Wastewater Reuse: Potential And Feasibility

WASTEWATER REUSE: POTENTIAL AND FEASIBILITY

David Hanrahan,
Lead Environmental Specialist,
World Bank

　　Madam Chairman, Minister Zheng, Mr. Yukon Huang and other distinguished guests, I‘m delighted to have this opportunity to address you at the beginning of this important conference on a very important subject. I‘d like to use this time to set out a few key questions and issues, which I hope will be addressed in more depth and more detail during the presentations and discussions over the next few days .

　　My presentation is entitled "Wastewater Reuse: Potential and Feasibility". I will talk only briefly about potential, because I‘m sure that everybody here agrees that there is a large potential that has to be used. Let me summarize a few relevant facts. In northern China only 38% of the rainfall reaches the sea, and even then groundwater levels have dropped by 15 meters in some places. More than half of the main sections of the major rivers in northern China (and some in southern China) are worse than water quality Class V and therefore, in principle, useful for very little and certainly not appropriate for most productive purposes. Clearly there are both water quantity and quality problems here. The key aspect of the reuse potential lies in the high levels wastewater investment that have already occurring and that are being planned, to deal with the water quality problems. There are targets for treatment coverage of 50-60% and also targets for up to 70% wastewater reuse in urban areas. I have an estimate from some work that the World Bank has done this country will be investing about 20 billion Yuan per year (that is two and a half billion dollars) in wastewater and also in wastewater reuse. That is a huge amount of money and it is very important that the maximum benefit be gained from that investment, in terms of both improved water quality and of productive reuse.

　　Currently the wastewater reuse rate is low. I have seen a figure of about 5% and I think that is probably about right. However, I would also note that the existing wastewater collection and treatment rates are also below the target. These two figures present a serious concern that the country is not yet getting the full benefits out of all investment it is making.

　　Clearly, a large reuse potential exists, but let me make three points about this. The first point is that conservation is often cheaper. Managing the whole water cycle can be more efficient than needing to build new systems. Unfortunately, this is a complex approach and often requires institutional and behavioural changes. The second point is that a considerable amount of untreated wastewater is already reused for agriculture, because it goes into channels and rivers and is taken out downstream. In China, as many other countries in the world, large amounts of wastewater are actually reused at present and we have to take this factor into account as we go forward. The third point is that investing in reuse is not always economic. Clearly reuse is a very good approach and clearly we must take the maximum possible advantage. However, we not should push it where it does not make economic or environmental sense. So the question that I would raise here is: "what is the realistic target for reuse?" I think it must go now from broad national goals down to consideration for each city. What is the realistic target for reuse in your urban area? How can this be achieved?

　　Reuse can be an important step forward. However, it must be done as a part of comprehensive management of water resources. Reuse requires coordination across several ministries or departments and it is a part of the growing complexity that China has to deal with, in managing water resources more generally. This is a key challenge which must be addressed. Water resources in China -- of which reuse is an important part -- has to be dealt with in a more integrated way. This integrated approach is in fact already the policy of the Government of China. However the real challenge now is putting this into implementation.

　　Before I start to talk about feasibility of reuse, I want to clarify some definitions. Indirect or informal reuse refers to untreated wastewater which is taken from drainage channels or polluted rivers, without controls, and used in many different ways. In fact, many river system have functioned in this way, not just in China, but also many parts of the world. So often we are really talking about moving away from indirect and informal reuse into controlled or direct reuse, where the wastewater has been suitably treated. It is intended for specific purposes where some value is added and in many cases it can generate revenue. I want to get that distinction very clear, because the issue is often how to take water from existing indirect reuses and turn this into productive direct reuse. Another important aspect is recycling of wastewater before its discharge, which is often the most efficient form of reuse. Again, it is well established policy in China to promote recycling. I have heard various numbers about increasing levels of industrial recycling in China. I am not certain how rapid this movement is and it can always be made more effective but this is a very good trend.

　　Let me touch on the list of possible forms of reuse. In terms of interested people at this conference, we are talking about industrial reuses of many kinds, and non-potable municipal reuse. I know that several cities here have already taken steps to put schemes into place. Greening or landscape use in varied forms is very common type of reuse across the world. Agricultural reuse is another important possibility. I realize that this is urban conference, but the part of the increasing complexity of water management is the relationship between the urban areas and surrounding agriculture districts. I come from the Environmental Department of the World Bank and I have to say there is often value in ecological reuse, putting treated effluent back into water systems to maintain an ecological balance, for example, putting it into wetlands and into rivers. There is the possibility of groundwater recharge which is occurring informally in many places where ground water is been recharged with highly polluted effluent. The challenge is turning this into a positive and controlled approach.

　　When I was finalizing this presentation last night. I decided to include a reference here to the issue of sludge. This is separate question but I mention it here because people who are thinking about reuse are often thinking whether they can reuse wastewater treatment plant sludge. I would say that it is a good idea, but if reusing wastewater is difficult, economic reuse of sludge is much more difficult. You should be thinking about it, but I want to emphasize that it is a complex issue.

