EUROPEAN COMMISSION Directorate-General Regional Policy Ex post evaluation of cohesion policy interventions 2000-2006 financed by the Cohesion Fund (including former ISPA) Work Package C - Cost benefit analysis of environment projects Pilot case study - Project no. 22: Dublin Region Waste Water Treatment Scheme (Stage 5), Ireland (2000IE16CPE001)

August 2011

Disclaimer: The views expressed in this study are those of the authors and do not necessarily reflect the views of the European Commission or of its services. This report merely acts as a guideline document for policy makers and does not seek to establish the Commission’s future policy in this area. Repro- duction or translation is permitted, provided that the source is duly acknowledged and no modifications to the text are made. Ex post evaluation of cohesions policy interventions 2000-2006 - case study

Table of Contents

1 Project no. 22: Dublin Region Waste Water Treatment Scheme (Stage 5), Ireland (2000IE16CPE001) 1 1.1 Summary 1 1.2 Revision of ex ante cost benefit analysis 4 1.3 Ex post cost benefit analysis 12 1.4 Comparing the ex ante and ex post cost benefit analyses 33 1.5 Unit costs 34

Ex post evaluation of cohesions policy interventions 2000-2006 - case study

Foreword

This document presents one of ten case study that has been elaborated as part of the study ‘Ex post evaluation of cohesion policy interventions 2000-2006 fi- nanced by the Cohesion Fund (including former ISPA) - Work Package C - Cost benefit analysis of environment projects. This case is a pilot case and does not have exactly the same structure as the other case studies as form was ad- justed according to the experiences of this pilot case study. The study was commissioned by the European Commission, DG Regio. During the project ten case studies were elaborated that can be used as guidance or good practice for future Cost Benefit Assessments in relation to Cohesion Fund/ISPA applica- tions.

The overall approach to the case studies is as follows:

The projects have been analysed in the period July to October 2010 and con- tains the simple and most important story concerning:

• Why the project was formulated?

• Who the relevant stakeholders were in the decision making process?

• How the project was analysed and decided upon?

• What the outcome of the project was in the ex-post perspective?

The project analyses include to the largest possible extent the ex-ante and ex- post figures in order to assess the project’s performance. Due to the great vari- ety in the data quality, data access and possibility to reconstruct data, the analy- ses vary in quality and extent. However, in every case there is a significant learning that can contribute to the fundamental questions of the study1:

• What were the impacts of the examined projects?

• How can ex post cost-benefit analyses contribute to the practice of ex ante cost-benefit analyses?

• What are the potentials and limits to carry out an ex post cost-benefit analysis to identify and/or analyse the impact of the projects? Is it an ap- propriate tool for impact analysis?

The CBA guidelines have been used to analyse the projects. In all cases the project teams have visited the project sites and the teams have interviewed technical, financial and managerial staff concerning the project development, implementation and the results of the project. Furthermore, the project teams have been in dialogue with the project beneficiaries on the data used in the ex- post analysis.

1 Terms of reference page 6 in chapter 3. Subject of the contract. Ex post evaluation of cohesions policy interventions 2000-2006 - case study

List of Abbreviations

B/C Benefit-Cost ratio CBA Cost Benefit Analysis CF Cohesion Fund CO2 Carbon Dioxide EC European Commission ENPV Economic Net Present Value ERR Economic Net Present Value EUR Euro FNPV Financial Net Present Value FRR Financial Rate of Return GDP Gross Domestic Product GDP Gross Domestic Product GHG Green House Gases H2S Hydrogen Sulphide Ha Hectare IRR Internal Rate of Return ISPA Instrument for Structural Policies for Pre-Accession kW Kilo Watt LFG Landfill gas Nm3 Normal Cubic Metres NPV Net Present Value NPV Net Present Value PV Present Value PV Present Value SDR Social Discount Rate

Ex post evaluation of cohesions policy interventions 2000-2006 - case study 1

1 Project no. 22: Dublin Region Waste Water Treatment Scheme (Stage 5), Ireland (2000IE16CPE001)

1.1 Summary Need to implement EU membership required the Irish authorities to implement the Urban Waste UWWD Water Directive (UWWD, 91/271/EEC) by 2001. This involved the provision of secondary treatment facilities. Hence, from the outset the objective of the Dublin Region Waste Water Treatment Scheme (WWTS) was primarily to comply with this environmental legislation, and through this compliance im- prove the quality of life of the Dubliners. In other words, the decision on the design of the Dublin WWTS was mainly steered by finding the technical solu- tion that would comply with the UWWD in the cheapest way.

For the present ex post evaluation this has some implications. Firstly, since the decision in practice was made on the basis of a cost effectiveness analysis and not a cost benefit analysis (CBA), it is somewhat meaningless to assess the quality of any ex ante CBA - hereunder its usefulness for decision-making. Secondly and in line with the first issue, it is not straightforward to compare the ex post CBA (carried out within this ex post evaluation) with previously made CBAs - of which there seems to have been quite a few, since it is not obvious which one to compare with. Thirdly, with the main objective being environ- mental legislation compliance, the value of an ex post CBA is questionable since it is not fully suitable to address this objective, and quite a number of re- sources are needed to produce a proficient ex post CBA.

Benefits of improved This said the Dublin WWTS contains a specific investment in ultraviolet disin- bathing water fection that was added to the sewage treatment works to support compliance with the Bathing Water Regulations (1992). Hence, there is an element of the infrastructure that is directly targeted at improving the benefits to the Dubliners and others recreational users.

The ex post CBA thus accounts for the benefits of the improved bathing water. Furthermore, it is important to be aware of the initial state of the water quality in the Dublin Bay and what would have happened without the Dublin WWTS - i.e. the "do nothing scenario". This is of course also important for the above environmental legislation compliance. In short, in the 1990's the already poor Ex post evaluation of cohesions policy interventions 2000-2006 - case study 2

water quality deteriorated. Waste water underwent at the best primary treatment with the sludge being shipped and dumped directly into the sea. Even worse, the north part of Dublin's waste water was directly emitted into the sea.

Need to expand Dub- However, it did already at the time of the commissioning of the Dublin WWTS lin WWTS show that the design capacity was too low. With Ireland being a "Celtic tiger", Dublin experienced a period of rapid economic growth between 1995 and 2007 - which though came to a dramatic halt by 2008. At the same time the popula- tion of Dublin grew to an unexpected high. Hence, the Dublin WWTS has al- ready from the start of its operation suffered from overloading. Furthermore, due to designation of the Liffey Estuary as sensitive waters there is a need for infrastructure developments to comply with stricter discharge standards. This expansion is already in process with geotechnical investigations related to a sea outfall tunnel expected to be carried out in 2010.

Such needed expansion is therefore included in the ex post CBA via a new large 200 mill Euro infrastructure investment (in 2010 prices) taking place dur- ing 2011-16, with the main cost burden in 2015-16.

Dublin WWTS Hence, the Dublin WWTS being analysed in the ex post CBA consists in addition to the existing infrastructure this new infrastructure investments as it is unavoidable. Furthermore, of the existing infrastructure the CBA focuses as requested by DG REGIO on Stage 5. However, since the Stage 4 infrastructure development, a submarine pipeline, is an integral element in the functioning of the Stage 5 infrastructure, it has also been included. The analysed existing in- frastructure is illustrated in Figure 1-1.

Figure 1-1 Map of the project area at the Dublin Bay

In addition to the submarine pipeline it contains an upgrading of the Ringsend treatment works, the construction of a pumping station at Sutton which pumps Ex post evaluation of cohesions policy interventions 2000-2006 - case study 3

the North Dublin waste water to Ringsend for treatment via the submarine pipe- line, the diversion of waste water from Howth, Sutton, Baldoyle, and Portmar- nock to the Sutton pumping station, and the construction of an interceptor sewer which transfers the North Dublin waste water to the Sutton pumping sta- tion.

Ex post CBA The ex post CBA results must thus be used with the above objective and development of the infrastructure in mind. The main results are:

Financial return is negative at a substantial FNPV (Financial Net Present Value) of -674.6 million Euro (2010 prices), corresponding to a FIRR (Finan- cial Internal Rate of Return) of -11.4%. Hence, there is no business case for the Dublin WWTS, and so it did require (EU) financial support.

Economic return is, however, also negative at ENPV at -324.6 million Euro and EIRR at -4.3%. Hence, the quantifiable benefits of the environmental im- provements in the Dublin Bay are not sufficient to compensate for the costs. So from the perspective of the quantitative CBA results the Dublin WWTS was not an economic viable investment. This said, it is - with the additional Stage 6 investment - environmental viable in the sense that is complies with the rele- vant environmental regulations. Furthermore, it must be acknowledged that there are a number of benefits that until now have not been feasible to quantify

Costs used in the economic analysis are conversions of those in the financial analysis - using the conversion factors suggested by the DG REGIO CBA guidelines. It is assumed that these conversion factors are elaborated to take into account some environmental impacts such as noise, odours, aesthetic and landscape via the design of the investment.

Additional impacts distinguish between:

• Internal benefits - i.e. to the users - are estimated as the benefit to 45,000 households from additional housing permissions that can be attributed to the Dublin WWTS.

• External benefits are calculated as the increase in water recreational bene- fits.

• External costs comprise the environmental costs of increased energy use of the Dublin WWTS compared with the primary treatment facilities.

Qualitative benefits discussed - but not included in the quantitative calculations - are the public perception of the public perception of the environmental im- provements. This is very much related to water quality - as the ability to have the Blue Flag status is creating confidence among the population and generally they now regard the Bay as a great resource very closely located to a large city; improvements to aquatic life and fish stocks; to tourism and industry; and health impacts. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 4

Risk analysis shows that the probability of the project giving a positive eco- nomic return is really non-existing.

