Modelling the costs and benefits of water demand management initiatives

Water authorities require robust methods to enable them to evaluate and prioritise capital expenditure - both for new water sources and for demand management initiatives.

AECOM has developed a Cost Benefit Analysis (CBA) tool to assist in justifying and prioritising capital expenditure in demand management and enable robust and well-informed future planning.

The Demand Management Assessment Tool (or ‘DMAT’) was designed to assess both individual demand management options, or a suite of options, and for each of these undertake CBA analyses from different perspectives: a social (economic) CBA, a financial CBA from the perspective of the Water Authority, and a financial CBA from the perspective of customers.

This approach allowed an understanding of to whom costs and benefits are likely to accrue, and therefore provides some insight into the most appropriate way of implementing the initiatives. For example, where an initiative is expected to provide net benefits to customers through reductions in their water and heating bills, then the Authority may only need to educate their customers of this potential. In other cases, cost sharing or financial incentives may be required.

Total carbon savings can also be calculated in addition to water savings and inclusion of environmental costs and benefits is also possible.

A case study is examined through the development of the DMAT model for an example water authority.