Which option makes the most sense from a cost-benefit

Reference no: EM133377364

Question 1. Many areas of the United States have combined sewers, where combined sanitary waste and stormwater are treated at the wastewater treatment plant. During heavy rain events, the inflow to the wastewater treatment plant can exceed the treatment capacity, causing a combined sewer overflow (CSO) with discharge of untreated sewage into waterways. The Clean Water Act protects against CSOs.

The hypothetical city Watertown must decide the best approach to decreasing the number of CSO events it experiences. Assume that avoided CSOs incur benefits at $3.50/gal and perform at the full design flow.

The options under consideration include the following:

A: Construction of an additional wastewater treatment plant (WWTP) flow: 1 million gal/yr investment cost: $12 million, annual O&M cost: $1.25 million/yr useful life: 40 yrs

B: Construction of tunnels and reservoirs to store untreated sewage flow: 16 million gal/yr investment cost: $1.4 billion, annual O&M cost: $73,000/yr useful life: 50 yrs

C: Widespread installation of green infrastructure flow: 3.5 million gal/yr investment cost: $65 million, annual O&M cost: $95,000/yr useful life: 30 yrs

AB: Additional WWTP and storage

AC: Additional WWTP and green infrastructure

BC: Storage and green infrastructure

ABC: Additional WWTP, storage, and green infrastructure

Complete an incremental cost-benefit analysis using an annual interest rate of i = 3%.

which option makes the most sense from a cost-benefit perspective?

what inherent assumptions are included in the selection of the best option?

if the city can only secure bonds for $70 million for capital projects, what do you recommend they pursue?

Reference no: EM133377364

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