Investment Evaluation of Rainwater Tanks

Anirban Khastagir () and Niranjali Jayasuriya

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), 2011, vol. 25, issue 14, 3769-3784

Abstract: Melbourne, Australia faced fourteen consecutive years of below average rainfall before drought breaking rains in 2010. Melbournians are also concerned about the significant increase in potable water price in the future where the cost is expected to increase by 100% in 5 years. Stormwater harvested using rainwater tanks is an alternative source of nonpotable water source where potable quality water is not required for use. However, prior to installing rainwater tanks, customers expected to investigate the financial viability of installing tanks. The objective of this study is to carry out cost effectiveness analysis to estimate the payback period, cost effectiveness ratio and the levelized cost of installing rainwater tanks in different geographical locations with significantly varying mean annual rainfall (MAR). The paper also focuses on the impact of the inflation rate, interest rate (discount rate), the period of analysis on the previously stated cost parameters and determines the optimum tank size based on the MAR of the location. The study showed that the payback period was as low as 14 years for a 5kL tank in an area where the MAR is around 1000 mm (discount rate of 10% and inflation rate of 4.2%). The payback period varied considerably with the tank size especially in low rainfall areas (MAR ≤ 450 mm). This emphasizes the importance of selecting the optimum tank size to ensure maximum use of the rainwater to maximize the return on the initial investment. Copyright Springer Science+Business Media B.V. 2011

Keywords: Cost effectiveness analysis; Payback period; Levelized cost; Mains water price; Rainwater Tanks (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s11269-011-9883-1

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