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City of Rifle Water Conservation Plan Final Report -July 2008 6.1 Quantitative Benefit-Cost Analysis Results Table 6-1 presents the results of the quantitative benefit-cost analysis. The project team recognizes that successful water conservation planning and implementation is an iterative process with a feasible planning horizon that is relatively short (i.e. 5 to 7 years). That is, some recommended programs and measures may be found within a few years to not be effective or to suffer from too low of a benefit-cost ratio; these may be abandoned for other more promising alternatives. However, for the City of Rifle, the real economic benefits of a successful water conservation program will only be realized over a longer time frame. This is primarily because the City's current costs for energy, chemicals, and raw water supply are relatively low. The real benefit is demand reduction to allow down- sizing and deferment of future water infrastructure projects, specifically, water production and treatment facility expansions. A secondary benefit is the reduction in future water supply costs. For this reason, a 20-year analysis period was selected. This represented a compromise between a period not long enough to capture the benefits and one (such as time to system build-out, estimated to be 30+ years in the future) that might be too subject to conjecture. Table 6-1 presents 20-year implementation costs, 20-year total water volume and peak day demand reductions (referenced against current water consumption rates), associated energy, chemical, water supply and water infrastructure savings, and finally, abenefit- cost ratio (tota120-year cost savings divided by 20-yr implementation cost). Measures and programs with abenefit-cost ratio greater than one (unity) are considered to have favorable economic payback. Table 6-1 illustrates the following key results: • As compared to the "no conservation" case, the proposed program is projected to reduce peak day demand by almost 1.9 mgd, or 18%, by 2027 and save over 8,700 ac-feet of water over the 20-year period. • The reduction in peak day demand, and the corresponding water production/treatment infrastructure cost savings able to be achieved over the long term, produces almost 90% of the total projected cost savings of the overall program. The implication is that the bulk of the program's payback to the City will be in the long term. • The overall program's projected 20-year benefit-cost ratio is 1.9, which is favorable. • The upfront implementation cost over the first two to three years is projected to be $3 85K. Roughly one-half of this initial cost is for design and installation of xeriscaping in existing and new City landscapes. This has a low benefit-cost ratio, but its main value is in education and example-setting. Implementation costs will need to be covered through existing City staff hours, grant funds, the Utility Department budget, or other sources. Obviously, if implementation is not funded, the plan will fail. ~ The average annual cost over a 20-year period is projected to be about $85K. ~ Implementing a strong inclining-block water rate structure and landscaping and irrigation system design requirements for new development are projected to achieve the most water and cost savings. These two items economically "carry" the overall program and are critical to its success. • High-efficiency fixturelappliance requirements for new development and targeted water audits are also projected to save significant amounts of water with favorable benefit-to-cost ratios. SGM # 99055A-388 34 Evaluation and Selection of Conservation Measures and Programs