ACET study materials
ACET study resources

ACET (Institute of Actuaries of India Exams): The Rainwater Tank Business Case

ACET · Put your knowledge to work in context.

All case studies

The Rainwater Tank Business Case

Ravi, a second-year student, proposes a rainwater harvesting tank for the boys' hostel as his service project. The hostel roof is a flat rectangle 18 m by 12 m. Local records give 850 mm of rain across the 90-day monsoon, and the standard runoff coefficient for a concrete roof is 0.8; first-flush diversion discards the first 2 mm of each rainy spell, which the committee agrees to ignore at this stage. The hostel uses 3,200 litres a day, all year. The quote is for a 20,000-litre tank at ₹6.50 per litre of capacity. The warden's real concern is the dry spell: last year the monsoon failed for 12 consecutive days in July and the hostel bought tanker water at ₹1,800 per 6,000 litres. Ravi's note claims "the tank will cover the whole monsoon and pay for itself in one season". The campus committee meets on Saturday.

1. Compute the harvestable volume for the season and express it as a number of days of hostel demand.

Read the worked answer

Roof area = 18 × 12 = 216 m².

Rainfall = 850 mm = 0.85 m.

Volume falling on the roof = 216 × 0.85 = 183.6 m³ = 1,83,600 litres.

Apply the runoff coefficient of 0.8 (the rest is splash, evaporation and gutter losses):

1,83,600 × 0.8 = 1,46,880 litres harvestable over the season.

As days of demand: 1,46,880 ÷ 3,200 = 45.9 days.

Against a 90-day monsoon, that is about 51% of demand - 1,46,880 out of 90 × 3,200 = 2,88,000 litres.

So even in a perfect season the roof supplies barely half the hostel's monsoon requirement, before any storage losses. That single figure already contradicts the claim that the tank "covers the whole monsoon", and it is worth stating before the committee turns to payback.

2. Does the 20,000-litre tank cover the 12-day dry spell? Compute the capacity actually needed, its cost, and the tanker cost it would displace.

Read the worked answer

Coverage of the proposed tank: 20,000 ÷ 3,200 = 6.25 days. The dry spell is 12 days, so the tank runs dry roughly halfway through.

Capacity needed: 12 × 3,200 = 38,400 litres.

Extra capacity: 38,400 − 20,000 = 18,400 litres, at ₹6.50 per litre = ₹1,19,600 additional capital cost. The full 38,400-litre tank would cost 38,400 × 6.50 = ₹2,49,600.

Tanker cost displaced per event: 38,400 litres needs 38,400 ÷ 6,000 = 6.4 tankers, so 7 tankers at ₹1,800 = ₹12,600 (₹11,520 if the supplier bills pro rata).

So the extra ₹1,19,600 of storage avoids at most about ₹12,600 in a bad year - a payback of roughly 9 to 10 bad years, not one season. The 20,000-litre tank as quoted avoids only 6.25 × 3,200 = 20,000 litres, i.e. about ₹6,000 of tankering, and leaves the hostel buying water for the remaining six days.

3. Evaluate Ravi's two claims and give the committee a recommendation with one further consideration.

Read the worked answer

Claim 1, "covers the whole monsoon": false. Harvestable water is 1,46,880 litres against a monsoon demand of 2,88,000 litres - about 51%. And that assumes every drop is captured, which the ignored 2 mm first-flush diversion per rainy spell makes optimistic; ten spells would discard 216 m² × 0.002 m × 10 ≈ 4.3 m³, roughly 1.5 days of demand.

Claim 2, "pays for itself in one season": false by an order of magnitude. The proposed tank costs 20,000 × 6.50 = ₹1,30,000. It displaces at most about ₹6,000 of tankering in a bad year. Even the right-sized tank displaces about ₹12,600 a year.

Recommendation: do not approve on Ravi's reasoning; the project is defensible on water security, not on payback. Options: fund the ₹1,30,000 tank as a resilience measure with honest accounting, or stage it - phase one at 20,000 litres plus a low-cost recharge pit for overflow, which captures the excess rather than losing it.

Further consideration: the tank is only useful if rainfall arrives in step with storage. A 20,000-litre tank fills after 20,000 ÷ (216 × 0.8 × 1,000) ≈ 116 mm of rain, so it will overflow repeatedly in peak monsoon unless the overflow is routed to groundwater recharge.