This report by the Food and Agriculture Organisation (FAO) deals with the economics of wastewater use in agriculture. It presents an economic framework for the assessment of the use of reclaimed water in agriculture, as part of a comprehensive planning process in water resource allocation strategies to provide for a more economically efficient and sustainable water utilization. 

The economic framework for wastewater reuse presented in the report is intended to fit within a comprehensive planning framework. The economic appraisal of the project should be from a regional basin viewpoint, comparing its economic costs and benefits. The feasibility of re-use projects hinges on several key factors –

• The physical and geographical features of the area should be conducive to an exchange of water rights between the parties concerned.
• The extra costs (of treatment and infrastructure) should be affordable in relation to benefits. Farmers should be supportive, which depends on the net impact on their incomes, the status of their rights to freshwater, and their alternatives.
• Public health authorities should be satisfied that the projects pose no undue risks, after reasonable precautions have been taken.
• Finally, the environmental impact should be acceptable: the same impact may be acceptable or not in different circumstances, and different authorities will place a different weight on specific impacts in forming an overall judgement.

The document presents case studies from Spain and Mexico which provides a good field testing for the approach presented in Chapter 3 on Methodologies of Cost-Benefit and Cost-Effective Analyses. Chapter 4 on case study results demonstrates that the methodology presented for appraising wastewater reuse projects is viable.

The case studies confirm that re-use is an area ripe for the application and refinement of the tools of environmental cost-benefit analysis. The case material demonstrates that certain items of costs and benefits are more robust than others. The analysis of the case studies has implications for policy towards the use of reclaimed water, depending on what its principal objectives are –

• As a feasible and cost-effective means of meeting the growing demands of agriculture for water in regions of growing water scarcity and competition for its use.
• As an environmental solution to the growing volume of wastewater effluent and it’s potential for downstream pollution.
• As a “win-win” project that is a solution to urban water demand, while also delivering the agricultural and environmental benefits stated above. 

View the report here