A Study on Economic Evaluation for Pipeline Renewal Using Contingent Valuation Method and Forecasting Pipeline Burst

Economic-based approach for predicting optimal water pipe renewal period based on risk and failure rate

“…[21,22] Calculation of benefit-cost ratio A methodology for economic evaluation (benefit-cost analysis) is proposed based on the contingent valuation method. [23] Comprehensively, the purpose of this study is to develop a specific method for estimating the benefits of pipe renewal and to determine the renewal timing from an economic point of view. The objectives of this study are summarized as follows:…”

“…In this study, the expected damage from a single case of pipe failure was calculated, and the benefits of renewal were derived by estimating the number of failures that would be prevented by renewing the pipes. There are various benefits for renewing a deteriorated pipe, such as reducing the repair cost, reducing the suspension damage cost, reducing the energy needed to run the pump station, reducing the legal and labor costs, increasing the water quality, and increasing the credibility of water service providers [21][22][23].…”

“…Kim et al's methodology [23] was used to calculate the renewal cost. The costs were divided into construction costs, which can be further divided into construction costs, incidental expenses, and land acquisition costs, and other extra costs.…”

“…Thus, although the accumulated benefit, i.e., monetary cost reduction, of performing pipe renewal at each point of failure differed according to the point of analysis, the benefit of preventing a pipe failure did not vary, because the monetary cost was a fixed at a flat price for each year. All remaining factors used in the benefit-cost function were set as described in previous studies [23].…”

“…However, they only present benefit items that are generated according to the renewal; no specific method is given for calculating the benefits. In addition, as in the case of Kim et al [23], the benefits derived from a consumer's willingness to pay are typically based on survey results. Unfortunately, these results can be affected by the period and region in which the survey was conducted.…”