Sunday, March 24, 2013

Payback for a 2,000 litre water tank: about four years

Update: I have a crow to eat. Playing citation hide-and-seek I find that the original benchmark included purchase, a pump, plumbing and installation. It's here: Thanks to Stilgherrian for getting the ball rolling (below). I have added other thoughts at the end of the post. 

Why do I let myself get sucked in like this? I could ignore this stuff on a Sunday, then someone points me at a dodgy statistic swallowed without chewing by an uncritical journalist, and away I go.

The dodgy statistic in question is this:

“Restrictions could also encourage ''inefficient'' measures such as rainwater tanks, which cost up to $2000 but held only $4 worth of water at 2011 prices, the report said.”

It's in this story about water pricing, and because the Sydney Morning Herald doesn't practice source-linking, you have to do a bit of Googling to find out that the report in question is this one, from the Productivity Commission (the quote is on page 184):

“For instance, a common 2000 litre household rainwater tank costing about $1500 to $2000 holds about $4 worth of water at current mains water prices.”

It's a very misleading statistic in two ways. First, I can't find any 2,000 litre water tank that costs that much – even an expensive under-deck tank can be had for about $1,300. Second, it assumes that the water in the tank is a static resource – hence the snitty crack about it containing $4 worth of water.

Sydney's price of water in 2011 was $2.103 per kilolitre (hence “about $4 worth”). If I run a fairly simple model, and use a $640 purchase price for the tank (from here), it's not a bad deal.

Here are my unrealistic assumptions:
  1. The turnover of the tank is sufficient that each “fill” gets used.
  2. The catchment is 8 meters x 8 meters (the roof area above my head right now).
  3. 1mm of rain on 1sqm is 1 litre (this is assumed by every online calculator I see).
  4. I used the Bureau of Meteorology Observatory Hill average rainfall here.

Under those conditions, that tank would deliver about $163 worth of water each year – paying for itself in around four years. And it's this that the Productivity Commission dismisses (with unsourced data and zero analysis) as “inefficient”.

Let's reverse the calculation. What do you have to get out of a $640, 2kl tank for it to achieve payback in five years? About 5 Kl per month – which means filling and emptying the tank 2½ times each month, or the equivalent of six days with better than 10mm rainfall per month.

Sure, there are other on-costs. Sure, this isn't a complete study. But even if I'm out by fifty percent, we get six-to-eight years of payback time for a water tank.

Addendum: As noted, the cost includes installation. However:

1. It's still silly for the PC to treat a water tank as $4 worth of static water.
2. Payback doesn't happen overnight, but it does happen.

I'd be interested to see what a better model would show!


Stilgherrian said...

Cost differential between your pricing and PC's is maybe installation cost?

Richard Chirgwin said...

Stil - Impossible to tell from the Productivity Commission report.

Going backwards through the references, I find that the original source seems to be a 2006 study for the WA Water Corporation saying that an underground tank costs $2,000. Or perhaps $3k.

So the data is outdated and the source is not disinterested!

From what I know of the prices known to me (pumps as well as the tanks) the original study's prices are well out-of-date and skewed to the high side. The last install price I had for a BIG tank was less than $2k.

Stilgherrian said...

Minor details. The core point of your post is undamaged.

So what does this say about the supposed expertise of the Productivity Commission if their arguments can be dismantled on a sunny Sunday afternoon?

richardw said...

In fact it would be safe to assume that a tank's useful capacity is it's capacity per day. (OK not sensible but as logical)

So $4 would be potentially $1460 per year worth of water. Now this will never happen but neither will $4 per year unless you live in permanent drought which most Australians don't.

So they could have claimed $1460 per year of value from same tank and been just as meaningful.

Gavin Costello said...

Aside from the grip with the article you already posted, I think the worst part was the apparently deliberate ignorance of the Benefits of the use of RWT in urban areas. This was covered in great detail in the Productivity report from pp187 onward. Has the editorial of the Sydney Morning Herald fallen so badly in search of a headline?

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