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Construction and Operation Costs of Wastewater Treatment and Implications for the Paper Industry in China Kunyu Niu, Jian Wu, Fang Yu, and Jingli Guo Environ. Sci. Technol., Just Accepted Manuscript • DOI: 10.1021/acs.est.6b03835 • Publication Date (Web): 23 Sep 2016 Downloaded from http://pubs.acs.org on October 29, 2016
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Construction and Operation Costs of Wastewater Treatment
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and Implications for the Paper Industry in China Kunyu Niua,b
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Institute
of
Agricultural
Jian Wuc,*
Economics
and
Fang Yub Jingli Guoa
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a.
Development,
Chinese
Academy
of
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Agricultural Sciences, Beijing, China, 100081;
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b.
Chinese Academy for Environmental Planning, Beijing, China, 100012;
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c.
School of Environment and Natural Resources, Renmin University of China, Beijing,China,
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100872.
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Abstract: This paper aims to develop construction and operation cost model of wastewater
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treatment of paper industry in China and explores the main factors that determine these costs.
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Previous models mainly involved factors relating to the treatment scale and efficiency of treatment
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facilities for deriving the cost function. We considered the factors more comprehensively by adding a
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regional variable to represent the economic development level, a corporate ownership factor to
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represent the plant characteristics, a sub-sector variable to capture pollutant characteristics and a
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detailed-classification technology variable. We applied a unique dataset from a national pollution
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source census for the model simulation. The major findings include: (1) Wastewater treatment costs
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in the paper industry are determined by scale, technology, degree of treatment, ownership, and
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regional factors; (2) Wastewater treatment costs show a large decreasing scale effect; (3) the current
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level of pollutant discharge fees are far lower than the marginal treatment costs for meeting the
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wastewater discharge standard. Key implications are as follows: (1) Cost characteristics and impact
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factors should be fully recognized when planning or making policies relating to wastewater treatment 1
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projects or technology development; (2) There is potential to reduce treatment costs by centralizing
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wastewater treatment via industrial parks; (3) Wastewater discharge fee rates should be increased; (4)
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Energy efficient technology should become the future focus of wastewater treatment.
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Keywords: Wastewater Treatment; Construction Cost; Operation Cost; Paper Industry
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TOC Art Unit Treatment Cost
Marginal Treatment Cost
28 29 30 31 Scale
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Pollutant Concentration
33 34 35
1.
Introduction
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Wastewater treatment cost analysis can provide important information for the planning, prediction
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and policy-making relating to wastewater treatment projects’ development and management1-3. An
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understanding of the marginal wastewater treatment cost can lay a foundation for the formulation of
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feasible environmental tax policies1. However, there is still very limited information about the cost of
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industrial wastewater treatment plants (including construction and operation costs), and even fewer
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empirical studies in this particular area. Existing literature primarily focuses on exploring or
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assessing the wastewater treatment technology from a technical or engineering perspective5-12, while
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few studies analyze the wastewater treatment costs or the correlation between the costs with
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management and economic statuses13. Some articles focus on the cost function and analysis of urban
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wastewater treatment14-19, but few focus on industrial wastewater treatment costs
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reasons include the complication of industrial wastewater treatment, large differences in wastewater 2
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. The main
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treatment costs due to the differences in pollutant types between industries, a shortage of researchers
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that can conduct economic analysis on wastewater treatment18, and the difficulty in acquiring
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relevant and accurate information.
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The paper industry produces the largest chemical oxygen demand (COD) discharges among all
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industrial sectors in China22. It contributes to about 32.37% of total COD discharges within the
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industry sector. Meanwhile, it only contributes 1.43% to total industrial added value23. As requested
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by the State Council in the “12th Five-Year Plan of National Environmental Protection”, greater
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efforts will be put into controlling pollution in key sectors, including the paper making, printing and
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dyeing sectors, in order to reduce discharges of COD24. In this context, we develop the construction
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and operation cost function of wastewater treatment for the paper industry, in an attempt to
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comprehensively understand the cost structure and major factors that impact wastewater treatment
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costs.
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With the cost model, we analyze the impact on wastewater treatment costs from both technical
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factors such as wastewater treatment scale, technology, degree of pollutant treatments, different sub-
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sectors, as well as socio-economic factors such as the ownership of the plant and the geographical
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location (which represents the economic context of the region). The model also enables us to
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simulate the construction/operation costs as well as the marginal wastewater treatment costs for the
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paper industry under different circumstances. Based on the above analyses, we are able to draw
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conclusions and examine the potential policy implications.
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2.
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2.1 Methodology
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Methodology and Data
Normally, the wastewater treatment construction and operation cost function is formed in exponent equations14-16, 25-28. The model is expressed as follows:
= ∗ ∗
(
) (1)
3
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Where, is the construction cost ( ) or pollution abatement operation cost ( ) for wastewater
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treatment facilities; W is the wastewater treatment scale, which appears as the design capacity of
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wastewater treatment (DCWT) ( ) in the construction cost function, and the annual wastewater
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treatment volume (AWTV) ( ) in the operation cost function; refers to the kth pollutant (k=1,2,…,n); is the concentration of pollutant in inlet wastewater; is the concentration of pollutant in outlet wastewater; the ratio of inlet concentration to outlet concentration of
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pollutants indicate the degree of pollutant treatment; α, β and (k = 1,2, … , n)% are parameters.
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This model is not only applicable to an industry with a single pollutant, but also applicable to
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industries with multiple pollutants.
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Most economic analysis regarding wastewater treatment indicates that the major determinants of
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treatment costs involve wastewater treatment design scale or population density of the serving area,
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or the amount of wastewater to be processed as well as effluent pollutant concentrations14-16, 25-28.