　　Let me now run briefly through some questions I think have to be addressed, if you are looking in any city or any area at the feasibility of wastewater reuse. I have put them under five broad headings here: technical, social, economic, financial and institutional feasibility.

　　Technical feasibility. I think that the majority of the people in this audience are probably from a technical background, such as engineers or scientists, and so I will not spend too much time on this question. Technology exists for reuse up to the level of providing water of potable standard and this is been demonstrated in many places. What is more important is the selection of the appropriate level of technology for any particular purpose. A careful analysis of options should be done in the context of any specific reuse opportunity. In other words, look to see what potential uses are the most attractive and then consider what is the best technology would allow you to take advantage of those. There will be some cases where you may do schemes to test new technologies and I would encourage this. However, if you are doing real long term projects, please look very carefully at choice of technologies, in the light of what you are trying to achieve.

　　In this context, it must be accepted that there are clearly operational problems in many existing wastewater treatment plants. There are a lot of reasons for this. The basic one is probably the lack of funds to operate the plant which goes back to tariff issues. As a result, there is a very high variability in the performance of existing major wastewater treatment plants. Some of them are excellent but some of them are not really working. More important than these extremes is the fact many plants often have poor control of the quality. Poor control of the effluent quality may not be a big issue for a discharge into a major river system if it is meeting the wastewater discharge standards, but it will be a major problem that needs to be resolved in order to turn reuse into a commercial opportunity.

　　Let me make a few comments about social feasibility just to ensure that it is addressed in the design of projects. We know that a lot of indirect reuse is occurring but I think you have to ask, as living standards increase, as people expect higher quality of life, how will they accept direct reuse? In particular, the possibility of non-potable domestic reuse is one that seems to have a lot of technical possibilities, but I would suggest you need to look how acceptable this will be. As well as investigating technical feasibility, it is important that the public in general, particularly those people in areas that are being used for trials and used for reuse schemes, must have confidence that the relevant health standards will protect them.. Now, I don‘t suggest you have to have impossibility high health standards and other presenters here will discusses relevant experience on this. However, the standards used must be clear and people must be confident about them. Finally, on this subject, I would suggest you think about what level of investment in understanding public attitudes and in education is required, so you get public support for increasing reuse.

　　I want to make a couple of comments on economic feasibility. The economic perspective on reuse means asking the question: "is this good use of the State‘s limited resources?" There is a finite amount of water resources available in China. There are also limited financial capital and skilled human resources. The economic approach says the investments that are proposed must be really good uses of these scarce inputs. How to get the maximum benefits from the resources that the State is putting into this? Reuse can often bring economic benefits: it can reduce need for further water supply augmentation, or can delay the expansion, which is also an economic benefit. In some cases, it can eliminate completely the need for major expansion. If the next water supply expectation is an extremely expensive one, there is considerable value in finding ways to avoid it. Reuse can also protect scare high quality water resources, particularly ground water. (Unfortunately, people cannot see ground water, and therefore it gets over-used, it gets wasted and people often do not realize how important those ground water supplies are to the economy and to the quality life.) So from the economic point of view, the cost of reuse can often be justified if all these aspects are considered fully, but I would again emphasise that conservation is often more effective than new investment. Careful analysis if required in each case.

　　I want to talk now about financial feasibility, because this is the important issue for cities and for companies who try to operate reuse schemes. Financial feasibility has to be considered in a context where there is a complex market for water, in which the price and availability of different sources is often set by regulation. Industry in particular, often has choices for its supply, including self-supply from groundwater; self-supply from a river; and the option of taking water for municipal supply. It may have a choice of combining with other industries in finding a solution. The availability of this water and the actual price paid are set by regulation, in other words, by government decision. The overall framework has be set by the government, because water is a national resource, but it is important when looking at finance to understand which of the factors set by government may change because these changes will affect the prices paid for water in the market.

　　Treated effluents will have differing quality levels because in this market there will be opportunities for very high quality reuse water and opportunities for low quality reuse water. These "products" have to compete now as part of the complex market of water supply. The price than can be charged for reclaimed water will normally be less than price of water company water. Reuse is what is called an "inferior good" because it is typically less desirable than fresh water. Looking at some experience worldwide, a reuse price of somewhere between 25-75% of the municipal water price is typical. Treated effluent could certainly generate significant revenue in some cases but each possibility must be carefully analyzed. I have heard people say "here‘s a very successful reuse example - there must be many more". However, one wonderful opportunity does not mean that every other potential reuse case will be as profitable.

　　That said, many profitable opportunities are being implemented in China. I am looking forward to hearing from the cities that are managing them. The most profitable opportunity appears to lie in replacing municipal water in large industrial systems or in power stations. There are two reasons why these can be highly profitable. In the first place, these plants have existing reticulation systems in a separate industrial water system, into which a reuse supply can be connected. With this one connection, you can supply thirty or forty or fifty thousand cubic meters per day. In engineering terms, that is a great economy of scale in the distribution system and significantly reduces the total cost of the reuse. Secondly, if the municipal water is been charged at a realistic rate, the unit price of the new supply will be less and as a consequence, industry will find reuse a cheaper source and will be happy to connect. Therefore, some of these opportunities look very good and a number have already been put in place.

