conceptual model with a logical
flow of events whereby the analysis proceeds or ends based on the response, and data
calculation and interpretation.
Terms and Definitions
Communities: Refers to those cities that were selected based on two criteria: (1) a city
must have claimed that water from the BOR CBIP could be used as an economically
feasible alternative source of drinking water and (2) must be located near an irrigation
canal. Those cities include: Coulee City, Moses Lake, Othello, Soap Lake and
Warden. Cities that did not meet the criteria were: Oakesdale, Ritzville, Creston and
Mattawa.
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Irrigation Water: Is that water which originates from the Columbia River which has
been allocated by the United States Congress to the U.S. Bureau of Reclamation for
use in the Columbia Basin Irrigation Project. Water for the project comes from Lake
Roosevelt, the reservoir formed behind the Grand Coulee Dam, which is then pumped
to Banks Lake. Water from Banks Lake is used to flow into the Main Canal which is
then diverted into the East Low Canal and West Canal. This water is allowed to flow,
from North to South, through a series of lined and unlined canals and wasteways into
the Potholes Reservoir. This large reservoir then provides irrigation water for the lower
half of the CBIP which eventually empties back into the Columbia River near Pasco,
Washington.
Wells: Private drinking water wells which could be drilled to provide an alternative
source of drinking water.
Assumptions
In approaching this analysis the following assumptions were made:
(a) Institutional or legal conditions are not an impediment to accessing irrigated
water, [e.g., Section 9 (c) of the Reclamation Project Act of 1939 authorizes the
Secretary of the Interior to enter into contracts to furnish water for municipal
water supply or miscellaneous purposes.]
(b) Irrigation water is available to each designated community within a reasonable
distance.
(c) Irrigation water is available to each designated community on a year-round
basis.
(d) Quality of the irrigation water is acceptable through standard treatment
techniques and considered to be a source of drinking water.
(e) In addition to the capital costs for water treatment facilities identified for this
analysis, the following are examples of additional costs that have been identified
but not quantified and therefore not included in the base cost calculations:
(1) Transmission System - capital and O&M costs
(2) Water Storage System - capital and O&M costs
(3) Surface Water Treatment System - O&M costs
(4) Rights-of-way - capital costs
(5) Relocation of Utilities - capital costs
(6) Land - capital costs
(7) Utilities - O&M cost
(8) Labor - O&M cost
(9) Consulting fees
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The Model (Chart 1)
A model was developed in order to identify those processes or steps that are
essential to analyzing the economic feasibility of using irrigation water as alternative
source of drinking water. These process elements take a progressive approach
whereby each succeeding step builds on the prior step. Each step is phrased as a
question so that an affirmative answer would continue the process to the next step. If a
negative answer were encountered (except Step 4 and 5) then the analysis would not
continue, indicating that the proposal was not economically feasible. The following is a
description of each step used in the model.
Beginning - Irrigation Water
In order to commence the modeling process, it was necessary to first define the
term "irrigation water" EPA has used the definition provided above.
Step 1 - Year-round Supply?
While each community requires a year-round supply of drinking water, the study
could not presumptively assume that an adequate supply of irrigation water was
available to each community. This step involves determining if each community would
have access to a year-round source of water.
Under current practices irrigation water is available only during the agricultural
"growing season" which runs from mid-March though the end of October each year.
Those communities that would be dependent on this water source would therefore only
have drinking water during the growing season and would not have access to an
available supply between the months of November through April, i.e., the non-growing
period. The irrigation canals that would be accessed as the source of water for each
community are shown in Table 2.
Since irrigation water is only provided during the growing season, each
community would need to ensure a method of water storage in order to have an
available supply of drinking water during the non-growing period. The size of each
water storage system would be based on that community's consumption of drinking
water during the non-growing period plus being able to provide enough additional
storage reserves to allow for unforseen emergencies. EPA did not believe it
appropriate to identify the type of construction for each method of storage, since there
can be considerable variablity in design which is contingent upon a variety of
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Chart 1
Model Used to Determine Economic Feasibility of Using Irrigation Water as an
Alternative Source of Drinking Water
Mandatory
Minimum
Treatment
OK?
! Irrigation
I water can be
! usatfbythe
• liBornmunrty
System Cost
Is if economically
feasible?