1.2 Revision of ex ante cost benefit analysis

1.2.1 Use of ex ante cost benefit analysis for decision-making CBA not used for When reviewing any ex ante cost benefit analysis for the Dublin WWTS it is decision-making from the outset important to acknowledge that the primary objective of the in- frastructure investment was to comply with the Urban Waste Water Directive (UWWD, 91/271/EEC) by 2001. In other words, the decision on the design of the Dublin WWTS was mainly steered by finding the technical solution that would comply with the UWWD in the cheapest way - i.e. the decision was made on the basis of a cost-effectiveness analysis, not a CBA. This decision- making process was stressed by DG REGIO (see Text-box 1-1). This said the objectives of the project stated in the Cohesion Fund application included in addition to compliance with the UWWD, the aim to reduce the pollution in wa- ters used for bathing and recreation, to protect aquatic life and fish stocks ac- cording to the Water Quality Management Plan of Dublin Bay, and to improve tourism and industrial/commercial development in the area.

Text-box 1-1 DG REGIO: "CBA was not a part of the decision-making process"

Brendan Smyth, the first EC desk officer in charge of the Dublin Bay project from DG REGIO's side, answers to the question on how a CBA was used in the deci- sion-making process: “Water projects in Europe are difficult to measure from the impact side. The cost side is clear, but the benefit side is unclear. Therefore the impacts are much different from e.g. World Bank projects in Africa where substan- tial positive effects such as reduced illness can be measured”. With respect to the Dublin Bay project, Brendan Smyth continues: “The approach here was clear: to comply with a legal provision. Therefore the focus was put on how to reach the en- vironmental targets at least costs by use of cost-effectiveness analyses. Generally at that time, the focus was on budget, timing, priority area and EU environmental policy compliance. The use of CBAs was not an issue since it was basically engi- neers and not economists working with the project planning”. Source: Interview conducted in Brussels 27 May 2010 at DG REGIO

The central Irish stakeholders who were involved in the decision-making proc- ess (and the implementation stage) were the Department of Environment, Heri- tage and Local Government - the organisation making the application and re- sponsible for the funding, Dublin City Council - the organisation responsible for the implementation of the project and in the operation period the contract holder with the Design Build and Operate (DBO) contractor, and finally the Department of Finance - the organisation to which payments are made. The stakeholders, who were interviewed during this case study, confirm the lack of CBA use.

Enda Falvey, responsible coordinator from the Department of Environment, explained at an interview in Dublin 15 April 2010: "The Ministry of Environ- ment did not conduct ex ante CBAs at the time of the project planning and no particular economist resources were able to conduct a CBA. At the end of the Ex post evaluation of cohesions policy interventions 2000-2006 - case study 5

project implementation DG REGIO claimed to see an ex post CBA. In 2004, a CBA methodology study was carried out by a consortium of DKM Economic Consultants Ltd.2, Aqavarra Research Ltd. and ESRI. Based on this methodol- ogy an ex post CBA was conducted for the Dublin Bay project. DG REGIO accepted the CBA and it also appeared to be in good compliance with the 2003 edition of the CBA guidelines from DG REGIO. In addition, the Ministry of Finance has published a guidance (2005) to be followed in the CBA studies, and accordingly 13 projects were assessed".

Existing CBAs Hence, CBAs have been carried out for the Dublin WWTS - how many is not entirely clear. Two have been identified, one from 2000 and one from 2005 - i.e. both being ex post or close to ex post analyses. In other words, there is really no ex ante CBA to compare this study's ex post CBA with; but the two existing CBAs have inspired the work.

2000 CBA3 tries to quantify socioeconomic benefits via estimating the tourism revenues by hotels and B&Bs that can be attributed. Similarly, overcoming the limitations to industrial development due to over-pollution of the Dublin Bay is assessed to have rendered value added, while the commercial sector has bene- fitted from increasing trade arising from tourism, local industry and the residen- tial population. Furthermore, it is assessed that a good market for cockles can be developed when the water quality is improved, and the CBA attaches a monetary value to the sludge arising from sewage treatment, i.e. as fertiliser in agriculture and forestry. It calculated the Economic Internal Rate of Return (EIRR) to be 15.8% - i.e. a viable infrastructure investment seen from a socio- economic viewpoint.

The approach can be seen as indirect way of applying a hedonic pricing method - i.e. the increase in land values due to its improved local environmental attrib- utes or actual usability for housing or industry has been estimated via increased revenues. This approach has some weaknesses. In particular, it is difficult to distinguish revenue increases that can be attributed to the new infrastructure from those that are caused by other developments. Furthermore, this difficulty exists particularly for areas where many other developments are going on - e.g. in large cities. An isolation of such infrastructure impacts is relatively easier for e.g. rural areas.

2005 CBA4 distinguishes between internal benefits and external benefits. The former includes benefits to domestic customers - i.e. part of the new domestic housing would not have gained planning permission without the construction of the new infrastructure, benefits to non-domestic users - i.e. a net benefit to in- dustry of having their effluent removed and treated, and benefits to the local

2 DKM Economic Consultants Ltd. (2004), Economic Evaluation of Water Supply and Waste Water Projects - Cost-Benefit Analysis, Methodology Paper, August. 3 Dublin Corporation (2000), Dublin Main Drainage, Ringsend Sewage Treatment Works Expansion and Sludge Treatment and Disposal, Updated Socio-economic Cost Benefit Analysis, November. 4 McCarthy Acer Consultants Ltd (2005), Dublin Bay Project, Ex-Post Cost Benefit Analy- sis. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 6

authority - e.g. avoided costs of continued operation of the old treatment works and pumping station. The latter includes benefits for those engaged in water- based activities such as swimming and boating, improved general amenity value of the site in terms of odour, visual impact etc., possible improved ca- pacities for fish stocks and potential benefits for angling, and benefits to wild- life. The valuation of these benefits builds to a large extent on the Environment Agency UK (2004)5. It calculated the EIRR to be 6.71% - i.e. here also a viable infrastructure investment.

1.2.2 Review of ex ante assumptions Unexpected eco- Whether the design of the Dublin WWTS was made on the basis of a CBA or a nomic and popula- cost effectiveness analysis it had to fulfil the expected demand for its use. In tion growth … this context, it is important to understand that in the period after the design was made, the demand for waste water treatment grew unexpectedly fast - and probably faster than any forecaster could have foreseen. With Ireland being a "Celtic tiger", Dublin experienced a period of rapid economic growth between 1995 and 2007 - which though came to a dramatic halt by 2008. At the same time the population of Dublin grew to an unexpected high.

… leading to insuffi- Hence, the Dublin WWTS has already from the start of its operation suffered cient capacity from overloading. The design flows for the Ringsend Waste Water Treatment Plant (WWTP) are shown in Table 1-1. The 2001 peak storm flow to Ringsend was estimated at 22.6 m3/s, while storm holding tanks cater for flows in excess of the capacity of the biological waste water treatment capacity of 11.1 m3/s.

Table 1-1 Design flow basis for Ringsend WWTP

Design parameter Estimated 2001 Estimated 2020 Estimated ultimate flows flows design year flows Dry weather flow (m3/s) 3.8 4.6 5.5 Average flow (m3/s) 4.8 5.7 6.9 Max flow for waste water treatment (m3/s) 11.1 11.1 13.8 Peak flow (m3/s) 22.6 22.6 23.5 Source: Tender Documents Vol. 2 Employers Requirements 1998.

The total dry weather flow to the Ringsend WWTP was based on three compo- nents: flow from domestic population, flow from industrial sector, and infiltra- tion into sewers.

Much of the City’s sewerage system dates back to the end of the nineteenth century and beginning of the twentieth century and is a combined waste wa- ter/storm water system. Since the 1960's it has been policy that all new devel- opment should be drained on a separate drainage system for surface water. As a result of this residential flow from the original Ringsend catchment area was 180 l per capita (c) per day and allowance of 204 l/c/day was made in the de- sign because of the higher infiltration rates into the old sewers, particularly in the tidal zone. A baseline flow of 130 l/c/day for the North Dublin Catchment

5 Environment Agency UK (2004), Benefits Assessment Guidance for Water Quality and Water Resources Schemes. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 7

and 50 l/c/day infiltration was allowed for. Industrial flow data in the original design was taken as the sum of the maximum allowable discharges permitted under trade licenses.

Table 1-2 shows the design load that the Ringsend WWTP in 2020 could cater for average BOD and TSS loads of 98.4 t/d and 101.1 t/d, respectively. Domes- tic design average pollutant loads were estimated based on per capita contribu- tions of 60 g BOD/c/d and 75 g TSS/c/d, 8 g Ammonia-N/c/d, 12 g Total Ni- trogen/c/d and 3 g Total Phosphorus/c/d.

Table 1-2 Design load basis for Ringsend WWTP year 2020

Design parameter Estimated 2001 loads Design year 2020 Average load 95%ile Average load 95%ile BOD, kg/d 88,300 141,400 98,400 13,600 TSS, kg/d 89,000 171,000 101,100 10,900 Amm-N, kg/d 8,100 10,900 9,500 101,100 Total Nitrogen, kg/d 13,600 18,600 15,600 157,600 Total Phosphorus, kg/d 3,200 4,800 3,700 5,600 Source: Tender Documents Vol. 2 Employers Requirements 1998.

In terms of population equivalent (PE) Table 1-3 shows that the final design was set at 1.64 million PE for the year 2020. This estimate was based on popu- lation projection from the Central Statistics Office i.e. the report ‘Population and Labour Force Projections 1996-2026’ was used. This projection assumed low migration and a decline in the total fertility rate. The additional population centres of Ashbourne, Dunboyne, Clonee, Saggart, Rathcoole, Newcastle and Baldonnel were included (combined PE of 30,000). An additional PE of 10,900 was included for commercial, institutional, commuter populations; 6,700 PE for the commuter population and 4,200 for the number of hospital bed places in the drainage area. Industrial loadings were included at 60% of the 1991 licensed load. This figure was based on a Dublin County Council's target reduction of 50% with a 10% margin to allow for difficulties in identifying what load each industry would discharge.

