An Online Tool for Estimating Return-on-investment for Water Recycling at Nurseries

• Published in: HortTechnology (Alexandria, Va.) Va.), 2022-02, Vol.32 (1), p.47-56
• Main Authors: Gottlieb, Paul D., Brumfield, Robin G., Cabrera, Raul I., Farnsworth, Daniel, Marxen, Lucas
• Format: Article
• Language: English
• Subjects: cost-benefit analysis; investnents; irrigation; partial budget approach; retention pond
• ISSN: 1063-0198; 1943-7714
• DOI: 10.21273/HORTTECH04925-21

Water availability, quality, and management, particularly under climate change constraints and fierce competition for water resources, are challenging the sustainability of intensively irrigated nursery crops. We created an online tool to estimate costs and benefits of a water recycling investment at a commercial nursery, given data on the operation input by the user. The online tool returns a “regulatory risk score” based on the user’s drought and pollution risk. Then, using a partial budget approach, it returns net present value of the investment, upfront capital cost, and expected change in annual cash flow. The present article seeks to cross-validate this computer model with results reported in the case study literature. We aggregated data on 38 nurseries and greenhouses profiled in five published studies into a meta study dataset. These data validated the computer tool’s assumptions about the relationship of operation size to total capital cost. Separate simulations on the profitability effects of varying public water rates and price premia due to green marketing corroborated the findings of earlier studies. A major finding of the simulation analysis not previously emphasized in the literature is that capital cost and profit vary significantly with the precise method that is used to size the recapture pond. A “minimalist” approach to this decision is likely to be the most cost-effective, but growers should also keep stormwater runoff and other issues of environmental best practices in mind.