4.3. Financial Requirements

Tue, 09/18/2012 - 16:11 -- klm-admin

4.3.1. Capital cost budget

The capital cost budget includes:

  • planning & training
  • design
  • construction labor and materials
  • supplies for growing agricultural products
  • finance for operations until crops are produced
Budgets vary widely depending on the size and type of system, from a few thousand to several hundred thousand dollars. Capital budgets require a qualified wastewater recycling expert to determine for the local situation.

Here are major variants affecting capital budgets:

  • condition of the collection system
  • presence of local expertise for agriculture & aquaculture
  • presence of hatcheries for fish
  • site slope and soil conditions
  • type of technology used
  • whether simple operation or high profit is the priority
  • capability of municipality to provide construction machinery

Costs for local infrastructure for collection systems, aquaculture and integrated agriculture are liable to misinterpretation. Therefore, prior to setting a capital budget it is required to have a wastewater recycling expert carry out a one week investigation of the local situation.

This website does not provide examples of capital budgets, as such examples are often mistaken by potential users as budgets for their own projects.

Costs also depend on how the municipality or land owner decides to deal with land. Normally the municipality provides and at no cost to the facility operator for 5-10 years. However this gets complicated depending on who owns the land, plus local customs for land use.

4.3.2. Options for financing

If residents are paying water fees to the central state water company, or a large privatized monopoly, but received bad service for this payment, it is possible in some cases for the municipality to opt out of the system and direct funds to  companies which offer more cost-effective technologies.

If the municipality has a water company, then the water company is one candidate to pay for construction and operation. If the state has a water company then this organization could be approached for funding. However these institutions are the least probable to agree, as they are usually bureaucratic and inflexible. About half  the costs are for biodigesters and earth moving, so costs are greatly reduced if the municipality or sponsor contributes earth moving equipment.

In the case of converting conventional facilities which are paying financial penalties for polluting local waterways, it is possible to amortize the future financial penalties to pay for capital costs of modifying the sites.

In the case of landless farmers who have acquired property, it is possible to ask for assistance from the local or national association of landless persons.

Funds are available from international  institutions, but most of their consultants do not know about wastewater recycling, or are against it due to lack of qualification. Organizations such as the World Bank, European Development Bank or Inter-American Development Bank lend funds for wastewater treatment but usually not for decentralized wastewater recycling. In future it is possible that they have an attack of good sense and start to fund this, so check with local representatives.

In the case of a pilot project, international non-governmental organizations sometimes can get funding.

4.3.3. Factors affecting revenues & expenses

Profitability depends on good site management and marketing. A facility is capable of paying its own operating costs, but requires a trained operator. Especially in poor communities, operators require help from a manager.

Some economy of scale is required to maximize cost-effectiveness.  At least two facilities are required in one municipality, or a larger site is required, or the site needs to be attached to an existing farm. Without these factors, a single one ha. site is not going to produce the necessary net revenues.

See the example shown in the finance section of this website for methods to calculate
revenues & expenses.

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