EconPapers    
Economics at your fingertips  
 

Cost-benefit analysis of an infrastructure project and a cost-reflective tariff: A case study for investment in wastewater treatment plant in Serbia

Malisa Djukic, Iljcho Jovanoski, Olja Munitlak Ivanovic, Milena Lazic and Dusko Bodroza

Renewable and Sustainable Energy Reviews, 2016, vol. 59, issue C, 1419-1425

Abstract: To prevent the environment from being adversely affected by the disposal of insufficiently-treated wastewater, the European Urban Wastewater Directive (Directives 91/271/EEC and 98/15/EEC) emphasizes the need for secondary or more stringent treatment of urban wastewater in sensitive areas. The EU Water Framework Directive (Directive 2000/60/EC) stresses the role of economic analysis to prevent the degradation and depletion of water resources. The wastewater treatment process results in external benefits that should be quantified in order to assess the economic feasibility of a proposed project. The principle of full cost recovery and “the polluter pays” principle are to be pursued. Using the European Commission methodology for cost-benefit analysis, economic performance indicators of an infrastructure project in Serbia requiring tertiary treatment of wastewater in a sensitive area are calculated. To ensure a financial sustainability, the authors assessed a cost-reflective tariff to be introduced following the start of wastewater treatment plant operations. The economic net present value is positive, while the economic internal rate of return is greater than the social discount rate. Full cost recovery implies a significant tariff increase that should be taken into account by water authorities and companies as the project should not be only economically feasible, but also socially affordable.

Keywords: Cost-benefit analysis; Financial sustainability; Social affordability; Environmental benefits; Wastewater tertiary treatment (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1364032116000800
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:59:y:2016:i:c:p:1419-1425

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic
http://www.elsevier. ... 600126/bibliographic

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-09-29
Handle: RePEc:eee:rensus:v:59:y:2016:i:c:p:1419-1425