Economic Valuation of Aquifer Storage Projects

There are economic benefits and costs associated with using aquifers as storage reservoirs for water-supply systems. Direct benefits include utilization of the conveyance and treatment capabilities of groundwater systems, reduction of pumping lifts, and control of subsidence and seawater intrusion. Indirect benefits include the buffer and existence values of storing water within aquifers. These benefits may include the avoided costs of obtaining water from other sources during water-short periods (when aquifer-stored water is available for use instead), or the avoided economic and social impacts of a water shortfall during such periods. Costs include the direct capital and operating costs of aquifer storage projects, as well as indirect costs such as water-quality degradation. To quantify these costs and benefits, it is necessary to correlate economic measures with the relevant hydrologic variables. Case studies of projects in California illustrate some specific economic aspects of aquifer storage programs. Objectives for these projects range from maximizing water stored in the ground to minimizing the marginal costs of operations. Economic valuation of aquifer storage projects also can be conducted within the larger context of conjunctive groundwater/surface-water management. For example, simulation-optimization modeling is being used to identify economically efficient strategies for operating spreading and injection facilities under alternative scenarios regarding availability and costs of different water sources, regulatory requirements, and groundwater demand.