An integrated techno-economic analysis on wastewater reclamation in Hong Kong: A comprehensive cost – Benefit analysis with life cycle assessment

Wastewater reclamation and reuse projects have been gaining significant attention as ways to secure sustainable water resources while preventing environmental degradation. However, traditional cost-benefit analyses do not reflect the true net benefits of these processes as they do not consider all externalities, particularly due to the difficulties in monetizing environmental impacts, thereby leading to underutilization. In this study, we conducted a hybrid cost-benefit analysis with an integrated environmental externality approach to evaluate the true net benefit of wastewater treatment and reclamation with explicit and implicit costs and estimated benefits. Firstly, we developed a cost-benefit analysis model based on the Drainage Service Department's statistical data from the Shek Wu Hui plant in Hong Kong from 2014 to 2018. Next, we estimated the external environmental benefits from pollutant abatement based on the shadow price of each pollutant by adopting a distance frontier function. We then conducted a life-cycle assessment to investigate the potential environmental impacts of the process using SimaPro 8.5.2.0 software and the EcoInvent 3 database, utilizing Stepwise2006 methodology for full monetization. A sensitivity analysis was applied to control for uncertainties as a robustness check. Our results show that aggregate cost, shadow price, and monetized environmental impact are estimated to be 4.47, 4.75, and 1.23 HKD per m³ of treated water respectively. Based on these results, our study illustrates that the true benefit is noticeably higher than the unit cost of wastewater reclamation, dependent upon a scale, and represents a breakeven point of 63,769 m³ of water reclamation per day. Our study further demonstrates that wastewater reclamation is viable from both social and economic perspectives and will increase the government budget by 81 million HKD. Therefore, this study can provide a basic guideline for developing a more complete economic valuation of wastewater treatment and reclamation projects.