A renewable resource

How can utilities in the GCC benefit from treating sewage effluent?

Treated wastewater could be put to use in the region?s agriculture, while by-products from the treatment process can be used as fertiliser.
Treated wastewater could be put to use in the region?s agriculture, while by-products from the treatment process can be used as fertiliser.
Treated wastewater could be put to use in the region?s agriculture, while by-products from the treatment process can be used as fertiliser.
Treated wastewater could be put to use in the region?s agriculture, while by-products from the treatment process can be used as fertiliser.

How can utilities in the GCC benefit from treating sewage effluent? Nadim Batri, principal, and Johnny Ayoub, senior associate from Booz & Co explain.

The GCC faces the dual challenge of declining water supplies and rising demand. With the region’s countries below the water scarcity threshold of 1,000 cubic meters per capita, all member states have embraced the large-scale desalination of seawater.

While desalination technology has proven to be adequate, it remains expensive and carries significant environmental costs from high energy use and the disposal of brine.

What the GCC needs is an alternative to fresh groundwater and desalination that is less costly, draws from existing water sources, and has less of an impact on the environment.

They need not look far. Right now, GCC nations regularly treat millions of gallons of wastewater before returning it to the sea. Although treated sewage effluent (TSE) is generally not viewed as safe for consumption and is often used in the GCC for landscaping, it is a potential source of water for a variety of critical agricultural, industrial, and other uses.

By turning to TSE as a source, the sunk costs associated with current treatment and disposal could be considered an investment in new water sources. And, perhaps most important, producing and distributing TSE would greatly reduce the stress on current fresh water supplies.

To be sure, this transition will not be effortless. Producing TSE is not inexpensive – groundwater is still cheaper by far, at least on a cost-to-user basis. In the US, agricultural users paid roughly US$0.70-0.90 per 1,000 gallons for reclaimed water; water pumped directly from an aquifer cost approximately
$0.10 – 0.15.

Yet with supplies of water so short and with greater urbanisation causing a strain on resources, GCC water utilities need to explore wastewater treatment technologies fully.

From 2010 to 2016, capacity for reusable water is expected to enjoy annual growth rates of 13 percent, compared with expected growth of four percent for contracted desalination capacity. Thus TSE will play a growing role in curbing water supply levels from non-
renewable groundwater.

This is particularly true because some of the biggest users of water do not necessarily need potable water.

Agricultural users comprise more than 80 percent of total water demand, and TSE has been proven to be effective in irrigating fodder crops eaten only by livestock.

In addition, district cooling providers could easily use TSE as a substitute for desalinated water, which they currently use at a very high expense.

The cost of treated effluent is approximately $0.66 per cubic meter (depending on its quality and on how much it costs to transport to end users) while water from desalination costs an estimated $2.27 per cubic meter.

Overcoming Challenges
The transition to TSE will require several key steps. Sewage as it is currently treated is not always good enough to be reused. After the removal of solids and further purification, added treatment would still be required to meet international quality and consistency standards.

District cooling companies that have explored the use of TSE have found that it is not an immediate substitute for potable municipal water; TSE is more corrosive, and using it would require these firms to make investments to protect existing distribution systems.

In addition, TSE suffers significantly from the public perception that it is a close cousin of raw sewage – a significant criticism should TSE be required for
agricultural uses.

Perhaps most troubling, the economic comparisons between TSE, desalination, and groundwater are difficult to make because of a system of tariffs and subsidies in GCC nations that obfuscate the true cost of each.
Therefore, the costs of TSE fall disproportionately on its potential end-users, making TSE seem more expensive than it really is.

The solutions to these problems are available. On technical matters, the GCC can call on the work done elsewhere to meet the challenges of producing TSE meeting consistent quality standards and addressing the corrosion issues for district cooling companies.

What’s more, the incentive for meeting these technical needs is significant. On a cost basis, the technical requirements of producing TSE are roughly one-third that of desalinated water.

And that is without factoring in the environmental and brine-disposal costs associated with desalination.

In addition, the production of TSE would create two new revenue streams for water utilities – from the water itself, and from the solid waste byproduct, which could be a replacement for artificial or chemical fertilizers.

Making It Work
Not surprisingly, GCC governments are looking closely at TSE as part of their water strategies.

They are setting up joint ventures with private stakeholders to develop the required infrastructure, operate and maintain the production facilities, and market the resulting water supplies as well as solid waste.

These joint ventures, which benefit from access to low interest rates and use high-leverage project financing schemes with debt ratios averaging 75 percent or more, can benefit from very attractive return on equity of 15 percent.

For these joint ventures to work, however, they require governmental support in the form of new rules and regulations, as well as revised subsidy and tariff policies.

First, governments and water authorities in the GCC need to launch awareness campaigns to help the public understand that TSE is a valuable resource that will be used for specific industrial and agricultural purposes but not in ordinary drinking water.

They also need to focus public awareness efforts around the environmental benefits, such as the replenishment of aquifers.

Second, governments need to be sure that they control groundwater supplies. Some private users draw groundwater directly, thus removing their incentive to use TSE.

In addition, government regulators will need to establish quality standards for TSE and define appropriate end uses.

TSE will need to be regulated with regards to application methods, crop restrictions, controls for human exposure and allowed discharge.

Third, governments will need to make clear to end users the economic costs of groundwater by reducing current water subsidies.

In certain cases, governments may have to restrict and control whether some end users are even able to use such non-renewable water sources at all.

Moreover, the cost of TSE should only reflect the costs associated with the additional level of treatment beyond what is necessary to meet wastewater disposal environmental requirements; other costs should be covered by municipal wastewater tariffs.

Thankfully, some GCC countries are already moving to meet these requirements.

For example, Abu Dhabi’s Regulation and Supervision Bureau (RSB), has recently launched several important new regulations aiming at controlling all non-domestic discharges into the emirate’s sewage system and setting the standards of the recycled treated wastewater in Abu Dhabi.

And although networks for the collection and treatment of TSE are almost inexistent, GCC countries are investing heavily. From 2010 to 2016, approximately $60 billion is expected to be spent on expanding wastewater networks and treatment capacity.

That is a hopeful sign, and represents a good first step toward capturing what could be the region’s greatest untapped water resource.


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