Monday, August 23, 2010

Sacramento Wastewater Report

Today, we released a study of the economic impact of of requiring total nutrient (primarily ammonia) removal from the Sacramento Wastewater Plant.  SRCSD estimates the capital cost at $770 million, and it will take about $30 million per year to operate it, including a lot of electricity.  Over a 30 year period from the start of construction, we find that the average annual economic impact on the Sacramento area will be a $94 million loss in income, and a decline of 390 jobs.  The full report is posted on our website,

So, is this a lot?  A $94 million income loss is a lot, about $65 to $70 per capita each year, but it is not an economic catastrophe.  For comparison, Sacramento County's total personal income is about $50 billion, so this amounts to a total income loss of 0.2%. 

Given the political debate, a more relevant comparison would be to the cost of the biological opinions on agriculture in the San Joaquin Valley.  We will release an updated estimate of this loss in a few weeks that shows pretty clearly that the lost agricultural income from environmental restrictions on pumping is actually lower than the loss in income from removing ammonia from Sacramento wastewater.  (The ag. cost is more concentrated on a smaller area, and does create more employment loss.)

Another current Sacramento comparison would be the 3 day per month state worker furlough program that is estimated to be reduce Sacramento incomes by $600 million per year.  So, the effect of nutrient reduction would be about 1/6 the current furloughs, or like having 6 permanent furlough days per year (every other month) for state workers (of course, just like the agriculture example above, the effects of wastewater charges would be broadly distributed across households than furloughs). 

Another way to think of it is a regressive tax increase.  Unlike many utility bills (e.g. cable tv, phone, electricity), households are unable to reduce this cost by changing behavior or forgoing services.  I am sure many households are willing and able to pay another $120 to $180 per year on their wastewater bill to help the Delta.  Lower income households (and over half of Sacramento households have incomes below $50,000) will find it a tough burden, and likely have a different opinion.

So should Sacramento be required to incur the cost for more advanced treatment?  I don't know.  That depends on the environmental benefits, and the emerging science in this area.  Cost is only one part of the decision.

1 comment:

  1. I disagree to the cost estimation of SRCSD. This kind of problem regarding the budget from removing ammonia in wastewater will cost hundreds of millions but it would not take $770 million to complete the whole sanitation. There are a lot of wastewater treatment systems that have been effectively implemented over the years and don’t require as much spending.