YJS
Yes
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environmental, climatic, and geological conditions. Therefore, while EPA has assumed
that each community would have to build and maintain an adequate storage system,
the capital and O&M costs that would be associated with these storage mechanisms
will not be quantified [see Assumption (e)(2)]. These costs must be recognized as
being additional to those base costs identified in the study.
Step 2 - Adequate Flow?
As mentioned in Step 1, each community must ensure that an adequate quantity,
i.e. flow, of irrigation water is available to provide a year-round source of drinking
water. Since irrigation water is first allocated for agricultural use, the communities must
ensure that adequate residual flows can be maintained by the BOR CBIP to provide
sufficient water for both storage and immediate drinking water use. From data that was
provided by the BOR, the average flows for the West and East Low Canals indicate
that adequate water flow is available to satisfy the drinking water consumption and
storage needs of the community as well as the agricultural mandates of the CBIP
Table 2
Selected Communities and Access Sites for Irrigation water
Community
City Coulee
Moses Lake
Othello
Soap Lake
Warden
Canal
Main Canal
East Low Canal
Potholes Canal
West Canal
East Low Canal
Step 3 - Adequate Quality?
One assumption of the model requires that the quality of the irrigation water
meet and/or exceed the quality of the water that is found at the Columbia River. It is
important for this assumption to hold in order to further assume that standard filtration
and disinfection would be the only treatment requirements that would be needed by the
community. For the majority of those communities that are above the Potholes
Reservoir, the assumption is that standard filtration and disinfection is all that is
required. The only exception is for the those communities that are downstream of the
Potholes Reservoir. The quality of the irrigation water that flows through the lower
8
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CBIP area has been characterized by the BOR to contain a variety of pesticides,
nutrients, and other contaminants that are anthropogenic in nature. Due to this fact,
those downstream communities, such as the City of Othello, would require an
additional source of treatment; in this case the use of a Granular Activated Carbon
(GAG) filtering system.
Step 4 - Minimum Treatment Needed?
Based on the assumption of the quality of the irrigation water being accessed as
just mentioned in Step 3, standard filtration and disinfection has been assumed as the
baseline treatment technology that would be needed for the communities in this study.
With this step answered in the affirmative, it then becomes necessary to determine the
capital costs for a water treatment plant.
As shown in Table 4, column h, capital costs were calculated for a surface water
filtration plant appropriately sized for each community. These costs are based on
EPA's 1995 Drinking Water Infrastructure Needs Survey2 ("Needs Survey"). The
specific type of filtration system was not specified. The method used for determining
the capital cost of a surface water treatment system is based on an equation already
provided in the Needs Survey.3 In order to perform the necessary calculations, the
user must first determine the quantity of water in millions of gallon per day (MGD) and
then insert the MGD figure into the equation. Capital costs were similarly calculated for
disinfection of the water (Table 4, col. i).4
To calculate the MGD figure for each community, it is necessary to have either
the population (Table 4, col. b) or number of customers (col. d) for each community and
then multiply that figure by the maximum water use per customer (col. e). The result is
gallons per day (gpd) for each customer (col. f) which is then divided by one million to
get Millions of Gallons per Day (MGD) (see col. g). The MGD figure is then substituted
for "x" in the equation.
Step 5 - Additional Treatment Expense?
For those communities that would receive irrigation water from the Potholes
Reservoir, an additional form of filtration would be necessary in order to properly treat
2 U.S. Environmental Protection Agency. Nov. 1995. 7995 Drinking Water Infrastructure Needs Survey:
Estimating the Cost of Infrastructure.
3 Ibid. Water Treatment Cost Curve - Install or Replace Filtration Plan - Equation 23. Also see Notes to
Table 3, Column h.
4 Ibid. Water Treatment Cost Curve - Disinfection - Equation 21. Also see NOTES TO TABLE 4, column i
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the irrigation water for human consumption. As mentioned above, the irrigation water
that flows from the Potholes Reservoir contains a variety of pesticides, nutrients, and
other anthropogenetic contaminants that could pose a human health risk if the water
were to be treated just using the standard filtration and disinfection techniques. In this
case, the community of Othello would need to use a GAC filter system to reduce the
contaminants that would be found after undergoing standard surface water treatment.
This requirement for an additional water treatment system increases the overall capital
costs.
