@RISK Weighs Water’s True Cost

water

Many of us assume that water is cheap—it flows freely from the tap whenever we need it. However, the true cost of water is far from free. For many companies pursuing corporate water stewardship strategies, a common barrier to action is this perceived low cost of water. As water costs are often as low as $2.00 per thousand gallons, justifying large water reclamation projects can be difficult if not impossible to justify.

A major beverage manufacturer was moving forward with implementation of a water recycling system, but faced a decision barrier around the perceived low cost of water. They hired Antea Group, an international environmental, health, safety, and sustainability (EHS&S) consulting firm, to conduct a quantitative analysis of the proposed project. John Estes, consultant with Antea Group, used @RISK to examine the beverage manufacturer’s operations and look at the hidden costs of the water they used.

“There’s the rinsing, cleaning of equipment, the steam needed to sterilize,” he says. “Essentially, a significant amount of water is used that doesn’t go into the product and instead is discharged to the sanitary sewer system.” The cost of sending this wastewater to the sewer is over $7.50 per thousand gallons— over 3.5x higher than the cost of getting water from the tap. Estes adds that there are additional hidden costs to the water from the heating and cooling processes, system operations and maintenance, and effluent treatment.

Using @RISK, Estes and his colleagues found that the most significant cost driver was the discharge to the sanitary sewer. They were also able to determine a more accurate cost of water as a baseline. With this true cost number in hand, they then ran probabilistic models with @RISK to determine future potential scenarios, discovering that once the recycling facility comes on-line, the projected cumulative savings will range between $10.5-million to $14.5-million over 10-years.

@RISK has proven itself to be an invaluable tool for Antea Group, Estes says. “What’s so nice about @RISK is its transparency,” he explains. “We can show all the formulas, and we can watch the simulations as they run. Other risk analysis software have more of a ‘black box’ design. With @RISK, you can set your variables, change them, and rerun your simulation and see exactly how it changes—it’s very helpful.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s