Desalination: Risk Management

Topics: Water supply, Desalination, Risk management Pages: 25 (6786 words) Published: January 31, 2011
Desalination refers to any of several processes which removes excess salt and excess minerals from water (Buros). This idea, though not a new science, is quickly growing in its popularity and usage worldwide to meet various agricultural, municipal, and industrial needs. Based on its growth potential in a variety of global markets and technologies, we have compiled this document to analyze the risks and consequences of investing in a desalination project orchestrated by a contracted company. This document is not company or investor specific – rather, it accounts for the general risks which any investor would encounter if faced with a decision of desalination plant investment. Three geographic regions were considered for their optimum return on investment: Texas, Spain, and Saudi Arabia. We chose Saudi Arabia because, as a whole, the Persian Gulf has a history of the greatest use of desalination. Moreover, Spain has a proven market for desalination, and finally, we researched Texas in order to find data and information on the desalination of brackish groundwater. Had we only been concerned with seawater desalination, both California and Florida are better states to look at in the U.S. because they have a longer history with seawater desalination. Additionally, three technologies were considered for use in one of those regions: reverse osmosis, distillation, or nanotechnology (and other newer technologies). Risk Analysis

A proper approach to risk analysis should include a thorough investigation of the following areas: Risk Context. In defining the risk context, the scope and boundaries of the project should be defined. A listing and description of the areas of study and their corresponding settings should be discussed. In this case, the different processes of desalination have been outlined, in addition to a discussion of the geographic regions which we will be considering for development. Criteria and baselines should also be mentioned, along with any assumptions we will make about this business relationship. Finally, a list of stakeholders should be included in the classification of risk context (Risk Analysis Framework). Risk Assessment. This area refers to the actual identification and assessment of the risks and hazards inherent in this business venture. In addition to a listing of the risks will be the assessment of the likelihood and the consequences of each risk coming to fruition. Furthermore, these assessments should lead to risk estimation and how they would affect the project and with what probabilities (Risk Analysis Framework). Risk Management. After the risks have been assessed, they need to be further evaluated. Here, there will be options for risk treatment and contingency plans for counteracting those risks. Risk management, in essence, evaluates those risks that warrant control measures and determines the appropriate conditions to manage those risks (Risk Analysis Framework). After performing these tasks, we should ideally arrive at a decision based on the results of the previous investigations. This decision will minimize the combination of risk and impact associated with each investment possibility. Risk Context

As mentioned previously, desalination is the process of removing salt and other minerals from water in order to make it usable for various purposes. Here, we have defined the desalination processes that we are considering and evaluating for risks. Additionally, we have discussed the geographic regions where these new technologies will be implemented. These three technologies added to the three geographic regions will, hence, yield nine options for investment.

Figure [ 1 ]: Desalination Decision Tree

Technological Background
A desalting device is essentially used to separate saltwater into two streams: one with low concentration of dissolved salts (the fresh water stream) and the other with the remaining dissolved salts (the concentrate or brine stream). The device...
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