Again referring to the Needs Survey, the Othello MGD figure of 2.73 (Table 4,
col. g) was substituted for "x" in the equation used to calculate the capital cost for
disinfection of the irrigation water.5 The capital cost for a GAC filter system is
estimated to be $2,506,209.
Step 6 - System Costs: Is It Economically Feasible?.
At this point, the analysis requires that the annualized cost per household be
determined. In looking at Table 4 this was done by:
(1) Summing all the capital costs by community (cols, h + i +j).
(2) Calculating an annualized cost per community. For this calculation
the assumption was made that capital costs would be financed through a
municipal bond issue where the costs of the bond issue are passed on to
each customer. The term of this bond issue is ten (10) years and
interest is six percent (6.0%), compounded monthly. Principle is that
amount shown in col. k, i.e. the Total Capital Base Costs.
(3) Once the annualized cost per community is calculated, that amount
is then divided by the number of customers for that community
(Table 4, col. d) that final amount is the MINIMUM Annualized Cost per
Household (col. I).
The reason for calculating the (MINIMUM) Annualized Cost per Household is to
provide a basis for comparing this to the selected 0.6% threshold figure of average
household income to be used as an economic feasibility test. Specifically, the test that
is used for determining the economic feasibility of a proposed drinking water system is
to compare that proposal's annual system costs to see if these costs exceed a pre-
selected percentage (i.e. 0.6%) level of the mean household income for that area in
order to determine the economic impact to that community's household income,6 and
Ibid. Water Treatment Cost Curve - Granular Activated Carbon - Equation 25. Also see NOTES TO
TABLE 4, column j
See Appendix A.
10
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therefore act as a measure for determining the economic feasibility of that proposal.
Now that the annualized system cost calculations completed, Mean Household
Income data was obtained from the U.S. Bureau of the Census for each community
(Table 4, col. m), and then 0.6% of that mean household income figure calculated
(Table 4, column o.)
With both the annualized system costs and the threshold level calculations now
available, all that is left is to compare the annualized system costs to the respective
threshold figure. The results of the comparison are shown in Table 4, col. p. For each
community the minimum annualized cost per household exceeded the 0.6% threshold
figure of mean household income for that community.
The implication from this comparison is that for each community the use of
irrigation water as a primary drinking water source would place an unusual economic
burden on that community and therefore, for each community referenced this drinking
water source is not economically feasible.
Evaluation of Alternative 2: Drilling to Deeper Aquifer Depths - see Table 5
Similar to evaluating Alternative 1, the first step in evaluating the economic
feasibility of drilling deeper drinking water wells is to select several communities and/or
a geographic population base for determining the base costs.
The second step in this evaluation is the development of a methodology for
determining the economic feasibility for drilling deeper drinking water wells. For this
evaluation a survey was conducted of well drilling companies to determine the base
capital costs. The base capital costs were found to include the drilling service (per
linear foot) for a deeper well, any necessary permits for well drilling, and materials or
well drilling supplies. O&M costs were not included. Based on the data that was
collected, an analysis was performed to determine the economic feasibility of drilling
deeper drinking water wells.
From survey data of the Pasco/Tri-Cities and Moses Lake areas, average costs
for drilling one well were:
11
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Table 3
Materials/Permit/Service •
Drilling and casing (to 150 ft.)
Drive shoe and surface seal
Department of Ecology Permit
Total
Cost
$3,375
$ 110
$ 100
$3,585
Before an evaluation could be performed, several assumptions were made
regarding the economic analysis. It was assumed that one well serves one residence
or household and that the base costs are applied equally to each household in every
community since the range of costs for each item did not vary widely across the
geographic areas surveyed. It was further assumed that this would be a one time cost
to each user.
Upon the determination of the base costs, the cost per household is therefore
the MINIMUM Total Cost to Drill a Well shown in Table 5, col. m. This is the minimum
though not total cost since annual operating and maintenance costs were not factored
in.
Again, the Minimum Total Cost (col. m) is compared to the 0.6% threshold
figures in column o in order to determine if implementing these wells would provide an
unusual economic burden on users; the answers are shown in column q. For all
communities referenced the total base costs far exceeded the 0.6% threshold level of
mean household income.
Therefore, based on this analysis it is not economically feasible to use deep
wells as a proposed drinking water source (see column r).