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Sipala et al.29 concludes that wastewater treatment costs are related not only to treatment scale
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(sometimes population density of the surrounding area), treatment degree and type of pollutant, but
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also to the requirement of regional environmental management. McConnell and Schwartz30 and Yu
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et al.
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factors. Variables, including corporate ownership were incorporated into the models by Dasgupta et
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al. 20, Wang and Wheeler 21. These improved models better addressed the issue of single or few
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explanatory variables of treatment costs, yet some important aspects were not taken into account in
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the selection of the explanatory variables in the actual application of such models. First, it is not
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necessarily true that the more pollutants as explanatory variables are included in the model, the better
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the model can be explained. For example, Hernandez-Sancho et al.18 and the study conducted by the
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World Bank 20 included both COD and biological oxygen demand (BOD) in their models. However,
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As both are the oxygen demand for pollutant oxidization, COD and BOD are highly related in
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representing the degree of pollution, and the inclusion of the two types of pollutants in the same
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indicate that wastewater treatment costs are also associated with regional development
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model may lead to the problem of collinearity. Second, due to difficulties in data acquisition,
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previous research may have missed some important variables. Few research studies incorporate most
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of the important explanatory variables into their models18, 20, 21, 31, 32, for example, some incorporate
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the factor of technology but left out region31,32. Third, for the industrial sector, there is a large
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difference in the type of products in different sub-sectors within the same sector, as well as the
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corresponding difficulty of wastewater treatment, yet previous research has failed to differentiate the
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wastewater treatment costs between different sub-sectors of the same sector18, 20, 21. Last, at present
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there has been no study using a large sample dataset to assess the industrial wastewater treatment
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costs.
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2.2 Model and Variables
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In this study, we take Eq. (1) as the basic model to build the paper industry’s wastewater treatment
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construction costs function and operation costs function by using a large sample dataset. The cost
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model will involve explanatory factors including wastewater treatment scale, treatment technology,
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pollutant treatment degree, business type, region and sub-sector. As shown in Eq. (1), the impact on
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cost by factors other than treatment scale and pollutant treatment degree will be captured by
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parameter α.
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In order to specify variables, we first consider the type of pollutant in wastewater. The most
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damaging conventional pollutant discharged by the pulp and paper industry is COD. Technologies
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that control COD discharges tend to reduce the discharge levels of other pollutants33. Consequently,
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we took COD as the exclusive pollutant variable in the model. Therefore, for the paper industry, &
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=1 in Eq. (1), and refers to COD. In this study, COD refers to Total COD (which includes both
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insoluble and soluble COD).
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As for the variable of wastewater treatment technology, the wastewater treatment process in the
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paper industry mainly includes four types of technical processes: physical, biological, chemical, and
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physicochemical processes34. We further divide biological means into 3 different types: aerobic, 5
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anaerobic and an anaerobic-aerobic combined process. These three types of biological treatment
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processes differ greatly in terms of the facility/building, treatment principles and costs. Thus, our
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revised model includes six types of wastewater treatment processes including physical, chemical,
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physicochemical, aerobic, anaerobic and anaerobic-aerobic combined processes. In order to avoid
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perfect collinearity, five of the technology factors (physical technology, chemical technology,
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physicochemical technology, anaerobic technology and anaerobic-aerobic combined technology) are
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set as dummy variables in the model, while the aerobic technology factor is set as the control
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variable and is omitted from the model (table S1 in SI).
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Dasgupta et al.20 considered the factor of corporate ownership when they studied China’s industrial
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wastewater treatment costs. In their research, enterprises were classified into state-owned and non-
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state-owned. In this study, corporate ownership is also considered as a variable that explains the
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differences in wastewater treatment costs, but the ownership type was further classified. In China,
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state-owned enterprises only cover a very small percentage of total enterprises in the paper industry
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(2.4%), while the percentage of non-state-owned enterprises is much higher, with the private
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enterprises occupying the largest proportion (81.3%) and foreign enterprises accounting for 16.3% 23.
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Thus, this study classified enterprises into private enterprises, foreign enterprises and state-owned
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enterprises (the definition of these three types of enterprises are described in Part 3 of the SI).
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Similarly, private ownership and foreign ownership are set as dummy variables in the model, while
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state-owned enterprises are set as the control variable (Table S1 in SI).
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In order to explain the regional differences in wastewater treatment costs, we divide the location of
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treatment facilities into the eastern, middle and western regions of China. To avoid perfect
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collinearity, the eastern and middle regional variables of China are set as dummy variables in the
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model, while the western region is set as the control variable (Table S1 in SI).
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One important characteristic of industrial wastewater, different from that of the urban wastewater,
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is that the composition of wastewater from different sub-sectors within the same sector differs a lot. 6
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The paper industry is divided into 3 different groups: the manufacture of pulp, paper, and paper
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products35. The manufacture of pulp has a much higher level of pollution than paper and paper
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products manufacturing processes. As a result, we classify pulp manufacture as one group of the sub-
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sector variable, and paper and paper products as another group. Pulp manufacture is set as a dummy
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variable with paper and paper products manufacture as the control variable (Table S1 in SI).
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Taking Eq.(1) as basic model, and according to the classification of variables above, α in (1) should be expressed as (2): ' = (&) + '+, (-ℎ) + '/ (0) + '+/ (-0) + '12 (34) + '1/ (30) + '5 (6) + '+ (- ) + '+ (-) + '7 () + '8 (9) (2)
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After importing Eq. (2) into Eq. (1), using COD substitute in Eq.(1), we obtain: =
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: ; (+,)
