Economic evaluation of a water network system through the net present value method based on cost and benefit estimations

Abstract

Water network synthesis has been employed to conserve water resources and reduce freshwater costs for the sake of sustainable development. However, the previous economic evaluations of water network systems did not comprehensively include all of the tradeoffs incurred in water network synthesis. The objective of this work was to evaluate the economic feasibility of a water network system using the net present value (NPV) method and estimate the principal cost and benefit contributors to its NPV. The procedure used for the economic evaluation consisted of water network synthesis, water system design, the estimation of the incremental costs and benefits, and the application of the NPV method. A total of 10 water-using operations in the steel and iron industry suffering from the shortage of water were used to evaluate the profitability of a water network system. The water network system was optimized by minimizing the freshwater consumption rates through nonlinear mathematical programming. This water network system was specifically designed, and its incremental costs and benefits were estimated on the basis of the conventional water system. The principal cost contributor to the NPV was the piping cost in the construction stage, while the principal benefit contributor to the NPV was industrial water used in the operations and maintenance stage. The results of the NPV method including all of the tradeoffs showed that the water network system was more economical than the conventional water system, with reduced industrial water consumption and wastewater generation rates. This work was expected to activate the implementation of water network systems by demonstrating the high profitability and contribute to the simple generation of a NPV-maximized water network system by estimating the principal cost and benefit contributors to the NPV used for the streamlined objective function of mathematical formulation.