12
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Table 4
Using water from the Bureau of Reclamation - Columbia Basin Irrigation Project
as an Economically Feasible Alternative Source of Drinking Water:
Comparison of a Community's Minimum Annualized Cost per Household
to Mean Household Income Threshold Levels
for Determining Economic Feasibility
[b]
[c)
[9]
[h]
[n]
[Pi
[q]
Number of
Customers
Average (Households) Maximum
Population Household per Community Water Use
1.250
Community
Coulee City
Moses Lake
Othello
Soap Lake
Warden
(.1392)
598
15.342
4,640
1 270
1,685
Size
28
28
28
28
28
feme]
214
5.479
1.657
454
602
267.500
543 (gpcd) 8,330,706 [b]x[e)
1,647 2.729,079
1 904 864 416
2140 est 1,288280
MOD
0.27
833
2.73-
086
1 29
Capital Cost to
Install Water
Filtration Plant
828.324
7,968,930
3,492,207
1.625,923
2,109.599
Capital Cost
for
Disinfection
46,015
415,719
203,142
96806
1 25 574
Capital Cost
for Granular
Activated Carbon
CS)
n.a
n.a
2.506.209
na
n a
Total
Capital
Base Costs
&
874,339
8,384.649
6.201,558
1.722,729
2.235.173
MINIMUM
Annualized
Cost per
Household
Ul
542
203
496
503
492
Mean
Household
Income
MHI -1989
Q)
22,429
27,569
28,113
19.589
23,511
0.4% of
MHI
(col. mj
m
90
110
112
78
94
0.6% of
MHI
(col. m)
W
135
165
169
118
141
Annualized
Cost Exceeds
0.6% of MHI?
col I > col o
Yes
Yes
Yes
Yes
Yes
Is Proposal
Economically
Feasible?
No
No
No
No
No
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NOTES TO TABLE 4
Column
b Population. For all cities except Moses Lake the 1992 population figure was
used. Source: Fox, James R. and C. Hodgkin. 1995 Washington State Almanac
- An Economic and Demographic Overview of Counties and Cities, 9th Edition.
p.118.
For Moses Lake the most representative population figure with respect to
drinking water usage was for 1991. Source: Washington State Dept. of Health,
Div. of Drinking Water.
c Average Household Size. Source: Washington State Dept. of Health, Div. of
Drinking Water.
d Number of Customers Per Community. This was calculated by taking the
Population figure from column b and dividing that figure by 2.8, i.e. the Average
Household Size (column c).
e Maximum Water Use, gpd/customer. Source: Washington State Dept. of
Health, Div. of Drinking Water.
f Total gpd (gallons per day). For each community the total gpd is calculated by
taking the number of households per community (co'i imn d) and multiplying that
figure by Maximum Water Use, i.e. gpd/customer (column e).
g MGD - Millions of Gallons per Day. This is calculated by dividing the Total gpd
(column f) by 1 ,000,000.
h Capital Cost to Install Water Filtration Plant. Source: U.S. EPA, Office of
Water. Nov. 1995. 1995 Water Infrastructure Needs Survey - Estimating the
Cost of Infrastructure. Equation 23 and p. 2. The equation used for assigning
costs to all system sizes is:
Cost = 10(6'262187 + 0'632472*|0910(X) + 0'079027*|0910(X)A2>>
where: x = Treatment capacity in millions of gallons
per day (from column [g])
14
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i Capital Cost for Disinfection. Source: U.S. EPA, Office of Water. 1995 Water
Infrastructure Needs Survey. Equation 21 and p. 1 . The equation used for
assigning costs to all system sizes is:
Cost = -|0(5'027896 + 0'641823*|0910
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m Mean Household Income -1989. Source: U.S. Census Bureau.
n 0.4% of Mean Household Income.}
o 0.6% of Mean Household Income.} Source: U.S. Environmental Protection
Agency. 1981. Sole Source Aquifer Designation: Petitioner Guidance. EPA
440/6-87-003. p. 13.