　　I think, however, that not many other uses are as profitable as these big industry uses, mainly because of the cost of reticulation. In the other words, there are usually high costs in putting in the distribution pipe works and of making whatever adjustment is required in buildings or in houses, in order to take in this second water supply. Where the reuse project requires basically duplicating a water supply system, that can be very expensive. In this context, the best possibilities occur when the reuse scheme is included as part of the urban development, which again is part of new government policy. The most cost effective way is to put in landscape watering or dual systems into an apartment building or any other system like this, as part of initial road building, building construction and so on. If it is necessary to retrofit, it would be extremely expensive. My last comment on this point would be to stress that supplying treated effluent is really a business, selling water into the water market. If it‘s carefully done, if the organization is well run, if it takes conservative approach, then it is likely to be successful.

　　The last area of feasibility I want to finish with is institutional feasibility and I think this is one of the most difficult questions. As I have said, government policies and regulation set the framework. Government policy is obviously going to move towards conservation of high quality sources and increasing protection of the environment and, within that set of policies, efficient wastewater companies will find increasing opportunities for potable reuse. Policy setting in itself a complex thing to carry out, especially in defining the details. It will require many different organizations to cooperate in setting standards and in establishing technical requirements. Health, building standards, pricing, and so on will have to be addressed in the planning process and the necessary incentives put in place, if we are going to incorporate increasing levels of effluent use into new schemes. It is also important to build up a network of people who share examples of good practice.

　　Let me give you an example of the institutional complexity at the municipal scale. Typically, at present, there is a water supply company, which supplies the city for domestic, institutional and industry uses. Wastewater goes to the wastewater company, it is treated and goes into the river. This is a very clear process and responsibility is well defined. Now the wastewater company decides to get into a new business and establishes a reclaimed water company (in many cases, just part of the wastewater company) which they starts to sell reclaimed water back to industry, and perhaps back to domestic services as well. What now happens? I have seen an example where a change in municipal government policy that said that industry in the city could not take water from the water company for their industry uses. This appears to be a wonderful move. It creates a market to which the reclaimed water company can sell. The wastewater company suddenly gets a big revenue stream, and now there is a lot of money to help operate the treatment plant. The industry buys the reclaimed water at a price which is probably 25% less than they have been paying and so this is excellent for them. (It also takes away the incentive for them to conserve.) The loser may be water supply company because the company -- by decision of the municipal government -- has just lost one of the biggest consumers. Is there better way to manage reuse? Sometimes reuse can create revenue streams for wastewater operators, but I think the conclusion from this example is that now the municipality has to think very carefully about whether this is the time to establish a comprehensive water and wastewater company. The complexity that I talked about the beginning is now reaching down to the day-to-day operation of the different bureau and departments with the city. Cities need to consider very carefully the comprehensive management of water resources, not just as government policy, but as an approach that is now starting to make more sense. To me, this is one of the key questions that you have to discuss and I hope to listen to some of these debates.

　　Let me finish off, because I am giving keynote presentation, by setting some expectations. I suggest that going forward that there are three areas that should be addressed. In order of increasing complexity, the first one which should be fairly straight forward: establish technical standards and identify good practice. There is no need for 15 or 16 different design approaches to wastewater reuse: probably 4 or 5 would be adequate. Health standards are under discussion at present - these need to be finalized in a way which receives broad support. It is important to deal with questions like separation of reticulation systems, if treated wastewater is going to be put into public area (some countries require different pipe fittings) and so on. There are a set of technical issues that I think can be addressed in a reasonably straight forward way.

　　The second area is to understand the better the institutional and financial aspects. There are a number of project under way now and it is time to look for patterns and to see trends. I suggest carrying out a number of case studies to review the programs in cities that have already started doing something. Another way forward on this is to collect policy experience and to provide practical guidance on institutional issues and on pricing. This is an area where efforts should be put into exchanging information.

　　The third and the most difficult question, is to develop the framework of regulation and policy which would promote increased levels of productive reuse. Some of the issues are related to broad water resources, while others are related to management of municipal systems. How should a framework be developed which will give the government the influence that it is looking for in relation to reuse? After entry into the WTO, the government -- at all levels -- will be trying to step back and bring in new sources of operational expertise, to encourage other sources of investment and to find innovative solutions. The question is how can the government put the framework together that will encourage increasing expertise and investment to come into the expansion of reuse.

　　Finally, and I use this phrase in many of discussions of water and environment issues, "there is no simple answer". Finding the way to expand productive reuse here in China will take time and effort. It is clear from the many people who have come together here that the necessary work is already beginning and that this conference is part of that effort required. Let me finish by wishing you great success in these three days of the conference and out the into the future. Thank you.

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