Economic analysis of the wastewater treatment plant

Abstract

Problems in municipal and domestic wastewater have become major issues in sanitation sectors. One of the solutions to overcome domestic sewage is to install the Wastewater Treatment Plant (WWTP). Economic analysis is fundamentally required for its viability. This paper focused on the economic analysis of feasible rates determination based on the ability to pay (ATP) and willingness to pay (WTP) of users. Furthermore, this paper also highlighted the sensitivity of NPV for different scenarios using different discount rates. Field questionnaires were distributed to surrounding communities in the study area. It was found that the values of ATP and WTP were IDR 125,000 and 40,000 respectively. Using the higher values of ATP, the NPV, and BCR were found to be economically feasible. For the sensitivity analysis, the results showed positive NPV using interest rates of 7.75-9.25%, and negative NPV for discount rates up to 9.75%. Therefore, to implement the development of WWTP, subsidies from the local government may help the starting point of the wastewater treatment plans construction and its operation and maintenance costs.