In EPA's Petitioner Guidance it states that after determining the annual system
costs to a typical user, "...if this cost exceeds 0.4 to 0.6% of the mean household
income in the area, use of the sources can be considered to be economically
infeasible."(p.13) While Table 4 shows both the 0.4% and 0.6% values
(columns n and o, respectively) of Mean Household Income for illustrative
purposes, as the higher of this range the 0.6% level becomes the threshold
level; that is, if any proposed system exceeded the 0.6% threshold level it was
deemed to be economically infeasible. The comparison is then to see if the
MINIMUM Annualized Cost per Household for that proposed system (column I)
exceeds the 0.6% threshold level that community as shown in column o. The
answer is shown in column p - for every community the answer is "YES".
q Is This Proposal Economically Feasible? The answer for all communities is
"NO"
16
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Table 5
Drilling to Deeper Aquifers:
Comparison of a Community's Minimum Annualized Cost per Household
to Mean Household Income Threshold Levels
for Determining Economic Feasibility
[HI
[m]
[n]
[o]
[p]
[q]
Community
Coulee City
Moses Lake
Othello
Soap Lake
Warden
Population
(1992)
598
15.342
4.640
1.270
1,685
Average
Household
Size
28
28
28
28
28
Number of
Customers
(Households)
per Community
[b]/lc]
214
5.479
1.657
454
602
Maximum
Water Use
Caed/cusi)
1.250
543 (gpcd)
1,647
1,904
2140 est
gpd
Hlxfe]
267,500
8.330.706 [b]x[e]
2.729,079
864.416
1,288.280
MOD
027
8.33
273
086
1 29
Drilling
S.Casing
Avg Cost
per foot
S)
2250
2250
2250
2250
2250
Average
Drilling
Depth
CD
150
150
150
150
150
Avg Cost
ONLY
to Drill
a Well
(?)
3.375
3.375
3,375
3,375
3375
Drive Shoe &
Surface Seal
Avg Flat Fee
($)
110
110
110
110
110
DOE
Permit
(S)
100
100
100
100
100
MINIMUM
Total Cost
to Drill a Well
(U1 + W + P1)
IS
3,585.00
3,585.00
3,585.00
3,585.00
3,585.00
Mean
Household
Income
MHI-1989
SI
22.429
27,569
28.113
19,589
23,511
0.4% of
MHI
(col.n)
SI
90
110
112
78
94
0.6% of
MHI
(col. n)
UU
135
165
169
118
141
Well Drilling
Exceeds
0.6% of MHI?
col. m > col. p
Yes
Yes
Yes
Yes
Yes
Is This Proposal
Economically
Feasible?
No
No
No
No
No
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NOTES TO TABLE 5
Column
b thru g see NOTES TO TABLE 4.
h Drilling & Casing/Average Cost per foot. Based on a telephone survey of
four (4) drilling companies in the Moses Lake/Pasco area. The costs for drilling
and casings ranged from $20.00 to $25.00 per foot; average cost is $22.50 per
foot.
i Average Drilling Depth. The survey indicated that a typical depth would range
from 130 feet to 170 feet; average depth is 150 feet.
j Average Cost ONLY to Drill a (150 foot) Well. This calculation takes the
average cost per foot for drilling and casing (column h $22.50) multiplied by the
average drilling depth of 150 feet (column i), equals $3,375.
k Drive Shoe & Surface Seal Average Flat Fee. Based on telephone survey of
drilling companies; average fee of $110.
I Department of Ecology Permit. Based on telephone survey of drilling
companies. This is a flat fee of $100.
m MINIMUM Total Cost to Drill a Well. The figure of $3,585 is constant for all
communities and is calculated by adding columns j ($3,375) + k ($110) + I
($100).
The assumption here is that this is a one-time cost to the household. If we were
to assume that this cost would be personally financed by the household over five
years at say 12%, the annual cost to the household would still be close to
$1,000 per year, which still exceeds the 0.6% threshold level in column [p]..
n thru q see NOTES TO TABLE 4 for corresponding column explanations,
i.e. col. n, Table 5 corresponds to column m of Table 4; column o to column
n; column p to column o; and column q to column p, respectively.
18
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Is This Proposal Economically Feasible? Since the purpose of the economic
feasibility test is to see if the proposed system costs do not exceed the 0.6%
threshold level of column p, and we see that column q indicates that for all
communities the annualized costs do exceed the 0.6% threshold level, then for
each community the answer "NO"; the proposed system is not economically
feasible.
19
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Appendix A
Economic Feasibility Test Guideline:
Response to the Application and Range of the EPA Guideline for
Testing Economic Feasibility for Drinking Water Systems
Elliot Rosenberg, U.S. EPA Region 10
Regional Economist
July 27,1996
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Question.
