Managing hydroclimatological risk to water supply with option contracts and reservoir index insurance

Brown, Casey; Carriquiry, Miguel

doi:10.1029/2007wr006093

Cited by 58 publications

(61 citation statements)

References 18 publications

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“…Index insurance mechanisms have been proposed in the literature seeking to cover financial risks for water managers (Brown and Carriquiry 2007;Zeff and Charaklis 2013) and offering coverage for agricultural production (Zeuli and Skees 2005;Leiva and Skees 2008).…”

Section: ; Pérez Blanco and Gómez Gómez 2013)mentioning

confidence: 99%

“…Similarly to Brown and Carriquiry (2007), we propose a unitary indemnity, but based on crop production and adapted to the ID.…”

Section: ; Pérez Blanco and Gómez Gómez 2013)mentioning

confidence: 99%

“…In such cases, Brown and Carriquiry (2007) suggest that the contracts should be signed before forecasts were available or otherwise, insurees could adjust premiums in accordance with forecasts. However, none of them adapt the insurance scheme to deal with intertemporal adverse selection.…”

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

“…Although not commercially offered, several hydrological drought index insurance mechanisms have been proposed in the literature seeking to cover financial risks for water managers (Brown and Carriquiry 2007;Zeff and Characklis 2013) and offering covers for agricultural production (Leiva and Skees 2008). Brown and Carriquiry (2007) use seasonal inflows to develop an index insurance that compensates an urban water supplier for the increased costs associated with acquiring water from irrigators during dry periods via option contracts.…”

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

“…Brown and Carriquiry (2007) use seasonal inflows to develop an index insurance that compensates an urban water supplier for the increased costs associated with acquiring water from irrigators during dry periods via option contracts. Zeff and Characklis (2013) propose an index insurance based on streamflows and withdrawals from a multireservoir system that generally refills each year.…”

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

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Hydrological Drought Index Insurance for Irrigated Agriculture

Villarroya¹

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EL PRESIDENTE LOS VOCALES EL SECRETARIO i AgradecimientosLlegó el momento de redactar los agradecimientos, y recordar a todas las personas que me han acompañado en este recorrido y que me han ayudado a finalizar el doctorado. El pararse a pensar sobre todo lo que tenemos que agradecer a las personas que nos rodean, es un ejercicio que deberíamos hacer más a menudo, sin tener por ello que redactar una tesis cada vez.Para empezar quiero dar las gracias a mis dos tutores, María Bielza y Alberto Garrido. María me abrió las puertas del CEIGRAM y me dio la oportunidad de colaborar con ella en el proyecto -Un seguro de sequía hidrológica para la agricultura de regadío como instrumento de adaptación al cambio climático‖, gracias a lo cual recibí una beca FPI del Ministerio de Economía yCompetitividad para la realización del doctorado, que me ha dado tranquilidad y estabilidad económica durante los últimos 4 años. Gracias María, por todas las oportunidades que me has dado, tu cercanía, tu dedicación y tus consejos. Alberto Garrido ha seguido muy de cerca toda mi investigación, pero debo de agradecerle sobre todo su papel en la última parte de la tesis, fundamental para culminar este trabajo. Alberto, muchas gracias por tu apoyo, eficacia y por todos los ánimos que me has dado.En el proyecto he tenido la suerte de colaborar además con Jorge Ruiz, Ana Iglesias, FelipeMedina, Gabriela Jiménez y Alberto Algarra. También quiero dar las gracias a todos los que participaron en el seminario del proyecto.La beca FPI me ha dado además la posibilidad de acceder a ayudas para la realización de estancias en otras universidades. La primera fue en la Universidad de Catania (Italia), donde debo de agradecer la ayuda de Antonio Cancelliere, Vincenzo Nicolosi, David Peres y Brunella Bonaccorso, así como la compañía de mis incansables compañeros de despacho, Claudio e Ilaria. La segunda estancia fue en la Universidad de Mississippi (Estados Unidos). Allí tuve el honor de trabajar con dos grandes expertos en seguros agrarios, Barry Barnett y Keith Coble, con los que hemos escrito uno de los artículos que forman parte de esta tesis, muchísimas gracias por vuestra contribución. También asistí a la clase de Ardian Harri, con quien disfruté de la econometría. Debo de agradecer especialmente la ayuda de Barry en todos los aspectos y la compañía y complicidad de Dee Barnett, que me hizo sentir como en casa durante la estancia.Por cierto, nunca he madrugado tanto los sábados, como para ir a correr con Becky y Cade Smith y los Broadtown runners.La realización de esta tesis no hubiera sido posible sin el apoyo del CEIGRAM y del ResumenLos riesgos de escasez de agua en sistemas de regadío son importantes en los países semi-áridos y es probable que aumenten debido al cambio climático. De ahí deriva el interés en ofrecer a los agricultores la posibilidad de proteger la estabilidad de los ingresos de las explotaciones de regadío frente a este riesgo. Debido a las dificultades que un seguro de este tipo presenta, solamente un país (Estados Unidos) ofrec...