Table 1-3 Loading (PE) for Ringsend WWTP year 2020

Ringsend North Dublin Total Resident population 830,911 314,139 1,145,050 Hospitals/commuters 9,700 1,200 10,900 Design margin (10%) 31,414 31,414 Industry 365,967 87,033 453,000 TOTAL 1,206,578 433,786 1,640,364 Source: Loading Analysis Report of April 2010 (Barry and Partners for the Dublin City Council).

However, as shown in Table 1-4, the actual loads have exceeded the design loads. This was actually the situation right from the start of operation in 2003. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 8

Table 1-4 Measured annual average BOD and PE loads (1 PE = 60 g BOD/day) for 2003-2008

BOD (t/day) PE (average) (average) 2003 111.0 1,850,000 2004 118.8 1,980,000 2005 117.9 1,965,000 2006 117.3 1,955,000 2007 101.5 1,691,667 2008 107.4 1,790,000 2003-08 112.5 1,875,000 Design load (2020) 98.4 1,640,000 Source: Loading Analysis Report of April 2010 (Barry and Partners for the Dublin City Council).

Further, the 95 percentile load was higher than the stipulated 2020 design load for all years except 2007. In average for year 2003-2008 the 95 percentile load was 168.4 t BOD/day (or 2,800,000 PE) compared with the design percentile load 157.6 t BOD/day (or 2,627,000 PE).

The significant higher actual organic load compared to the design load has caused significant problems. The main problems are: higher oxygen require- ments which have caused the need for investment in additional aeration equip- ment and have increased the operation and maintenance costs; increased sludge production which has caused the need for investment in additional treatment facilities and has increased the operation and maintenance costs; and a constant risk of upsetting the biological treatment process with the latter resulting in noncompliant effluent discharges.

To give some insight into the above capacity problems, Text-box 1-2 gives some institutional reasons seen from the viewpoint of DG REGIO. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 9

Text-box 1-2 DG REGIO: "Too small from the beginning – some institutional rea- sons why!"

To outsiders it may seem unbelievable that a large EU funded waste water treat- ment plant was in under-capacity from the beginning. How can it occur that the de- sign did not adequately reflect the need when the Irish economy exploded in the so-called Celtic tiger boom? Was the option to invest in the Ringsend waste water treatment plant right? The EU desk officer John Walsh, who was in charge of the project in DG REGIO during its construction phase, believes that a combination of unprecedented growth and lags in the planning process largely explain the reasons. Planning procedures in Ireland are quite time-consuming with significant possibilities for interested par- ties to intervene. While such plants are normally built only every 40 years by a mu- nicipality in this case the project management was professional and organised not least because the plant was the largest ever integrated sewage and sludge treat- ment plant built in Ireland. The demand forecasts were established in the early 1990's based on a 20 year demand horizon. The projection factored in modest de- mand growth rather than the unpredicted and unprecedented growth that occurred. Rigidity in the planning, development consent and procurement procedures made it difficult to react to the sudden growth in the economy and population. The planning process around the Environmental Impact Assessment and the approval of the complex Design Build and Operate contract contributed to the lags in information needed for the planning and decision making to adjust to the current development. However at least the plant was designed to allow the extension of the biological treatment capacity. Source: interview with John Walsh, Deputy Head of Unit DG REGIO/D2 - Thematic development, innovation , Brussels 26 May 2010

Non-compliance Finally, as stated above the Ringsend WWTP was designed for removal of sus- with environmental pended solids, organic matter, partly nitrification and disinfection of treated standards regarding waste water during the summer period. The plant was thus designed to produce sensitive waters an effluent that enables compliance with the standards shown in Table 1-5.

Table 1-5 Design standards

On a 95-percentile basis: BOD < 25 mg/l TSS < 35 mg/l COD < 125 mg/l

NH4-N < 18.75 mg/l On a 80-percentile basis (summer season): Feacal coliforms <100,000 per 100 ml Source: "to be inserted".

However, the plant was not designed for nitrogen or phosphorus removal as it was assumed that the recipient waters would not be classified as sensitive wa- ters. The recipient waters, Liffey Estuary, have however as per 31st May 2008 been classified as sensitive, which means that most probably discharge treated waste water from Ringsend WWTP should with the present discharge point in- clude nitrogen and phosphorus removal. This need for an infrastructure expan- sion has been incorporated into the ex post CBA produced within this study. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 10

1.2.3 Project identification and alternative options Project identification As illustrated in Figure 1-1 above, the existing infrastructure components as- sessed are those from Stage 5 - i.e. upgrading of the Ringsend treatment works, the construction of a pumping station at Sutton which pumps the North Dublin waste water to Ringsend for treatment via the submarine pipeline, the diversion of waste water from Howth, Sutton, Baldoyle, and Portmarnock to the Sutton pumping station, and the construction of an interceptor sewer which transfers the North Dublin waste water to the Sutton pumping station. In addition to the Stage 4 submarine pipeline has been included since it is an integral element in the functioning of the Stage 5 infrastructure. Furthermore, to understand the coverage of the project Figure 1-2 shows the Ringsend WWTP catchment - in- dicated with a brown line.

Figure 1-2 Overview of the catchment of Ringsend treatment works

Alternative options A number of alternative options were analysed at the ex ante stage to deal with the fact that in the 1990's the already poor water quality deteriorated. Waste water underwent at the best primary treatment with the sludge being shipped and dumped directly into the sea. Even worse, the north part of Dublin's waste water was directly emitted into the sea. The options analyses are reported in:

• The Ringsend STW Expansion Preliminary Report (1993)

• The North Dublin Drainage Scheme Catchment Area Study Preliminary Report (1994)

• The Ringsend WwTW Expansion Supplementary Report (SR) (1995)

In the report "Ringsend STW Expansion Preliminary Report (1993)" different site options for the expansion of the existing primary treatment plant were ana- lysed. All sites were in the vicinity, i.e. more or less neighbour sites, to the site Ex post evaluation of cohesions policy interventions 2000-2006 - case study 11

of the existing plant. One of the sites assumed reclaimed land in the Dublin Bay. In the report it was recommended that the plant should be based on acti- vated sludge treatment system which incorporated the use of the existing pri- mary settlement tanks. The plant should be located on a 28 ha reclaimed area (area J) was used for the future expansion of the plant. Subsequently a signifi- cant section of Sandymount Strand, close to Site J, was classified as a Special Protection Area, which put in serious doubt to the possibility of acquiring and reclaiming the site. Following meetings with owners of the other sites adjacent to the existing treatment plant concluded the acquisition of any of these sites would be difficult and would involve protracted negotiations.

Dublin City Council subsequently decided to investigate the feasibility of using a compact treatment plant which would be restricted to the existing site area. It sought outline proposals from up to ten suppliers of compact plants. It consid- ered that these proposals confirmed the feasibility of using the existing treat- ment plant site for the complete proposed expansion and decided to progress the procurement of the expanded plant on this site.

Since the construction of the existing works at Ringsend the effluent has been discharged to the harbour via the nearby power plant cooling water channel, as this allows for some dilution of the effluent prior to release into the receiving water. By discharging at this location however the effluent impacts on the water quality at Dollymount Strand, the closest designated bathing area. Alternative location of the outfall were assessed, but it was concluded that relocating the existing outfall was not considered viable compared with the provision of nitri- fication and disinfection facilities at the proposed treatment plant.

In the North Dublin Drainage Scheme Catchment Area Study Preliminary Re- port (1994), it was assumed that a new plant was constructed in the north drain- age area and nine different locations of the plant were examined. Taking all relevant factors into account including engineering considerations, environ- mental impact and socio-economic impact, it was recommended to locate a new plant at Baldoyle West. This area was more than ample and its strategic loca- tion was assessed to be excellent with regards to future developments. Further- more the cost of this option was calculated to be the lower than for any other sites. Different technical options for the wastewater treatment plant were exam- ined and it was recommended to base the treatment plant on a conventional technology based on primary sedimentation followed be a completely mixed activated sludge plant with secondary sedimentation tanks.

There was, however, a major local resistance for the location of a waste water treatment plant in the north area, and DC therefore decided to investigate the possibilities of a centralised solution, where all wastewater was treated at the Ringsend site. In "The Ringsend WwTW Expansion Supplementary Report (SR) (1995)" an assessment of the flows and loads from the combined drainage areas Ringsend WWTP and North Dublin as well as some additional smaller population centres was carried out, including an examination of the impact of the effluent from a combined WWTP on the receiving waters in Dublin estuary and bay. Recommendations on treatment standards based on water quality in the receiving waters were developed. It was recommended that effluent treat- Ex post evaluation of cohesions policy interventions 2000-2006 - case study 12

ment standards for the combined works should be 25 mg BOD/l, 35 mg SS/l, 125 mg COD/l and 17.5 mg NH4-N/l to be received on a 95 percentile bases. Furthermore is was recommended that provision should be made for future de- nitrification at the proposed plant in order that compliance could be ensured with any nitrate limit set in the estuary and the bay. Finally it was recom- mended that disinfection facilities should be provided in the combined treat- ment plant.

