An approach to risk and uncertainty in benefit‐cost analysis of water resources projects

Goicoechea, Ambrose; Krouse, Michael R.; Antle, Lloyd G.

doi:10.1029/wr018i004p00791

Cited by 23 publications

(12 citation statements)

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“…Third, uncertainties are present in information on exposure and effects (Goicoechea et al 1982;Sassi and Ruggeri 2008;Mena and Gerba 2009;Hart et al 2013). For instance, it is common to assume contaminant concentrations in water consumed represent exposure although internal doses can be decisive.…”

Section: Assessment Methodologiesmentioning

confidence: 99%

Integrated frameworks for assessing and managing health risks in the context of managed aquifer recharge with river water

Assmuth

Simola

Pitkänen

et al. 2015

Integr Envir Assess & Manag

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Integrated assessment and management of water resources for the supply of potable water is increasingly important in light of projected water scarcity in many parts of the world. This article develops frameworks for regional-level waterborne human health risk assessment of chemical and microbiological contamination to aid water management, incorporating economic aspects of health risks. Managed aquifer recharge with surface water from a river in Southern Finland is used as an illustrative case. With a starting point in watershed governance, stakeholder concerns, and value-at-risk concepts, we merge common methods for integrative health risk analysis of contaminants to describe risks and impacts dynamically and broadly. This involves structuring analyses along the risk chain: sources-releases-environmental transport and fate-exposures-health effects-socio-economic impacts-management responses. Risks attributed to contaminants are embedded in other risks, such as contaminants from other sources, and related to benefits from improved water quality. A set of models along this risk chain in the case is presented. Fundamental issues in the assessment are identified, including 1) framing of risks, scenarios, and choices; 2) interaction of models and empirical information; 3) time dimension; 4) distributions of risks and benefits; and 5) uncertainties about risks and controls. We find that all these combine objective and subjective aspects, and involve value judgments and policy choices. We conclude with proposals for overcoming conceptual and functional divides and lock-ins to improve modeling, assessment, and management of complex water supply schemes, especially by reflective solution-oriented interdisciplinary and multi-actor deliberation.

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Section: Assessment Methodologiesmentioning

confidence: 99%

Integrated frameworks for assessing and managing health risks in the context of managed aquifer recharge with river water

Assmuth

Simola

Pitkänen

et al. 2015

Integr Envir Assess & Manag

View full text Add to dashboard Cite

show abstract

“…38 For these rare cases, some statistical analysis can be used and the estimates of uncertainty can include accepted statistical methods. 45 However, most information about environmental contaminants is not complete enough to permit the use of this method for estimating uncertainty.…”

Section: Uncertainty Analysismentioning

confidence: 99%

Techniques for the assessment of carcinogenic risk due to drinking water contaminants

Cothern

Letkiewicz

1986

Critical Reviews in Environmental Control

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“…The possible inaccuracies in steps 1 and 2 also occur in the procedure of Goicoechea et al [1982b] and depend on the manner in which the expert information about benefit and cost components is obtained. This is beyond the scope of this paper.…”

Section: Hence Obtain Estimates Of the Mean And Variance Of Each Compmentioning

confidence: 99%

“…Under this assumption, B (the total benefits) and C (the total costs) will also be independent and normally distributed. Goicoechea et al [1982b] show that the distribution of Z is given by Figure 1 shows the CDF's obtained using the approximate method in comparison to the exact CDF when B/C = 2.0 and V• = Vc = 0.2. It can be seen that the correspondence is quite good, particularly for the lognormal and gamma distributions.…”

Section: Error Analysismentioning

confidence: 99%

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An Approximate Method for the Analysis of Uncertainty in Benefit‐Cost Ratios

Dandy¹

1985

Water Resources Research

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Uncertainty exists in the estimates of benefits and costs for any proposed water resource project. An approach is presented for the treatment of this uncertainty and its incorporation into the benefit-cost ratio. The method is based on subjective estimates of "most likely," "upper," and "lower" values for individual components of benefits and costs and estimates of the correlation coefficients between these components. The method is approximate but has the advantage of not requiring a computer for its application. The main errors introduced by the approach are analyzed and are shown to be relatively small. Finally, a case study is presented to demonstrate application of the method. INTRODUCTIONThe benefit-cost ratio is a commonly used economic criterion for the comparison of alternative water resource projects [James and Lee, 1971]. Clearly, the economic benefits and costs of any proposed water resource project cannot be predicted with total precision due to a number of factors, including the following: (1) the randomness in hydrologic processes such as rainfall, runoff, and evaporation (these affect the crop yields due to irrigation, flood control benefits, etc.); (2) the uncertainty in future population growth, which affects the estimated benefits due to water supply, recreation, and flood control; (3) uncertainty in the community demand functions for water supply and recreation; (4) limited data records; (5) uncertainty in engineering cost estimates due to variations in foundation conditions, delays in construction, and variable productivity.As is noted by Goicoechea et al. [1982b], the U.S. Water Resources Council has produced a project evaluation procedure [U.S. Water Resources Council, 1979] to assist in the analysis of risk and uncertainty in water resources planning. As yet, no complete methodology exists for treating this problem.Goicoechea et al. [1982b] have highlighted some of the issues associated with this area by identifying sources of risk and uncertainty in water resources planning and by outlining a probabilistic approach to benefit-cost analysis. The Goicoechea et al. approach involves identifying a probability distribution for each benefit and cost component of the project. These distributions will usually be subjective and will be based on "expected," "optimistic," and "pessimistic" estimates of the relevant value. It is further assumed that all components are statistically independent, an assumption which is questioned by Goldman [19833. If the individual components are normally distributed, an analytical expression can be derived for the resulting benefit-cost ratio. Another expression applies if the underlying benefit and cost components all have gamma distributions. One practical difficulty in using the Giocoechea et al.[198263 procedure is the need to use computer programs to compute the cumulative distributions of the benefit-cost ratio. This is required for numerical integration (in the case of normally distributed benefits and costs) or evaluation of the gamma function (if all benefi...

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An approach to risk and uncertainty in benefit‐cost analysis of water resources projects

Cited by 23 publications

References 2 publications

Integrated frameworks for assessing and managing health risks in the context of managed aquifer recharge with river water

Integrated frameworks for assessing and managing health risks in the context of managed aquifer recharge with river water

Techniques for the assessment of carcinogenic risk due to drinking water contaminants

An Approximate Method for the Analysis of Uncertainty in Benefit‐Cost Ratios

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