By Marcus Gay, NM WRRI Student Program Coordinator
In June of 2019, Alyssa Latuchie, a PhD candidate at the University of New Mexico’s Department of Economics, received a NM WRRI Student Water Research Grant entitled, A Survey: New Mexicans’ Willingness to Pay for Produced Water Treatment for Beneficial Re-Use. Alyssa is working under the guidance of her faculty advisor Dr. Janie Chermak, Professor of Economics at UNM. This research addresses if New Mexicans view produced water as a resource and the value, if any, they place on it.
After oil and gas are produced, the water that comes to the surface of the well is called produced water. This water is of low quality, with high salinity and toxins of various quantities. Historically, produced water has been treated as a waste product and is disposed of through deep injection wells. More recently, there has been a movement towards re-use of this water for completion of oil and gas wells, but there is still a large amount of produced water that is simply disposed. Since New Mexico is one of the top producers of oil and gas, the amount of produced water within the state is significant. In 2015, within the New Mexico portion of the Permian Basin, over 23 billion gallons of produced water was created, and only 28 percent of that was re-used. To put this into perspective, the quantity of water that was disposed of was equivalent to the annual average usage of about 370,000 people (based off of Albuquerque’s current per capita use). Relevant to the water shortage that New Mexico faces, treated produced water could provide an additional source of water to the state.
While the technology to treat produced water exists, it comes at a high cost. The pricing structure of water often makes using fresh water less expensive than treating produced water for re-use. The goal of Alyssa’s research is to determine if the general New Mexican public views produced water as a resource instead of something to be disposed. Through direct survey, Alyssa will estimate the willingness to pay (WTP) for treatment of this resource, and by extrapolating this result across the population of New Mexico, she will be able to determine if the total WTP will cover the estimated cost of treatment. By using this method, she will be able to estimate the value of a product that is not currently bought or sold through a market.
“I expect that with proper education about produced water and the treatment available, the New Mexican public will have a small willingness to pay for that treatment. While I do not expect that the dollar value will be very high, I do think that once the results have been generalized to fit the population of New Mexico, that the willingness to pay will cover the cost of treatment of produced water,” explains Alyssa, adding that the findings can give lawmakers the knowledge and empirical data for legislation on treating produced water.
“If produced water is viewed as a resource by New Mexicans, meaning they place a value on it, it would introduce the possibility of a new water source to our arid state.”
Originally from Philadelphia, Alyssa now lives in Santa Fe and received her Master’s Degree in Economics from UNM in 2016. Alyssa plans to graduate from UNM in the spring of 2020 with a PhD in Economics in the field of Environmental and Natural Resource Economics. After graduation, Alyssa plans to continue her work for the State at the Energy Conservation and Management Division within the Energy, Minerals, and Natural Resources Department as a Clean Energy Economist.