Water Supply Economics

Water supply systems are generally composed of: (1)Collection works; (2)purification works, where needed; and (3)transportation and distribution systems. There is much controversy over which economic arguments can be applied to water supply; e.g., it is often said that water supply exhibits significant economies of scale, thereby justifying larger and larger systems. This may be true when considering the purification works, but does not necessarily apply to the total treatment and distribution system. In this paper representative cost data collected from one of a series of case studies being conducted by the EPA are presented. These data should be useful in evaluating the relative economic impact and importance of the various components in the system. A suggestion is made as to the way in which the cost of water varies throughout the distribution system.