1.3 Ex post cost benefit analysis

1.3.1 Project identification Ex post analysis pro- As described in the ex ante analysis above, the existing infrastructure compo- ject nents assessed are those from Stage 5 as well as the Stage 4 submarine pipeline. From the technical viewpoint, it is assessed that the facility uses innovative treatment methods. After the primary treatment of sifting and settling of efflu- ent, the settled waste water is pumped into twenty-four Sequencing Batch Re- actors (SBRs) for secondary treatment. The SBRs at the Ringsend plant in Dub- lin are the largest in the world and, uniquely, are contained in a two-story struc- ture, due to site limitations. The twenty-four SBRs are divided into six units. Each unit consists of four tanks, operating in sequence. While one tank is filling with waste water, a second is aerating waste water with oxygen to accelerate the natural biological secondary treatment. The third tank is settling waste wa- ter and the fourth tank is decanting treated waste water to the next treatment stage. In the ex post analysis this part of the infrastructure is comprised in the do minimum scenario - i.e. the infrastructure that has been implemented to comply with the UWWD.

In addition the waste water receives ultraviolet disinfection, in order to comply with the Bathing Water Regulations (1992), before being discharged into the Bay. Hence, there is an element of the infrastructure that is directly targeted at improving the benefits to the Dubliners and others recreational users - and so are taken account of in the ex post CBA as the do UV-radiation scenario.

However, as also emphasised several times already, it did already at the time of the commissioning of the Dublin WWTS show that the design capacity was too low. Furthermore, due to designation of the Liffey Estuary as sensitive waters there is a need for an infrastructure expansion to comply with stricter discharge standards. Different options are being investigated by the Dublin City Council at the moment. One option is to construct an extended sea outfall (tunnel with a length of 7-10 kilometre) in order to discharge the treated wastewater at non- sensitive waters. This will solve the problem related to the non-compliance of discharge of treated waste water to sensitive waters, but an extension of the bio- logical treatment facilities will still be needed. A consultancy service agreement has been initiated in order to determine the necessary capacity of the extended plant. A preliminary assessment of the necessary total capacity is 2.4 million PE (Source: Dublin City Council). Geotechnical investigations related to the sea outfall tunnel are expected to be carried out this year. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 13

A rough preliminary cost estimate for the sea water outfall tunnel, which at the moment is expected to be the best technical-economical solution, is 170 million Euro (Source: Dublin City Council). In addition to that the necessary extension of the plant is expected to cost approx. 30 million Euro, bringing the necessary investment up to some 200 million Euro (margin of errors approx. 25%). Such needed expansion is included in the ex post CBA as a Stage 6 that is part of the do minimum scenario - i.e. necessary to comply with environmental regula- tions. It is assumed that the new investment will take place during 2011-16, with the main cost burden in 2015-16.

Figure 1-3 tries to give an illustration of the three main investment components included in the ex post CBA: the existing infrastructure; the ultraviolet disinfec- tion equipment - that is assumed to be accompanied with an upgrading of facili- ties such as toilets, life guards and machinery for removal of algal in order to meet the Blue Flag criteria for Dollymount Strand located at the spectacular North Bull Island (note that these latter costs are categorised as operating costs only); and the future investment to upgrade the capacity of waste water treat- ment and the needed investments as a response to the designation of the Liffey Estuary as sensitive waters.

Figure 1-3 Three main investment components included in ex post CBA

Finally, the ex post project analysis includes reinvestments, since the time hori- zon for the CBA is 30 years and some infrastructure elements have a shorter technical lifetime. The mechanical and electromechanical installations such as pumping stations are in this context assumed to have a lifetime of 15 years (see Ex post evaluation of cohesions policy interventions 2000-2006 - case study 14

the below financial analysis for further details). Note also that such reinvest- ments were not included in the 2000 and 2005 CBAs introduced above.

Baseline The financial and economic impacts of the above infrastructure investments - during both construction and operation - are evaluated in comparison with a baseline. The baseline adopted is a do nothing scenario where the original treatment facilities at Ringsend WWTP are used. These were commissioned in 1906 - then know as the Pigeon House Works - and consist of preliminary and primary treatment facilities serving a population of approx. 323,700 persons with a capacity of approx. 205,000 m3/day. Furthermore, the continued expan- sion of the City with the inclusion of the fringe areas, led in the mid 1950's to severe overloading of the Central City sewers and resulted in the implementa- tion of the North Dublin Drainage Scheme, which relieved the North City sew- ers, and the sewage was discharged with no treatment except coarse and me- dium screening via a new deep sea outfall off the nose of Howth. As the in- creased volume of sewage led to overloading of the Pigeon House Works, the Ringsend treatment plant was extended in the 1960's, 1970's and 1980's still including preliminary and primary treatment facilities. Upon completion of these different stages of extension the plant was capable of accommodating peak flow of 1,500,000 m3/day from a contributing population of 950,000 per- sons and wastewater from the industries. In the beginning of the 1990's the load to Ringsend WWTP was approx. 1.25 million person equivalences (PE), the dry weather flow approx. 260,000 m3/day and the peak flow approx. 1,350,000 m3/day.

In the do-nothing scenario, it is assumed that preliminary and primary treat- ment is maintained at Ringsend WWTP and "no-treatment" is maintained for the North Dublin Drainage Scheme. To avoid complete deterioration of the plant it is, however, assumed that the treatment facilities are kept in a reason- able good condition. Hence, the baseline is characterised by neither complying with environmental regulations nor helping to secure a good quality of life of the Dubliners.

1.3.2 Financial analysis Financial flows and To help understanding the below financial analysis and the subsequent eco- economic impacts nomic analysis, Figure 1-4 tries to illustrate the financial flows (shown by or- ange arrows) that occur during the operating phase and the economic impacts (shown by green boxes) that are assumed to materialise.

The financial flows comprise both cost flows and revenue flows. The Dublin City Council pays the costs of using the Dublin WWTS to a private contractor as it has been developed under a Design, Build and Operate (DBO) approach - an approach that was relatively new to Ireland. Under the DBO approach, the private contractor takes responsibility for the design, construction and operation of a treatment works to an agreed performance standard - thus providing an in- centive for the contractor to employ innovative and cost effective design meth- ods. In principle the contractor takes responsibility for providing treated waste water that fully complies with EU standards for an operational period, typically 20 years. As part of the DBO arrangement the plant will be handed back in ex- Ex post evaluation of cohesions policy interventions 2000-2006 - case study 15

cellent working order at the end of the contracted period. This largely over- comes one of the main headaches for local authorities - that of the ongoing and often hard to predict maintenance costs of this type of capital infrastructure. The payment from Dublin City Council to the private contractor averages 1.7 million Euro per month. In turn, each year a number of fines are paid by the private contractor to Dublin City Council when effluent standards are not met.

Dublin City Council then receives revenues via user charges from commercial and industrial enterprises - widely designed to respect the polluter pays princi- ple. In contrast, for a number of years domestic consumers have not directly been charged for their use of the waste water treatment facilities, but have con- tributed via income taxes. This exemption from the polluter pays principle was granted to Ireland under the negotiations of the Water Framework Directive. However, Ireland plans to re-establish a metering system in the domestic sector - and so such future revenues are included in the below analysis.

Finally, ex ante it was expected that Eco-fert, which is a by-product of sludge from the waste water treatment process, would provide income to Dublin City Council from the agricultural sector using it as fertiliser. However, it showed that Eco-fert could not be accepted as normal fertiliser and so agricultural out- put based on the use of Eco-fert are priced lower than other output. As a conse- quence farmers need instead to be compensated when using Eco-fert.

Figure 1-4 Financial flows and economic impacts during operating phase

Domestic Realised enviromental and users socio-economic impacts Commerical do not pay and directly industrial but through charges income 1. Based on actual taxation -Cleaner bathing waters orestimated -Reduction of odours problems loads following the 2. No compliance with polluters 4. Transport and - Increased numberof building polluterspays paysprinciple paymentsto permissions principle agriculture - A positive contribution to the general image of Dublin and the Eco-fert general perception of the (dried sluge Dublin City Council environmentalvalues at the for fertilising) Dublin Bay

Ringsend WWTW 3. Monthly certified payments Not realised environmental and socio-economic impacts

-Polluter pays principle not Contractor followed

- The expected utilisation of dried sludge for fertilising is a additionalcostto City due to Design Build Operate institutional barriers

The economic impacts illustrated in the above figure concern both internal im- pacts - i.e. those experienced directly by the users of Dublin WWTS, and exter- nal impacts - i.e. those experienced by Dubliners and others due to, for exam- Ex post evaluation of cohesions policy interventions 2000-2006 - case study 16

ple, cleaner bathing waters, and an improved image of Dublin - in particular the perception of the environmental values at the Dublin Bay. These are described further below under the economic analysis.

Investment costs

Do nothing scenario The baseline to compare the Dublin WWTS with is as already described a continued use of the Ringsend preliminary and primary treatment facilities. Re- investments are required to keep these in a reasonable good condition. A rough estimate of the necessary upgrading of the existing facilities is 20 Euro (2010 prices6) or 25 million Euro (assuming 1.25 million PE) during the period 1998- 2003. This upgrading is assumed to have a lifetime of 15 years, hence as illus- trated in Table 1-6, a similar reinvestment is assumed to take place during the 30 year analysis period, also leading to the presence of a residual value in 2028.

Table 1-6 Investment costs - do nothing scenario, million Euro (2010 prices)

1998 1999 2000 2001 2002 2003 2010 2015 2020 2028 Total FNPV Upgrading of ex- -1.0 -1.0 -4.0 -4.0 -7.0 -8.0 0.0 0.0 -4.0 0.0 -50.0 -29.0 isting primary treatment facilities Residual value 14.3 14.3 3.3 Total -1.0 -1.0 -4.0 -4.0 -7.0 -8.0 0.0 0.0 -4.0 14.3 -35.7 -25.7 Source: Estimates by COWI technical expert. Note: FNPV is the Financial Net Present Value.

