As the Chinese political and financial center, Beijing has a large and increasing population. Moreover, Beijing is located in the arid area of China. Rapid urbanization and climate change lead to serious water scarcity in Beijing. Arid regions around the globe are most often associated with physical scarcity. Northern China, including Beijing is an area of physical water scarcity (Seckler et al., 1998).

Beijing’s climate is semi-humid monsoonal with a mean annual temperature of 10­ to 12 centigrade. Mountains to the north, northwest and west shield the city from the encroaching desert steppes. The  average altitude of the surrounding mountains is 1,000 to 1,500 metres. The Dongling mountain located at the border of the Hebei province is the highest point in Beijing, with an altitude of 2,303 metres. Because of its geographical location, Beijing has low average rainfall. Beijing’s average precipitation is 550 mm per year, 80% of which falls between June and September (Beijing Water Authority 1986 to 2009).

In this study, the analysis aims to determine the contribution of a water reuse project to the development of the total economy. All the economic and social effects caused by water reuse systems are taken into the calculation. The economic and social impact factors are adapted from literature (Hernandez et al., 2006). The method used in this research is benefits cost analysis (BCA), which is a largely accepted method to evaluate environmental projects. Although various economic methods have been employed to evaluate water management such as life cycle analysis, multi-criteria analysis, cost effectiveness study, contingent valuation methods and multiple goal programming, the BCA method is most suitable method for this study (Ashley et al., 1999; Hauger et al., 2002). Based on the theory of welfare economics, the BCA method can help to illuminate the trade-off involved in making different kinds of investments (Arrow et al., 1996). It can inform decision makers about how scarce resources can be put to the greatest social good. 

In the CBA method, if benefits and cost stretch over time, present values of cost and benefits occurring in different periods are required. Net present value is the difference between the present value of benefits and the present value of cost. The discount rate used is another important issue in the CBA method. It is the rate at which future benefits and costs are discounted to present value (Prest and Turvey, 1968). The discount rate is based on how individuals trade off current consumption for future consumption (Arrow et al., 1996). People use different discount rates for different kinds of things (Gintis, 2000). For the evaluation of environmental resources, it is better to use the social discount rate (Brent, 1996). According to the publication Chinese Economic Evaluation Parameters on Construction (2006), the social discount rate used for benefit cost studies in China is 8% including the inflation rate.

The studied plants have different sizes. For wastewater reuse, plant 1 and plant 2 are small size and plant 3 and plant 4 belong to large size; while for rainwater harvesting, plant 1 is small size, plant 2 is medium size and plant 3 is large size. The detail of capacities of these plants is shown in Table 1.  The economic and social impact factors for wastewater reuse are listed in Table 2. The economic cost caused by wastewater reuse systems includes initial investment (defined as VI) and O&M cost (defined as CO&M). The determination of economic cost  (defined as CE)  of  wastewate use plants are shown in equation 1. Moreover, in equation 1, “n” means the time period which is 10 years in the study, and “r” means the discounting rate which is 8%.

                               (1)

Wastewater reuse may lead to human health risk because the reused water probably does not reach the official minimum health standards. The reuse water could be reused for toilet flushing, or green land irrigation. So wastewater reuse could have negative effects on human health. The origin of such calculation method for the social cost (defined as C_S) is shown in equation 2 and explained as follow. World Bank values the total health cost (defined as C_M) caused by water pollution in China, which is about 14.22 billion Yuan each year, and the total estimated DALYs (defined as M) caused by diarrhoea is 5,055,000 DALYs each year. The product of DALYs rate (defined as R) and population number (defined as K) gives the total DALYs of Beijing. It is supposed that the DALYs of Beijing resulting in diarrhoea is caused by total reused wastewater.

In equation 2, P means the probability of DALYs due to the wastewater reuse plant (P)

       (2)

                          (3)

About the social benefits of wastewater reuse (defined as B_S), the introduction of wastewater reuse could work as a campaigns to enhance social awareness on water saving. This can be determined by total expenditure on public awareness raising campaign (defined as S) and the ratio of number of users to total population in Beijing (defined as Q) as expressed in Equation 4. Moreover, the newly built wastewater reuse systems can create vacancy so that it benefits to improve the social employment. In equation 4, β is the employment elasticity, w is the number of increasing jobs in the plant, W is the total employment of Beijing and Y is the Beijing’s Gross Domestic Product.

             (4)

The economic and social impact factors of rainwater harvesting are presented in Table 3. Similar to wastewater reuse, the economic cost of rainwater harvesting (defined as C_e) contains initial investment (defined as V_i) and O&M cost (defined as C_o&m), which is shown in equation 5.

                                   (5)

In the present study, the rainwater is mainly reused for agricultural irrigation. If the quality of water does not reach the requirement, it may bring the potential agricultural risk. Equation 6 shows the social cost of agricultural risk (defined as C_s) could be determined by the average income from the vegetable (defined as I) and the total decreasing amount of agricultural production (defined as D).

                                   (6)

Rainwater harvesting could increase the water supply amount in winter, resulting in the production increase. It is regarded as the economic benefit. The economic benefit (defined as B_e) of rainwater harvesting can be determined by the unit income of extra-farming in winter (defined as E) and the area of storage tanks (defined as A).

                                    (7)         

Finally, rainwater harvesting also can help to increase the public awareness of water saving. Generally raising awareness of water saving is reached through all kinds of public education and advertisement campaigns. Rainwater harvesting could lead to that the cost is saved on awareness raising campaigns. So the cost saving on public education and advertisement campaigns can be regarded as the social benefit of rainwater harvesting (defined as B_s). Equation 8 presents the determination, in which “u” means the number of users, “F” means total expenditure on public awareness raising campaigns for water saving and “G” means total people number influenced by the campaign.

                          (8) 

RESULTS AND DISCUSSIONS

The present values of economic and social impacts of wastewater reuse plants are calculated and listed in Table 4. The economic costs are represented by initial investment and operational and maintenance cost, accounting for around 85% of total cost. Compared with social cost, the economic cost is a much larger value. But, about the benefits, different sizes have different situations. For the small plants, the economic benefits including all kinds of cost saving also account for around 85% of total benefits, while for the large plants, the social benefits account for larger proportion of total benefits.

The comparison between economic benefits and cost, and between social benefits and cost, shows that economic benefits are larger than economic cost for small size of plants. Conversely, the economic cost of large plants is much larger than the economic benefits. However, for the small plants, the social benefits are larger than the social cost; for the large plants, the social benefits are smaller than the social cost. So, from the respective of both social and economic impacts, building small wastewater reuse plants are more feasible than building large plants.  

The estimation results of rainwater harvesting are shown in Table 5. Plant 1, plant 2 and plant 3 respectively represents small, middle and large plant. It is different to the result of  wastewater  reuse,  that  the economic cost value of rainwater harvesting plants is almost the same as the social cost value. Moreover, excepting the small plant, the total cost values of middle size and large plants are quite closed to the total benefits values. The comparison between economic cost and benefits, and between social cost and benefits, shows that for small and middle plants, the economic benefits are closed or less than cost, while for large plant, the economic benefit is larger than economic cost. Similarly, it is only the large plant whose social benefit is larger than social cost.