How Much Does Water Desalination Cost?

Today, I was trying to figure out the economics of water desalination. The water bulls would have us believe that the world is running out of fresh water, and we should buy a water ETF trading at nine times book value or something. However, if water desalination is economical (or will be someday), then I don't think we need to worry as much about the supply of fresh water.

There are differing opinions regarding how far (in terms of cost per cubic meter or acre foot) desalination is from being at parity with other sources of water. Here is a review of the water desalination cost literature giving a broad overview, as of several years ago, on the cost of water desalination. One important obseration is that the cost depends on the type of feed water being desalinated: brackish water is less expensive than seawater. Also, the cost depends on the amount of dissolved solids in the water.

A couple years ago, a company called Energy Recovery Technologies said that they had desalination cost down to $0.46 per cubic meter, and was very optimistic on desalination as a water source for California:

"We demonstrated that we could now, in California, desalinate a cubic meter of water for a total of 1.58 kilowatt hours. [...] Colorado today spends about 1.9 kilowatt hours just to pump the state water around to California. In addition to that, about 1.6 kilowatt hours of additional energy is spent just to slush the Colorado River water around in California. When you look at all the energy being consumed by California today just by pumping water around, you realize that it is actually cheaper to desalinate water from the Pacific Ocean."

Another perspective, from Wikipedia,

"Desalinated water may be a solution for some water-stress regions, but not for places that are poor, deep in the interior of a continent, or at high elevation. Unfortunately, that includes some of the places with biggest water problems." and "Indeed, one needs to lift the water by 2,000 metres (6,600 ft), or transport it over more than 1,600 kilometres (990 mi) to get transport costs equal to the desalination costs. Thus, it may be more economical to transport fresh water from somewhere else than to desalinate it."

Writing about the high cost of lifting and transporting water, a Credit Bubble Stocks correspondent observes,

So it looks like California and New York City will never demand water from Lake Superior or Lake Michigan.
Arizona may be able to take a larger share of Colorado River water. Water won't be pumped over the Rockies, looks like.

I found another study that is more pessimistic about the costs of desalination. This one is interesting because it cites electricity usage figures for desalination, which seem to range from 10-20 kWh/1000 gallons of water. Also, the capital cost of the plants are around $10 million per million gallons per day. Or, $10 per daily gallon.

Another interesting idea is that you can co-locate a desalination plant with a power plant, and use the power plant's cooling water discharge as warm feed water for the desalination facility. Heated water makes desalination more efficient - the rule is a 3% decrease in energy use for each 2 degree F increase in water temperature.