Is the EPA guideline used for determining the economic feasibility of a drinking
water system appropriate, both in application and range?7
Answer:
Application
In order to determine if any project should proceed from conception to the
planning stage, it is necessary to establish if sufficient funding is available for all costs
associated with that project. In the case of a capital improvement project such as
installing a drinking water system, both capital and O&M (operating and maintenance)
costs are involved.
If we are to assume that all costs have been adequately accounted for, then the
planner must also determine if that project can be financed. With respect to a drinking
water system serving most or all of a community where the local utility may have
responsibility for primary financing of the system and assuming that the utility can
finance the proposed system, the utility would be expected to pass along these new
costs to its users (i.e. the households) as increased rates. If the proposed drinking
water system is a well for each household within a community, then the burden for
financing that new well directly falls on that household.
Capital Costs
Transmission system
Rights-of-way
Land
Relocation of Utilities
Storage
Water Treatment Plant
Examples of:
O&M Costs
Labor
Equipment
Utilities
Parts
Monitoring
Analyses
Other Costs
Architectural fees
Engineering fees
Legal fees
Administration
U.S. Environmental Protection Agency. 1987. Sole Source Aquifer
Designation: Petitioner Guidance. EPA 440/6-87-003.
A-1
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In either case, the household ultimately pays the costs. For a household to
determine if it can afford a proposed project, it must rely on its income, assets and
borrowing capacity. From income the household must take care of its overhead or fixed
costs, i.e. mortgage payment, other loan payments, food, utilities, education,
medical/dental, etc.. The balance of income remaining, i.e. the households disposable
income, is then allocated by each household as that household deems appropriate (i.e.
so much to savings, contingencies, recreation, etc.).
In evaluating its income, assets, current and future financial health for the
purpose of determining if it could afford a new purchase (or project), the household:
(1) may be able to afford that new project by utilizing savings only;
(2) may be able to afford that new project by selling some assets(s);
(3) may be able to afford that new project by borrowing;
(4) may be able to afford that new project by a combination of (1), (2)
and (3); or
(5) may not be able to afford that project, i.e. has little or no savings,
assets, limited income and/or no borrowing capacity.
Also, while we do not have any knowledge about each household's unique
financial situation we do have the data for a given community's mean (i.e. average)
household income. The availability of this data provides a method by which one can
compare the proposed project to that income level as a means test would be an
appropriate approach for determining the economic feasibility of a proposed project that
serves most or all of the households in that community.
Determining Economic Feasibility
If a proposed project is to be deemed economically feasible from the perspective
of affordability to the household, the proposed project should be calculated so that it
can be financed at or below some level of the mean household income of that
community. From an earlier study EPA found that typical water supply costs taken as a
percentage of average household income ranged from 0.1 percent to 0.3 percent.8
Therefore, having national data for average costs for a specific type of project, in
this case a water supply system, and also having average household income at the
community level, provides a basis for utilizing the EPA guidance range of 0.4 percent to
0.6 percent of mean household income as an economic feasibility test. This approach
8 U.S. EPA. 1986. GUIDELINES FOR GROUND-WATER CLASSIFICATION UNDER THE EPA GROUND-
WATER PROTECTION STRATEGY. Final Draft. Office of Ground Water Protection, Office of Water.
p.G-7.
A-2
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does not appear to be unreasonable. A more conservative approach would be to use
the upper range figure of 0.6% as a threshold level, i.e. any project cost exceeding this
0.6% threshold figure would be considered economically infeasible.
The determination if any annualized project costs figures actually place an
unusual burden on a particular household cannot be readily answered due to the
numerous variables that would have to be addressed but where data is not available.
In the specific case of using irrigated water as a primary source of drinking,
comparing (from Table 4) the annualized cost per household of this proposal to mean
household income shows a range of from 0.8% (Moses Lake) to 2.8% (Soap Lake). It
must be emphasized that this is using the minimum costs reflecting only the capital
costs for the water treatment plants and disinfection and not the total costs for the
entire system. This means that when all capital costs (water treatment plants,
disinfection, transmission, rights-of-way, pumping, reservoir, etc.) plus the O&M costs
are factored in, then the entire proposed system's annualized cost per household
would be considerably greater than shown When comparing the latter figures as a
percentage of mean household income, then those percentages would also be
considerably higher. There is the likelihood that this proposal would be placing an
unusual burden on the households in each community.
A-3
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