Ex post analysis sce- The Dublin WWTS investment costs are shown in Table 1-7. They consist of nario actual information e.g. from the Final Account Report and the 2005 CBA7, and of estimates by the COWI technical expert, in particular regarding the future project (Stage 6), that is assumed to contain a sea water outfall tunnel and an extension of the existing plant, and regarding the profile of reinvestments. In this context, it assumed that the civil engineering infrastructure elements have a lifetime of 50 years - and so no need for reinvestments, while mechanical and electromechanical elements are assumed to have a lifetime of 15 years. Note that due to the fact that values for selected years only are shown in the table, only part of the reinvestments after 2003 show up, but they are included into the totals. With respect to the extended project (Stage 6) only around a quarter of the investments costs really count as this new infrastructure by 2028 will have a sizeable residual value.

6 All values have been converted into 2010 prices using the Irish Central Statistical Office's "Wholesale Price Index for Building and Construction Materials" for investment costs, and the "Consumer Price Index - Housing, water, electricity, gas and other fuels" for the re- maining current price values. 7 See footnote 4. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 17

Note also that it until now has not been feasible to identify "level 3 costs"8, which - although not vital for the financial analysis - are considered to be valu- able for future funding decisions of similar infrastructure projects. In this con- text, it is suggested that the most useful unit of measurement is costs of waste water treatment per person equivalent (PE) for the different main activities such as pump stations, pipes etc. Furthermore, the costs would be presented as a range of values, where the average value relate to an average situation, while higher values refer to some problem/area characteristics that are likely to result in higher costs - and the other way around for lower values. For the economic analysis it would have been useful with more detailed costs data. This could have enabled a better use of conversion factors to go from financial to eco- nomic costs. However, since most of the benefits for a project like the Dublin WWTS are characterised as external quantitative impacts (see under economic analysis below for further on this) the use of conversion factors is not that criti- cal for the total result.

8 "Level 3 cost" are requested to be calculated in line with the methodology developed by Work Package 10 of the ex post evaluation of the ERDF in the 2000-06 programming pe- riod. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 18

Table 1-7 Investment costs - ex post analysis scenario, million Euro (2010 prices)

1998 1999 2000 2001 2002 2003 2010 2015 2020 2028 Total FNPV Do minimum scenario (secondary treatment) Stage 4 and Stage 5 (existing project) Contract No 2 - Ringsend Waste Water Treatment Work (1) -26.4 -64.2 -112.5 -24.9 -10.7 -33.8 0.0 0.0 -43.4 0.0 -445.7 -321.4 - civil engineering -8.4 -20.5 -36.0 -8.0 -3.4 -10.8 0.0 0.0 0.0 0.0 -102.7 -89.7 - mech. & elec. -17.9 -43.7 -76.5 -16.9 -7.3 -23.0 0.0 0.0 -43.4 0.0 -343.0 -231.7 Contract 3 - Sutton Pumping station(2) 0.0 0.0 -4.0 -7.8 -10.6 -1.8 0.0 0.0 0.0 0.0 -31.1 -23.8 - civil engineering 0.0 0.0 -4.0 -6.1 -6.9 -1.2 0.0 0.0 0.0 0.0 -20.1 -16.9 - mech. & elec. 0.0 0.0 0.0 -1.7 -3.8 -0.6 0.0 0.0 0.0 0.0 -10.9 -6.9 Contract 4 - Sub- marine Pipeline(2) 0.0 0.0 -5.8 -48.4-8.0 -4.9 0.0 0.0 0.0 0.0 -71.7 -60.8 - civil engineering 0.0 0.0 -5.8 -48.4 -8.0 -4.9 0.0 0.0 0.0 0.0 -71.7 -60.8 - mech. & elec. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Contract 5 - North Fringe Sewer and PS(2) 0.0 0.0 -4.0 -22.2 -23.8 -14.3 0.0 0.0 0.0 0.0 -71.2 -58.0 - civil engineering 0.0 0.0 -4.0 -22.0 -22.1 -13.8 0.0 0.0 0.0 0.0 -67.0 -55.4 - mech. & elec. 0.0 0.0 0.0 -0.2 -1.7 -0.4 0.0 0.0 0.0 0.0 -4.1 -2.6 Residual value 177.6 177.6 169.1 Total existing project -26.4 -64.2 -126.2 -103.3 -53.1 -54.7 0.0 0.0 -43.4 177.6 -442.0 -422.9 Stage 6 (future project) Sea water outfall tunnel and exten- sion of existing plant(3) 0.0 0.0 0.0 0.00.0 0.0 0.0 -60.0 0.0 0.0 -200.0 -88.5 Residual value 147.1 147.1 34.0 Total extended project 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -60.0 0.0 147.1 -52.9 -54.4 UV-radiation (terti- ary treatment) (3) 0.0 0.0 0.0 0.0 0.0 -4.9 0.0 0.0 0.0 0.0 -8.1 -5.0 Residual value 1.2 1.2 0.3 Total UV-radiation 0.0 0.0 0.0 0.0 0.0 -4.9 0.0 0.0 0.0 1.2 -6.8 -4.8 Total -26.4 -64.2 -126.2 -103.3 -53.1 -59.6 0.0 -60.0 -43.4 325.9 -501.8 -482.1 Sources: (1) Final Account Report (divided into civil engineering and mechanicals & electromechanicals via cost share estimated in the 2005 CBA). (2) 2005 CBA. (3)Estimates by COWI technical expert, who also provided lifetime estimates and reinvestment profiles for all infrastructure elements.

Incremental invest- A quick glance at the above two tables reveals that the investment costs of the ment costs Dublin WWTS are much higher than those of having continued with primary treatment only. However, it should be remembered that primary treatment op- tion would not have complied with environmental regulations, and so in this respect was not a viable option. The difference between the two options - i.e. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 19

the incremental investments costs - is shown in Table 1-8. These costs are focal for both the financial analysis and the economic analysis.

Table 1-8 Incremental investment costs - ex post analysis scenario minus do noth- ing scenario, million Euro (2010 prices)

1998 1999 2000 2001 2002 2003 2010 2015 2020 2028 Total FNPV Ex post analysis -26.4 -64.2 -126.2 -103.3 -53.1 -59.6 0.0 -60.0 -43.4 325.9 -501.8 -482.1 Do nothing -1.0 -1.0 -4.0 -4.0 -7.0 -8.0 0.0 0.0 -4.0 14.3 -35.7 -25.7 Incremental costs -25.4 -63.2 -122.2 -99.3 -46.1 -51.6 0.0 -60.0 -39.4 311.6 -466.1 -456.4 Sources: See Table 1-6 and Table 1-7.

Note that some of the high ex post investment costs are due to cost overruns. These are addressed further below.

Operating costs

Do nothing scenario In addition to regular upgrading of the preliminary and primary treatment at Ringsend WWTP, the COWI technical expert has estimated annual operating costs to amount to 2.5 Euro/PE or around 3 million Euro per year - see Table 1-9.

Table 1-9 Operating costs - do nothing scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Total -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -93.0 -49.1 Source: Estimate by COWI technical expert. Note: The selection of years to show values for differ from the investment costs tables above - as the most informative years have been chosen.

Ex post analysis sce- Table 1-10 shows firstly that the operating cost account has an additional ele- nario ment to the investment cost account - i.e. the "do Blue Flag" costs. It is thus assumed that meeting the Blue Flag criteria for Dollymount Strand does not require major infrastructure investments. Secondly, it shows that the operation and maintenance of the Ringsend WWTP comprise the main costs regarding the existing situation. Thirdly, the assumed additional operating costs from the Stage 6 infrastructure for one third concern a new sea water outfall tunnel and for two thirds concern an extension of the existing plant. Finally, due to the fact that the load has exceeded the design load of the Dublin WWTS right from the start, its operating costs have been considerably higher than anticipated. Fur- thermore, the population reacted very strongly on the smell from the treatment works which was not eliminated according with their expectations. It was de- cided to meet the demand by adding chemicals to the treatment processes and introduce ceiling of all open processes. It is assumed that operating costs of the existing infrastructure will fall when the extension (Stage 6) becomes opera- tional by 2017, as the extension will help to alleviate such problems. The costs fall has been assumed to amount to 25% of the operating costs for the Ringsend WWTP. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 20

Table 1-10 Operating costs - ex post analysis scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Do minimum scenario (secondary treatment) Mellow Park Pump- 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.4 -0.2 ing Station(1) Ballymun Pumping (1) 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -1.3 -0.5 Station Sutton Pumping 0.0 -0.1 -0.5 -1.0 -0.4 -0.3 -0.3 -0.3 -0.3 -0.3 -7.5 -3.5 Station(1) Ringsend WWTP(1), (2) 0.0 0.0 -13.3 -18.0-17.0 -17.8 -23.0 -23.0 -17.3 -17.3 -457.8 -198.6 Sea water outfall (2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -4.0 -4.0 -48.0 -14.7 tunnel (Stage 6) Extension of exist- ing plant (Stage 6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -7.5 -7.5 -90.0 -27.6 (2) Do UV-radiation (tertiary treat- 0.0 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -10.0 -4.4 ment) (2) Do Blue Flag(3) 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -3.0 -1.3 Total 0.0 -0.6 -14.4 -19.6 -18.0 -18.6 -23.9 -23.9 -29.6 -29.6 -618.0 -251.0 Sources: (1) E-mail from Dermot Penston. 14 May 2010. (2) Estimate by COWI technical expert. (3) Estimate by Mick Harford, Dublin City Council. Note: The selection of years to show values for differ from the investment costs tables above - as the most informative years have been chosen.

Incremental operat- As for the investment costs, the operating costs of the Dublin WWTS are much ing costs higher than those of having continued with primary treatment. The difference between the two options - i.e. the incremental operating costs - is shown in Table 1-11.

