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Selecting Portfolios of Water Supply and Demand Management Strategies Under Uncertainty—Contrasting Economic Optimisation and ‘Robust Decision Making’ Approaches

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  • Evgenii Matrosov
  • Silvia Padula
  • Julien Harou

Abstract

Planning appropriate portfolios of new water supplies and demand management measures requires considering a wide array of options and their interactions over a largely unknown future. Various modelling-assisted approaches are available to help this planning process. This paper applies two such frameworks to the UK’s Thames water resource system and compares their methods and outputs: how they consider uncertainty, how they represent supply and demand management options, and what plans each recommends. The first method is the current England and Wales industry standard: annual least-cost capacity expansion optimisation over a 25 to 30 year time horizon considering capital, operating (fixed and variable), social and environmental costs. The second approach uses stochastic simulation and regret analysis to select a preferred alternative, then statistical cluster analysis to identify causes of system failure enabling further plan improvement. When applied iteratively with system planners this second approach is referred to as Robust Decision Making (RDM). The economic optimisation approach considers all plausible combinations of supply and conservation schemes and recommends the least-cost schedule of their implementation. Our RDM application considers a smaller number of options but makes a more detailed assessment of the effect of uncertainty (supply, demand and energy price uncertainty were considered) on multiple criteria of system performance. The simulation-based approach also enables more realistic interaction amongst supply and demand management schemes. Both approaches recommended different plans which we explain by discussing the benefits and limitations of each. Joint application is recommended to produce least-cost plans that are robust considering multiple criteria of performance across a wide range of futures. Copyright Springer Science+Business Media B.V. 2013

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  • Evgenii Matrosov & Silvia Padula & Julien Harou, 2013. "Selecting Portfolios of Water Supply and Demand Management Strategies Under Uncertainty—Contrasting Economic Optimisation and ‘Robust Decision Making’ Approaches," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(4), pages 1123-1148, March.
    • Handle: RePEc:spr:waterr:v:27:y:2013:i:4:p:1123-1148
    DOI: 10.1007/s11269-012-0118-x
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    References listed on IDEAS

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    1. Ronald C. Griffin, 2006. "Water Resource Economics: The Analysis of Scarcity, Policies, and Projects," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207267x, December.
    2. B. Luo & I. Maqsood & G. Huang, 2007. "Planning water resources systems with interval stochastic dynamic programming," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(6), pages 997-1014, June.
    3. Robert J. Lempert & David G. Groves & Steven W. Popper & Steve C. Bankes, 2006. "A General, Analytic Method for Generating Robust Strategies and Narrative Scenarios," Management Science, INFORMS, vol. 52(4), pages 514-528, April.
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    Cited by:

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    2. Corentin Girard & Jean-Daniel Rinaudo & Manuel Pulido-Velazquez & Yvan Caballero, 2015. "An interdisciplinary modelling framework for selecting adaptation measures at the river basin scale in a global change scenario," Post-Print hal-01183833, HAL.
    3. Claudio Arena & Marcella Cannarozzo & Mario Mazzola, 2014. "Screening Investments to Reduce the Risk of Hydrologic Failures in the Headwork System Supplying Apulia (Italy) – Role of Economic Evaluation and Operation Hydrology," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(5), pages 1251-1275, March.
    4. Hurford, A.P. & Harou, J.J. & Bonzanigo, L. & Ray, P.A. & Karki, P. & Bharati, L. & Chinnasamy, P., 2020. "Efficient and robust hydropower system design under uncertainty - A demonstration in Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    5. Corentin Girard & Jean-Daniel Rinaudo & Manuel Pulido-Velazquez, 2015. "Index-Based Cost-Effectiveness Analysis vs. Least-Cost River Basin Optimization Model: Comparison in the Selection of a Programme of Measures at the River Basin Scale," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(11), pages 4129-4155, September.
    6. Dittrich, Ruth & Wreford, Anita & Moran, Dominic, 2016. "A survey of decision-making approaches for climate change adaptation: Are robust methods the way forward?," Ecological Economics, Elsevier, vol. 122(C), pages 79-89.
    7. Livia Rasche & Uwe A. Schneider & Martha Bolívar Lobato & Ruth Sos Del Diego & Tobias Stacke, 2018. "Benefits of Coordinated Water Resource System Planning in the Cauca-Magdalena River Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-27, January.
    8. Kwakkel, J.H. & Cunningham, S.C., 2016. "Improving scenario discovery by bagging random boxes," Technological Forecasting and Social Change, Elsevier, vol. 111(C), pages 124-134.

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