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Water 2014, 6(6), 1662-1670; doi:10.3390/w6061662
Article

The Economics of Groundwater Replenishment for Reliable Urban Water Supply

1,* , 2
 and 1
Received: 11 March 2014; in revised form: 27 May 2014 / Accepted: 29 May 2014 / Published: 10 June 2014
(This article belongs to the Special Issue Policy and Economics of Managed Aquifer Recharge and Water Banking)
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Abstract: This paper explores the potential economic benefits of water banking in aquifers to meet drought and emergency supplies for cities where the population is growing and changing climate has reduced the availability of water. A simplified case study based on the city of Perth, Australia was used to estimate the savings that could be achieved by water banking. Scenarios for investment in seawater desalination plants and groundwater replenishment were considered over a 20 year period of growing demand, using a Monte Carlo analysis that embedded the Markov model. An optimisation algorithm identified the minimum cost solutions that met specified criteria for supply reliability. The impact of depreciation of recharge credits was explored. The results revealed savings of more than A$1B (~US$1B) or 37% to 33% of supply augmentation costs by including water banking in aquifers for 95% and 99.5% reliability of supply respectively. When the hypothetically assumed recharge credit depreciation rate was increased from 1% p.a. to 10% p.a. savings were still 33% to 31% for the same reliabilities. These preliminary results show that water banking in aquifers has potential to offer a highly attractive solution for efficiently increasing the security of urban water supplies where aquifers are suitable.
Keywords: water allocation; groundwater; drought; risk assessment; economics; Markov switching model; Monte Carlo water allocation; groundwater; drought; risk assessment; economics; Markov switching model; Monte Carlo
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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MDPI and ACS Style

Gao, L.; Connor, J.D.; Dillon, P. The Economics of Groundwater Replenishment for Reliable Urban Water Supply. Water 2014, 6, 1662-1670.

AMA Style

Gao L, Connor JD, Dillon P. The Economics of Groundwater Replenishment for Reliable Urban Water Supply. Water. 2014; 6(6):1662-1670.

Chicago/Turabian Style

Gao, Lei; Connor, Jeffery D.; Dillon, Peter. 2014. "The Economics of Groundwater Replenishment for Reliable Urban Water Supply." Water 6, no. 6: 1662-1670.


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