Table 1-11 Incremental operating costs - ex post analysis scenario minus do noth- ing scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Ex post analysis 0.0 -0.6 -14.4 -19.6 -18.0 -18.6 -23.9 -23.9 -29.6 -29.6 -618.0 -251.0 Do nothing -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -3.0 -93.0 -49.1 Incremental costs 3.0 2.4 -11.4 -16.6 -15.0 -15.6 -20.9 -20.9 -26.6 -26.6 -525.0 -201.8 Sources: See Table 1-9 and Table 1-10.

Operating revenues

Do nothing scenario As illustrated in Figure 1-4 above the revenues paid to the Dublin City Council (who in turn pays the private contractor an average of 1.7 million Euro per month) come from commercial and industrial charges, while domestic users for a number of years have not directly been charged for their use of the waste wa- ter treatment facilities, but instead have contributed indirectly via income taxes. These income taxes are - due to a lack of information - not accounted for in Ex post evaluation of cohesions policy interventions 2000-2006 - case study 21

Table 1-12, leading to an underestimate of revenues until 2012, where the re- establishment of a metering system in the domestic sector is planned.

Table 1-12 thus contains revenues from non-domestic users only until 2011, divided into trade effluent - i.e. metered at the premises of business or industry, and tanker waste - i.e. waste being delivered directly to the treatment plant from various locations. From 2012 it is assumed that domestic users are charged the same per PE as non-domestic users. Note that it has been assumed that actual charges paid since 2004 - i.e. since the opening of the Dublin WWTS - also would have been paid during continued use of the primary treatment facilities.

Table 1-12 Operating revenues - do nothing scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Trade effluent: non-domestic users(1) 2.5 5.5 4.4 4.0 3.2 2.9 3.3 3.3 3.3 3.3 106.5 56.6 Tanker waste(1) 0.6 0.8 0.6 0.5 0.5 0.4 1.0 0.9 0.8 0.7 23.0 11.8 Domestic user charges(2) 0.0 0.0 0.0 0.00.0 0.0 0.0 3.6 3.6 3.6 61.3 21.6 Total 3.1 6.3 5.0 4.53.7 3.3 4.3 7.8 7.7 7.6 190.8 89.9 Sources: (1) Dublin Pollution Control. (2) COWI estimate.

Ex post analysis sce- The picture for operating revenues in the ex post analysis scenario9 is quite nario similar to the do nothing scenario. Table 1-13 shows two differences from Table 1-12 only. Firstly, the ex post analysis scenario does not contain revenues before its start of use i.e. 2004. Secondly, it has in line with the 2005 CBA10 been assumed that around 45,000 houses (approx. 15% of total housing units) would not have got planning permissions without the Dublin WWTS. Hence, the future domestic users charges are accordingly 15% higher than in the do nothing scenario.

9 Note that a by-product of the sludge digestion process is methane gas, which supplies over 50% of the energy required at the plant. This is included neither in the revenue nor in the cost figures. Furthermore, the expected revenues from the dried sludge product Eco-fert (fertiliser for agriculture) were not realised. 10 See footnote 4. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 22

Table 1-13 Operating revenues - ex post analysis scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Trade effluent: non-domestic users(1) 0.0 5.5 4.4 4.03.2 2.9 3.3 3.3 3.3 3.3 86.4 39.2 Tanker waste(1) 0.0 0.8 0.6 0.5 0.5 0.4 1.0 1.0 1.0 1.0 22.7 9.6 Domestic user charges(2) 0.0 0.0 0.0 0.00.0 0.0 0.0 4.1 4.1 4.1 70.5 24.8 Total 0.0 6.3 5.0 4.53.7 3.3 4.3 8.5 8.5 8.5 179.6 73.5 Sources: (1) Dublin Pollution Control. (2) COWI estimate.

Incremental operat- Hence, there are only few incremental operating revenues as shown in Table ing revenues 1-14. The question whether this also reflects few differences in the internal benefits to the users between the two infrastructure options is addressed in the below economic analysis.

Table 1-14 Incremental operation revenues - ex post analysis scenario minus do nothing scenario, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total FNPV Ex post analysis 0.0 6.3 5.0 4.5 3.7 3.3 4.3 8.5 8.5 8.5 179.6 73.5 Do nothing 3.1 6.3 5.0 4.5 3.7 3.3 4.3 7.8 7.7 7.6 190.8 89.9 Incremental reve- nues -3.1 0.0 0.0 0.00.0 0.0 0.0 0.7 0.7 0.9 -11.3 -16.4 Sources: See Table 1-12 and Table 1-13.

Financial result

FNPV and FIRR Table 1-15 shows that while the Financial Net Present Value (FNPV) in the do nothing scenario is positive and has a Financial Internal Rate of Return (FIRR) of 10.2%, there is no business case for the Dublin WWTS. Hence, the Dublin WWTS did require (EU) financial support. However, as emphasised several times already, the do nothing scenario would not have been a viable option since its does not enable compliance with environmental regulations.

Table 1-15 Financial result, FNPV, million Euro (2010 prices)

Do nothing Ex post analysis Incremental Investment costs -25.7 -482.1 -456.4 Operating costs -49.1 -251.0 -201.8 Operating revenues 89.9 73.5 -16.4 Total FNPV 15.1 -659.5 -674.6 FIRR 10.2% -10.1% -11.4% Sources: see above tables. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 23

1.3.3 Economic analysis CBA for a CE project When carrying out and using the below ex post cost benefit analysis (CBA), it is as emphasised several times already important to acknowledge that the deci- sion on the design of the Dublin WWTS mainly was steered by compliance with environmental regulations. Hence, in practice the decision was made on the basis of an ex ante cost effectiveness analysis (CE). A consequence of this is that the decision was more targeted at keeping costs low than getting high benefits, and so the benefits aimed for - indirectly via improved environmental conditions - were only limited accounted for.

This said, it is considered to be valuable to access the socioeconomic conse- quences of such large infrastructure investment. In the following this is done in accordance with the EC CBA guidelines11.

Internal quantitative impacts

External more than The Dublin WWTS leads to both internal and external impacts. The former are internal focus the impacts from the construction and operation of the new infrastructure - hereunder for the users, i.e. domestic and non-domestic waste water treatment users, and the latter are the benefits to all Dubliners and others from the im- provement of water quality in the Dublin Bay. Since the main aim of the in- vestment is to secure improved water quality, the external impacts are particu- larly in focus in the economic analysis.

Use of conversion A first step in the economic analysis is to assess whether the market prices of factors for costs costs and revenues used in the above financial analysis reflect the social oppor- tunity costs and benefits. For example, if jobs are created when constructing or to operate the new infrastructure- the alternative being e.g. unemployment for the new employees12, the labour costs are lower seen from a socioeconomic viewpoint than seen from a financial viewpoint.

However, as described in the financial analysis it has until now not been feasi- ble to distinguish cost elements in much detail - hereunder to distinguish labour costs from material costs. Hence, it is not feasible to develop specific conver- sion factors for the Dublin WWTS, and so for lack of any better, the conversion factors proposed in the EC CBA guidelines for investments in waste water treatment plants are adopted. More precisely, investment costs are converted from market prices to economic prices applying a factor of 0.83 - i.e. that for materials for civil works, while a factor of 0.71 - i.e. that for maintenance - is applied for operating costs.

These conversion factors are elaborated to take into account some environ- mental impacts such as noise, odours, aesthetic and landscape via the design of the investment. In other words, it is assumed that the Dublin WWTS invest- ment costs comprise measures to mitigate environmental impacts such as secur-

11 DG REGIO (2008), Guidelines to Cost Benefit Analysis of Investment Projects, July. 12 Note though that the Dublin WWTS was constructed in a period of low unemployment, hence the job creation effect must be expected to have been low. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 24

ing that the plant finishes are appropriate to the residential area where the pumping stations etc. are located; that odour control equipment is installed; and that noise is controlled. Hence, a double-counting of such impacts should be avoided in the external environmental impact part of the CBA (see below).

With respect to odour problems it is important to be aware of that the public living and working in the areas around Ringsend Waste Water Treatment Plant was used to the heavy smell problems. After the implementation of the project the public expectations and awareness was increased substantially and Figure 1-5 actually shows that the number of complaint were increasing a couple of years after the implementation of the project. According the Dublin City Coun- cil this was not due to increased odour problems. They were actually reduced. But the complaints followed from a change in expectations from the public. The public perception was that odour should be eliminated as a result of the Dublin Bay Project. As a response the Dublin City Council invested in the process by adding smell reducing chemicals and in ceilings of all open proc- esses to reduce the impact to the largest possible extent. The number of com- plaints subsequently fell.

Figure 1-5 Received complaints with regard to odour problems

NO. OF COMPLAINTS RELATING TO ODOUR RECEIVED PER MONTH (2004 TO DATE)

50

45

40

35

30

25

20

15

10

5

0 sep-05 sep-06 sep-07 sep-08 sep-09 jun-05 jul-05 dec-05 jun-06 jul-06 dec-06 jun-07 jul-07 dec-07 jun-08 jul-08 dec-08 jun-09 jul-09 dec-09 feb-05 mar-05 aug-05 okt-05 feb-06 mar-06 aug-06 okt-06 feb-07 mar-07 aug-07 okt-07 feb-08 mar-08 aug-08 okt-08 feb-09 mar-09 aug-09 okt-09 feb-10 mar-10 apr-05 nov-05 apr-06 nov-06 apr-07 nov-07 apr-08 nov-08 apr-09 nov-09 apr-10 maj-05 maj-06 maj-07 maj-08 maj-09 jan-05 jan-06 jan-07 jan-08 jan-09 jan-10

Source: Dublin City Council

The result for the incremental economic costs - i.e. the difference between the ex post analysis scenario and the do nothing scenario - is shown in Table 1-16, where the costs, measured in Net Present Values - i.e. ENPV, also are com- pared with the incremental financial costs, measured via FNPV. Note that in accordance with the EC CBA guidelines, a 5.5% discount rate is used in the economic analysis compared with 5% in the financial analysis. The table shows that the conversion brings the costs to a lower level, but there is still a need for substantial other benefits to make the Dublin WWTS a viable investment seen from a socioeconomic viewpoint. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 25

Table 1-16 Incremental financial, FNPV, and economic costs, ENPV, million Euro (2010 prices)

Financial Economic Conversion analysis analysis factor (FNPV) (ENPV) Difference Discount rate 5% 5.5% Investment costs 0.83 -456.4 -373.4 82.9 Operating costs 0.71 -201.8 -131.1 70.8 Total -658.2 -504.5 153.7 Sources: COWI calculations.

