TIME-CAPACITY EXPANSION OF URBAN WATER SYSTEMS

This paper presents a minimum cost method to time and size water system component expansion to meet an exogenously determined growth rate. The method analyzes the economic impact both of the economies of scale in construction and of the real cost of capital. The result is a capacity expansion model which determines when and how much excess capacity should be installed to meet increasing demands. The economic effects of timing and sizing decisions on total costs are plotted for various interest rates and levels of economies of scale. The paper demonstrates that the costs of expansion are sensitive to the increase in demand specific to the facility being planned and that the design capacity must be set individually for each separable water system component according to its particular cost function. These findings suggest that the standard practice of designing excess capacity in a water system to meet a fixed future demand (i.e., 25‐year system) should be revised. Copyright 1969 by the American Geophysical Union.