Reuse of treated municipal wastewater in drylands: Multi-sector optimization analysis for middle Rio Grande case study

Oluwatosin A. Olofinsao, Jingjing Wang and Robert P. Berrens

Utilities Policy, 2025, vol. 95, issue C

Abstract: Growing populations and water demands in drylands, exacerbated by climate change, strain freshwater resources. This study constructs a regional, multi-sector optimization model to explore the economic effects of alternatives for reusing treated municipal wastewater (TMW) in drylands. Focusing on the Middle Rio Grande Basin in the southwestern state of New Mexico, USA, this investigation innovatively considers agriculture as a nutrient sink. The analysis develops a theoretical optimization model for TMW reuse across three sectors simultaneously: agricultural (commercial farming); urban (greenspace provision); and environmental (river instream flow provision). A constrained optimization is used to calculate the value of water in the commercial crop farming sector, and the benefit transfer approach is used to obtain water values in the urban and environmental sectors. Results indicate that water is valued roughly comparably in urban greenspace ($205.26 per acre-foot) and environmental ($220.39 per acre-foot) sectors, and while agriculture acts as a nutrient sink it still realizes a much lower water value ($28.30 per acre-foot). Therefore, it is recommended that policymakers and the municipal authority prioritize the allocation of TMW for environmental flow and urban greenspace. Understanding water's economic value across alternative uses is crucial information for water policy and governance in water-scarce regions.

Keywords: Agriculture; Environment; Drylands; Municipal wastewater; Reuse; Urban (search for similar items in EconPapers)
JEL-codes: Q25 Q57 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:95:y:2025:i:c:s0957178725000566

DOI: 10.1016/j.jup.2025.101941

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