Internal benefits to It can be reasoned that the user charges reflect the users' marginal costs of treat- users ing their effluent, and thus give an indication of the (minimum) benefit to the users of having their effluent removed and treated. However, there are also us- ers that have a higher willingness-to-pay for the waste water treatment, and so the operational revenues calculated in the financial analysis are not considered to be appropriate to directly represent the internal benefits to the users (with or without conversion factor).

In any case, the financial analysis only revealed a few incremental operating revenues - arising from 45,000 houses that would not have got planning per- mission without the Dublin WWTS. For the non-domestic users, it was as- sumed that they would pay the same user charges as in the do nothing scenario, i.e. assuming no change in both tariffs and number of non-domestic users, and so no change in their benefits compared with the do nothing scenario.

Internal benefits to users are thus calculated as the benefit to the 45,000 house- holds that can be attributed to the Dublin WWTS. Such benefit figure has been estimated by DKM Economic consultants13 to amount to Euro 280 per house- hold in 2000 prices. This estimate has been adopted in Table 1-17 showing that this in 2010 prices amounts to an annual benefit of 17 million Euro.

Table 1-17 Incremental internal benefits to users, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total ENPV 45,000 housing permissions 0.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 424.2 174.1 Sources: DKM Economic Consultants Ltd (see footnote 1313) and COWI calculations.

External quantitative impacts

Quantifying external With the main aim - at least in a CBA context - of the Dublin WWTS being to impacts improve water quality in the Dublin Bay, there is unquestionable a need to as- sess the external impacts, in particular external benefits. Furthermore, there is a need to pursue quantifications of such external benefits in order to render a us-

13 DKM Economic Consultants Ltd. (2004), Economic Evaluation of Water Supply and Waste Water Projects - Cost-Benefit Analysis, Analysis Report, August.

Ex post evaluation of cohesions policy interventions 2000-2006 - case study 26

able economic result estimate. However, it must be acknowledged that there until now is limited experience with quantifying water quality benefits, and so when this is not feasible to do in a satisfactory way, the analysis must be ac- companied with qualitative assessments.

Recreational benefits A survey conducted in relation to the Dublin Bay Management plan during 1986-1990 found that at that time the popular Dollymount Strand was getting less attractive. From results of surveys on 22 July and 6 August 1990 it was concluded that the public’s perception of declining water quality in Dublin Bay has led to a strong preference for areas outside the main Bay – e.g. Killiney, Burrow and Claremont beaches. But there is evidence that the Dublin Bay pro- ject has halted the decline in the recreational use and returned it to growth. This is also emphasised by Dublin City Council (see Text-box 1-3)

Text-box 1-3 Dublin City Council: "A return of recreational use of Dublin Bay"

As Mick Harford (responsible officer of the north part of the Dublin Bay beaches) stated in an interview: "In the 1990's we faced a dramatic reduction in the number of recreational users at North Bull Island hosting one of Dublin Bay's most visited beaches - from the possible peak levels at 10,000 to considerably lower visitor lev- els. The increasing interest in holidays outside Ireland played a role too, but there is not doubt that the polluted water had a negative impact on using Dublin Bay for bathing holidays". The increasing threat to the otherwise spectacular Dublin Bay was also embedded in the Dublin Bay Water Quality Management Plan. After the Dublin Bay project, Mick Harford is quite convinced that the number of visitors has been steadily climbing due to the cleaner water and the Blue Flag status of the beach. “On a good summer day we count 8-10,000 visitors - so the peak level is reached again”. The estimate is based on counting on cars. Each car is assumed to have four passengers but even this exaggerates to real vehicle pas- senger figures it is seemed as an adjustment for the lack of counting people com- ing by foot, bicycle or public transport. There are no specific surveys characterising the visitors, but it is a general observation that 60% of the visitors are Irish - mainly Dubliners - and 40% are non-Irish. The non-Irish appear to be both foreign tourists and residents, but no it can not be confirmed since no survey on the recreational users has been conducted. During recent years, wind surfing and kite surfing has become increasingly popu- lar. Nice waves and good on shore wind make good conditions. There is a desig- nated space for kite surfers which attract many active users. However, the main benefit of the Dublin Bay project is from the perspective of Mick Harford the public perception of the island. This is very much related to water qual- ity. The ability to have the Blue Flag status is creating confidence among the popu- lation and generally they now regard the Bay as a great resource very closely lo- cated to a large city. The beach is characterised with shallow waters so the use is not perfect for swimming, but nice for families with children and those who enjoy the easy access from Dublin to the spectacular site and sea view. Source: Interview 2 June 2010 with Mick Harford, accountable for the Dublin City Council's North part recreational areas - hereunder North Bull Island where Dolly- mount Strand is located

A proof that the water in the Dublin Bay has become usable for bathing and other water recreational uses is thus that four beaches now comply with the wa- Ex post evaluation of cohesions policy interventions 2000-2006 - case study 27

ter quality criteria of the Blue Flag Programme14. The Blue Flag status of the Dollymount Strand (see Figure 1-6) was received in 2004, becoming the only beach in Dublin Bay that meets all the Blue Flag requirements. Dolly- mount Strand is with its length at 5 km the largest beach in the Dublin Bay. It can attract almost as many visitors as all the other areas at the Dublin Bay from Burrow Beach to Killiney combined. It is located at the North Bull Island which is a popular walking and recreational area for Dubliners.

Three other beaches have a water quality at that meets the Blue Flag re- quirements, but not the facilities needed for the environmental management. North Bull Island has facilities such as toilets (four toilets including handi- cap facilities) and an adequate numbers of litter bins being emptied every day. Furthermore, Dublin City Council covers the costs of life guards and machinery for removal of algal - altogether amounting to annual operating costs of 100,000 - 120,000 Euro (2010 prices).

14 http://www.blueflag.org/criteria where it is stated: The Blue Flag Programme is owned and run by the independent non-profit organisation Foundation for Environmental Educa- tion (FEE). The Blue Flag works towards sustainable development at beaches/marinas through strict criteria dealing with water quality, environmental education and information, environmental management, and safety and other services. The Blue Flag Programme in- cludes environmental education and information for the public, decision makers and tour- ism operators. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 28

Figure 1-6 North Bull Island on which Dollymount Strand is located

The quantification of these recreational benefits is done on the basis of the cal- culations in the 2005 CBA15. Table 1-18 shows that these benefits exceed the additional costs needed to make the water in the Dublin Bay suitable for bath- ing and other water recreational activities. Note of course that these additional costs would not have led to the result without the major parts of the infrastruc- ture investment.

15 See footnote 4. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 29

Table 1-18 Incremental external benefits, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total ENPV Water recrea- tional benefits 0.0 0.0 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 31.1 12.8 UV-radiation, in- vestment costs 0.0 -4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 -5.7 -3.8 UV-radiation, oper- ating costs 0.0 0.0 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -7.1 -2.9 Blue Flag, operat- ing costs 0.0 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -2.1 -0.9 Total costs 0.0 -4.1 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 0.7 -14.9 -7.6 Benefits minus additional costs 0.0 -4.1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1.9 16.2 5.2 Sources: Footnote 4 and COWI calculations.

External costs from Finally, the 2005 CBA includes external costs as a result of the new treatment increased energy us- works and pumping stations using more energy than the previous primary age treatment facilities. The estimated external costs are based on the environ- mental costs of emitting SO2, NOX, N2O and CO2. The estimates - which are included in the below economic result as they are not assessed to have be cov- ered by the above conversion factors - are shown in Table 1-19.

Table 1-19 Incremental external costs, million Euro (2010 prices)

1998 2004 2005 2006 2007 2008 2010 2015 2020 2028 Total ENPV Environmental costs from energy use 0.0 0.0 -0.7 -0.7 -0.7 -0.7 -0.7 -0.7 -0.7 -0.7 -17.1 -7.0 Sources: Footnote 4 and COWI calculations.

Economic result

Discount rate The total economic results of the Dublin WWTS makes use of the discount rate of 5.5% in line with the EC CBA guidelines. This is fairly similar to the 5% rate that seems to have been used in the 2000 and 2005 ex ante CBAs. How- ever, as already mentioned none of these two ex ante CBAs are really compara- ble with the ex post CBA made within this study, and so comparisons of dis- count rate contribute only little to the analysis.

ENPV and EIRR Table 1-20 shows that the quantifiable benefits of the environmental improvements in the Dublin Bay are not sufficient to compensate for the costs. Hence, from the perspective of the quantitative CBA results the Dublin WWTS was not an economic viable investment. This said, it is - with the additional Stage 6 investment - environmental viable in the sense that is complies with the relevant environmental regulations.

