This paper presents results of a large-scale economic-engineering optimization model of California's water supply system. The results of this 4-year effort illustrate the value of optimization modeling for providing integrated information needed to manage a complex multipurpose water system. This information includes economic benefits of flexible operations, economic valuation of capacity expansion opportunities, estimating user willingness to pay for additional water, economic opportunity costs of environmental flows, and identification of promising conjunctive use and water transfer opportunities. The limitations of such modeling also are discussed. Overall, the results suggest improvements to system operation and water allocations with a statewide expected value potentially as high as $1.3 billion/year. Significant improvements in performance appear possible through water transfers and exchanges, conjunctive use, and various operational changes to increase flexibility. These changes also greatly reduce costs to agricultural and urban users of accommodating environmental requirements. Model results also suggest benefits for expanding selected conveyance and storage facilities.
[1] This paper examines levee-protected floodplains and economic aspects of adaptation to increasing long-term flood risk due to urbanization and climate change. The lower American River floodplain in the Sacramento, California, metropolitan area is used as an illustration to explore the course of optimal floodplain protection decisions over long periods. A dynamic programming model is developed and suggests economically desirable adaptations for floodplain levee systems given simultaneous changes in flood climate and urban land values. Economic engineering optimization analyses of several climate change and urbanization scenarios are made. Sensitivity analyses consider assumptions about future values of floodplain land and damageable property along with the discount rate. Methodological insights and policy lessons are drawn from modeling results, reflecting the joint effects and relationships that climate, economic costs, and regional economic growth can have on floodplain levee planning decisions.
1] Farmers make joint water and land use decisions for economic purposes based in part on water availability and reliability. A two-stage economic production model is developed to examine the effects of hydrologic uncertainty and water prices on agricultural production, cropping patterns, and water and irrigation technology use. The model maximizes net expected farm profit from permanent and annual crop production with probabilistic water availability and a variety of irrigation technologies. Results demonstrate effects of water availability, price, and reliability on economic performance, annual and long-run cropping patterns, and irrigation technology decisions. Variations in water price and availability affect the desirability of different irrigation technologies. Increased water supply reliability can raise the probability of higher economic returns and promote more effective use of water for permanent crops. Such economic benefits can be compared to costs of operational changes and programs to increase water supply reliability for agricultural areas.Citation: Marques, G. F., J. R. Lund, and R. E. Howitt (2005), Modeling irrigated agricultural production and water use decisions under water supply uncertainty, Water Resour. Res., 41, W08423,
This paper applies two-stage stochastic quadratic programming to optimize conjunctive use operations of groundwater pumping and artificial recharge with farmer's expected revenue and cropping decisions. The two-stage programming approach allows modeling of water and permanent crop production decisions, with recourse for uncertain conditions of hydrology, annual crops, and irrigation technology decisions. Results indicate potential gains in expected net benefits and reduction in income variability from conjunctive use, with increase in high value permanent crops along with more efficient irrigation technology.
This paper develops and applies an economically driven simulation model for California's Friant-Kern system, a region characterized by diverse water sources employed predominantly for commercial irrigated agriculture, with significant local water trading activity. The economic-engineering simulation approach highlights the importance of representing user economic decisions for water systems in a context of complex physical and infrastructure systems dominated by economic water uses. The model simulates how water users conserve, select supplies and make water exchange and market decisions in response to water costs and availability, and provides estimates of economic and operational impacts of alternative policies for the Friant-Kern system. Results show that high surface water prices cause farmers to pump more groundwater, disturbing an existing conjunctive use system and aggravating regional groundwater overdraft.
[1] The coordination of reservoir operation is critical for water systems' efficiency. Improved coordination requires sharing information, demanding a clear understanding of the potential gains and its distribution among the users to motivate engagement in coordinated operations and bearing of transaction costs. In a multiuser, multireservoir system, the evaluation of the potential coordination gains is not trivial because it requires the simultaneous evaluation of numerous trade offs. This paper presents a methodology to identify the likely upper and lower bounds in multireservoir system benefits, providing a reference framework for analyzing the economic value of coordination. The methodology is applied to a large-scale multireservoir system in Brazil. The methods rely on the comparison between two management scenarios. The first one mimics typical system operation based on individually designed rule curves, which are likely to perform on the lower bound. This is compared with fullscale system-wide optimization through an Stochastic Dual Dynamic Programming algorithm to represent fully coordinated reservoir operation (upper bound). For our case study, results indicate that better coordination reduced spills and improved releases timing according to reservoirs characteristics and location, allowing overall gains between 3% and 8% in energy and 7.9% in revenues, with revenues mostly improved by coordination in dry years. Larger reservoirs presented the highest gains in absolute terms, while the smaller ones presented the highest relative increases. By indicating individual gains at each reservoir, valuable information is produced to support future negotiations and benefit sharing among different agents, being water agencies or power companies.
Efficient reallocation and conjunctive operation of existing water supplies is gaining importance as demands grow, competitions among users intensify, and new supplies become more costly. This paper analyzes the roles and benefits of conjunctive use of surface water and groundwater and marketbased water transfers in an integrated regional water system where agricultural and urban water users coordinate supply and demand management based on supply reliability and economic values of water. Agricultural users optimize land and water use for annual and perennial crops to maximize farm income, while urban users choose short-term and long-term water conservation actions to maintain reliability and minimize costs. The temporal order of these decisions is represented in a two-stage optimization that maximizes the net expected benefits of crop production, urban conservation and water management including conjunctive use and water transfers. Long-term decisions are in the first stage and short-term decisions are in a second stage based on probabilities of water availability events. Analytical and numerical analyses are made. Results show that conjunctive use and water transfers can substantially stabilize farmer's income and reduce system costs by reducing expensive urban water conservation or construction. Water transfers can equalize marginal values of water across users, while conjunctive use minimizes water marginal value differences in time. Model results are useful for exploring the integration of different water demands and supplies through water transfers, conjunctive use, and conservation, providing valuable insights for improving system management.
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