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Comparing Optimal Hedging Policies Incorporating Past Operation Information and Future Hydrologic Information

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  • Jenq-Tzong Shiau

    (National Cheng Kung University)

  • Hsu-Hui Wen

    (National Cheng Kung University)

  • I-Wen Su

    (National Cheng Kung University)

Abstract

This study aims to construct two hedging policies based on current storage and two auxiliary factors (past storage trend and future standardized streamflow index (SSI) and compare the effects on reservoir performance in terms of shortage characteristics (maximum single-period shortage ratio, total shortage ratio, average water shortage per shortage period, and risk) during droughts. The proposed approach is applied to the Nanhua Reservoir located in southern Taiwan. The results reveal that Model S (demand-based rule curves associated with fuzzified storage) efficiently improves shortage characteristics during droughts and outperforms Model C (current operation). Further improvements are obtained by incorporating past storage trends (Model STs: Model S with different periods of past storage trends) and future SSIs (Model SHs: Model S with different time-scale SSIs) into Model S. Exactly known SSIs in Model SHs derive optimistic hedging policies that have fewer less-than-1 rationing coefficients and significantly reduce shortage duration and total deficits. In contrast, Model STs lack future inflow information and lead to conservative hedging policies, which have early hedging and effectively decrease the maximum single-period water shortage. The effects of past storage trends and future SSIs on shortage characteristics decrease with longer periods since models with short-term information effectively capture the inherent variations and derive more effective hedging policies. According to the overall objective, Model SHs generally outperform Model STs, models with short-term information outperform the long-term models, and all the proposed optimization models outperform the current operation.

Suggested Citation

  • Jenq-Tzong Shiau & Hsu-Hui Wen & I-Wen Su, 2021. "Comparing Optimal Hedging Policies Incorporating Past Operation Information and Future Hydrologic Information," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(7), pages 2177-2196, May.
    • Handle: RePEc:spr:waterr:v:35:y:2021:i:7:d:10.1007_s11269-021-02834-2
    DOI: 10.1007/s11269-021-02834-2
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    References listed on IDEAS

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    1. Iman Ahmadianfar & Reza Zamani, 2020. "Assessment of the hedging policy on reservoir operation for future drought conditions under climate change," Climatic Change, Springer, vol. 159(2), pages 253-268, March.
    2. Youngkyu Jin & Sangho Lee, 2019. "Comparative Effectiveness of Reservoir Operation Applying Hedging Rules Based on Available Water and Beginning Storage to Cope with Droughts," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(5), pages 1897-1911, March.
    3. Jenq-Tzong Shiau & Yen-Ning Hung & Huei-Er Sie, 2018. "Effects of Hedging Factors and Fuzziness on Shortage Characteristics During Droughts," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 32(5), pages 1913-1929, March.
    4. Yong Peng & Jinggang Chu & Anbang Peng & Huicheng Zhou, 2015. "Optimization Operation Model Coupled with Improving Water-Transfer Rules and Hedging Rules for Inter-Basin Water Transfer-Supply Systems," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(10), pages 3787-3806, August.
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    7. Bin Xu & Xin Huang & Ping-an Zhong & Yenan Wu, 2020. "Two-Phase Risk Hedging Rules for Informing Conservation of Flood Resources in Reservoir Operation Considering Inflow Forecast Uncertainty," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 34(9), pages 2731-2752, July.
    8. J. Shiau & H. Lee, 2005. "Derivation of Optimal Hedging Rules for a Water-supply Reservoir through Compromise Programming," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 19(2), pages 111-132, April.
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    10. Hui Wang & Junguo Liu, 2013. "Reservoir Operation Incorporating Hedging Rules and Operational Inflow Forecasts," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(5), pages 1427-1438, March.
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    Cited by:

    1. Soyeon Lim & Seungyub Lee & Donghwi Jung, 2021. "Identifying the Drought Impact Factors and Developing Drought Scenarios Using the DSD Model," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(14), pages 4809-4823, November.
    2. Jenq-Tzong Shiau, 2021. "Analytical Water Shortage Probabilities and Distributions of Various Lead Times for a Water Supply Reservoir," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(11), pages 3809-3825, September.

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