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Section: ; Pérez Blanco and Gómez Gómez 2013)mentioning

confidence: 99%

“…Similarly to Brown and Carriquiry (2007), we propose a unitary indemnity, but based on crop production and adapted to the ID.…”

Section: ; Pérez Blanco and Gómez Gómez 2013)mentioning

confidence: 99%

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

Section: Hydrological Drought Index Insurancementioning

confidence: 99%

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Hydrological Drought Index Insurance for Irrigated Agriculture

Villarroya¹

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Many‐objective reservoir policy identification and refinement to reduce policy inertia and myopia in water management

Giuliani

Herman

Castelletti

et al. 2014

Water Resources Research

143

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This study contributes a decision analytic framework to overcome policy inertia and myopia in complex river basin management contexts. The framework combines reservoir policy identification, manyobjective optimization under uncertainty, and visual analytics to characterize current operations and discover key trade-offs between alternative policies for balancing competing demands and system uncertainties. The approach is demonstrated on the Conowingo Dam, located within the Lower Susquehanna River, USA. The Lower Susquehanna River is an interstate water body that has been subject to intensive water management efforts due to competing demands from urban water supply, atomic power plant cooling, hydropower production, and federally regulated environmental flows. We have identified a baseline operating policy for the Conowingo Dam that closely reproduces the dynamics of current releases and flows for the Lower Susquehanna and thus can be used to represent the preferences structure guiding current operations. Starting from this baseline policy, our proposed decision analytic framework then combines evolutionary many-objective optimization with visual analytics to discover new operating policies that better balance the trade-offs within the Lower Susquehanna. Our results confirm that the baseline operating policy, which only considers deterministic historical inflows, significantly overestimates the system's reliability in meeting the reservoir's competing demands. Our proposed framework removes this bias by successfully identifying alternative reservoir policies that are more robust to hydroclimatic uncertainties while also better addressing the trade-offs across the Conowingo Dam's multisector services.

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Navigating financial and supply reliability tradeoffs in regional drought management portfolios

Zeff

Kasprzyk

Herman

et al. 2014

Water Resources Research

104

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Rising development costs and growing concerns over environmental impacts have led many communities to explore more diversified water management strategies. These ''portfolio''-style approaches integrate existing supply infrastructure with other options such as conservation measures or water transfers. Diversified water supply portfolios have been shown to reduce the capacity and costs required to meet demand, while also providing greater adaptability to changing hydrologic conditions. However, this additional flexibility can also cause unexpected reductions in revenue (from conservation) or increased costs (from transfers). The resulting financial instability can act as a substantial disincentive to utilities seeking to implement more innovative water management techniques. This study seeks to design portfolios that employ financial tools (e.g., contingency funds and index insurance) to reduce fluctuations in revenues and costs, allowing these strategies to achieve improved performance without sacrificing financial stability. This analysis is applied to the development of coordinated regional supply portfolios in the ''Research Triangle'' region of North Carolina, an area comprising four rapidly growing municipalities. The actions of each independent utility become interconnected when shared infrastructure is utilized to enable interutility transfers, requiring the evaluation of regional tradeoffs in up to five performance and financial objectives. Diversified strategies introduce significant tradeoffs between achieving reliability goals and introducing burdensome variability in annual revenues and/or costs. Financial mitigation tools can mitigate the impacts of this variability, allowing for an alternative suite of improved solutions. This analysis provides a general template for utilities seeking to navigate the tradeoffs associated with more flexible, portfolio-style management approaches.

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Managing hydroclimatological risk to water supply with option contracts and reservoir index insurance

Cited by 58 publications

References 18 publications

Hydrological Drought Index Insurance for Irrigated Agriculture

Hydrological Drought Index Insurance for Irrigated Agriculture

Many‐objective reservoir policy identification and refinement to reduce policy inertia and myopia in water management

Navigating financial and supply reliability tradeoffs in regional drought management portfolios

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