Furthermore, it must be acknowledged that there are a number of benefits that until now have not been feasible to quantify. These are described below. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 30

Table 1-20 Economic result, ENPV, million Euro (2010 prices)

Do nothing Ex post analysis Incremental Investment costs -20.7 -394.2 -373.4 Operating costs -33.1 -164.1 -131.1 Internal benefits 0.0 174.1 174.1 External benefits 0.0 12.8 12.8 External costs 0.0 -7.0 -7.0 Total ENPV -53.8 -378.4 -324.6 EIRR -25.3% -5.3% -4.3% Sources: see above tables.

Qualitative impacts

Public perception As suggested by the Dublin City Council (see Text-box 1-3) the main benefit of the Dublin Bay project is the public perception of the environmental improve- ments. This is very much related to water quality. The ability to have the Blue Flag status is creating confidence among the population and generally they now regard the Bay as a great resource very closely located to a large city. A quanti- tative estimate of such public perception would thus enhance the usefulness of the above CBA.

Aquatic life and fish A number of recreational activities were examined in the Dublin Bay Water stocks Quality Management Plan from the late 1990's - e.g. angling, boating, and walking along the coastline - but until now no comparable ex post figures have been identified.

According to the Dublin City Council's Central Laboratory16 no considerable biological changes have been observed. The excavation in relation to the north- ern part of the bay did cause some disruption, but no significant positive or negative impacts are identified. The water look is improved since the sus- pended solids leaving the waste water treatment plant have declined considera- bly. With respect to algal blooms this is still observed and the nitrogen still be- ing let out from Ringsend is expected to have an impact. However, the sun light is a major factor on algal blooms, and so this is very difficult to divide up the impact measure.

Tourism and industry Since the Dublin Bay project has had a positive impact on the image of the city, this has most likely had a positive impact on the tourism industry. However, no surveys have been conducted, but according the Dublin City Council's more unofficial observations also a lot of foreign tourists are visiting the large Dol- lymount Strand (see above). It is therefore reasonable to conclude that the pro- ject due to the cleaner bathing waters have constituted an improved basis for domestic and international tourism in Dublin.

There are about 1000 licensed industries which are either connected to the pub- lic waste water system or having their own treatment system. Industries are

16 Interview with Aideen Carney, Imelda Averill and Denis Morrisey 15 April 2010. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 31

urged to have their own treatment facilities in order to reduce the system load. The pressure of reducing loads on the industrial sites may have been higher without the project. But this is a hypothetical statement. As appears from the Load Analysis Report from April 2010, the industrial loads have been reduced significantly due to strict control by the Environmental Protection Agency un- der the Integrated Pollution Prevention Control Directive and specific load re- duction agreements with the Dublin City Council. Thus impacts from the pro- ject on industries are not considered significant. This was also the assumption when analysing non-domestic user charges in the financial analysis.

Health A desk study was carried out for the Dublin Bay Water Quality Management Plan17. This study was ‘to review the nature and extent of the risk - as evi- denced in the international literature - to the health of recreational users of ma- rine waters caused by sewage contamination’. A second aim of the study was ‘to consider the propriety of undertaking a local epidemiological study to elicit the risks to health particular to the plan area’. The survey of the literature showed that the results of epidemiological studies were inconsistent with many shortcomings having been identified. These were in relation to sampling in ma- rine conditions, about organism isolation and enumeration, and about the meas- urement of illness incidences. One of the conclusions the study came to was that the proper conduct of a local epidemiological study was impracticable, even if adequate advances in theory and methodology could be achieved to deal with the shortcomings of previous studies elsewhere. It was also concluded that the assembly of sufficiently large and suitable study populations would not be feasible and that the extensive concurrent water sampling programmes required would make impossible demands on existing local resources.

1.3.4 Risk analysis Risk assessment and As emphasised above, a central feature of the Dublin WWTS is that the design management capacity already at the time of commissioning was too low, and so an expan- sion is already in progress. It appears - partly based on that fact that it has not been feasible to locate documentation of risk assessment activities - that there has been no thorough assessment of the consequences of a higher economic growth scenario. However, it must be acknowledged that it at that time was dif- ficult to forecast that Ireland would become a "Celtic tiger" with high economic growth rates between 1995 and 2007 - also resulting in above-expected popula- tion growth rates.

This said, it appears that any risk management activities have not been suffi- cient to respond to the unexpectedly high growth rates once they became appar- ent during the construction period. This lack of response is likely to be partly due to a lack of flexibility in the technical design, e.g. difficult to use more land in a city area such as Dublin.

Margins of error The margin of error analysis does therefore not deal with the impact of different economic growth scenarios, but looks solely on uncertainty regarding cost fig- ures. While the actual investment costs are known with reasonable certainty

17 Source: E-mail from Imelda Carney. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 32

there are more uncertainty connected with future (re)investment costs. Also fu- ture operating costs are uncertain. When it comes to internal and external bene- fit estimates uncertainty is connected with both their estimates and their devel- opment over time. Table 1-21 shows the margins of error for the main projects components.

Table 1-21 Margins of error, main project components

Do nothing Ex post analysis Incremental Investment costs +/- 25% +/- 15% +/- 15% - primary treatment +/- 25% - secondary treatment (existing) +/- 5% - secondary treatment (Stage 6) +/- 25% - tertiary treatment +/- 5% Operating costs +/- 10% +/- 10% +/- 10% - primary treatment +/- 10% - secondary treatment +/- 10% - tertiary treatment +/- 10% - Blue Flag +/- 25% Internal benefits +/- 25% +/- 25% External benefits +/- 25% +/- 25% External costs +/- 25% +/- 25% Sources: Assumption by COWI technical expert.

Figure 1-7 shows not surprisingly that even in the best cases i.e. higher than average benefits and lower than average costs that it is difficult to render a posi- tive economic result.

Figure 1-7 Probability distributions of the results NET PRES VAL Expected value -326 10% -366 50% -327 90% -284 -417 -246 INT R OF RET Expected value -4.3449 10% -5.6514 50% -4.3605 90% -3.0301 -7.2909 -1.7097 NPV / PV INV Expected value -0.7629 10% -0.8234 50% -0.7658 90% -0.6966 -0.8936 -0.6243

Ex post evaluation of cohesions policy interventions 2000-2006 - case study 33

1.4 Comparing the ex ante and ex post cost benefit analyses CBA not used for As highlighted above, the decision on the design of the Dublin WWTS was decision-making mainly steered by finding the technical solution that would comply with the UWWD in the cheapest way - i.e. the decision was made on the basis of a cost- effectiveness analysis, not a CBA. Although, it appears that CBAs have been carried out for the Dublin WWTS - how many is not entirely clear. In other words, there is really no ex ante CBA to compare this study's ex post CBA with.

Time and cost over- The purpose of this last section is thus merely to summarise some of the differ- runs ences between what was expected at the ex ante stage and what happened af- terwards - with a focus on time and cost overruns.

While the project was somewhat delayed during the construction phase, it is particular important to notice the large costs overruns - not least because the existing waste water treatment plant has too low capacity. Table 1-22 shows that there was a large cost overrun of 82 million Euro. The deviation of costs can mainly be explained by the cost price fluctuations (15 million Euro), varia- tion orders (46 million Euro) and commercial settlements (34 million Euro).

Table 1-22 Investment costs, existing plants, million Euro

Costs Capital works 135 Cost price fluctuations 15 Subtotal 150 Variations 46 Subtotal 196 Commercial settlements 34 Subtotal 230 Sources: Dublin City Council, Final Project Accounts.

In total 130 variation orders were issued during the construction period for a total sum of 46 million Euro. A list of the major variation orders are given be- low accounting for approx. 41.6 million Euro:

1 Increase nitrification capacity due to higher load 2.6 million Euro 2 Change of UV-radiation facilities due to higher max flow 118,000 Euro 3 Several variation orders concerning sludge dryers, mainly due to higher load and malfunctioning of existing dryers, total 7.5 million Euro 4 Refurbishment of existing sludge dryers 4.6 million Euro 5 Longer operation of sludge dryers during the construction and increase sludge production due to higher load 4.5 million Euro 6 Increase in electricity connection tariffs 0.84 million Euro 7 Mitigations for odour control 7.1 mill Euro. Ex post evaluation of cohesions policy interventions 2000-2006 - case study 34

8 Extension of construction period due to problem related to higher loads 5.7 mill Euro 9 Additional wastewater and storm water treatment during the construction period due to higher load and longer construction period 5.4 million Euro 10 Fulfilment of ATEX directive 0.7 million Euro 11 Installation of drum thickeners for secondary sludge due to higher load 2.3 million Euro 12 Problems in relation to SBR reactors due to higher load 0.27 million Euro

1.5 Unit costs Per person equiva- There are different ways of defining unit costs. It can be done per person lent equivalent and/or per infrastructure unit.

Although there is some information about the size of the infrastructure invest- ment - e.g. the km of new pipes or renovated pipes, it is not feasible from the contract details to calculate costs per infrastructure unit.

In any case, it is assessed that per person equivalent unit costs are more appro- priate for a comparison with similar infrastructure investments elsewhere. Table 1-23 shows such estimates for Dublin - using the 2003-08 average PE load of 1,875,000 - that reemphasises the importance of the costs of construc- tion and operating the actual waste water treatment facilities.

Table 1-23 Unit costs - Dublin WWTS (2010 prices)

Per person equivalent (PE) Investment costs EUR 250 per PE Contract 2 - Ringsend Waste Water Treatment Work EUR 171 per PE Contract 3 - Sutton Pumping station EUR 13 per PE Contract 4 - Submarine Pipeline EUR 32 per PE Contract 5 - North Fringe Sewer and PS EUR 31 per PE UV-radiation EUR 3 per PE Operating costs EUR 111 per PE Pumping stations EUR 2 per PE Waste water treatment EUR 106 per PE UV-radiation EUR 2 per PE