Harrison B. Zeff

Navigating financial and supply reliability tradeoffs in regional drought management portfolios

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.

Evaluating the impact of alternative hydro-climate scenarios on transfer agreements: Practical improvement for generating synthetic streamflows

AbstractUtilities are increasingly considering the use of temporary water transfers to augment their supplies during periods of drought, an alternative that is often less expensive than expanding safe yields through new infrastructure. Understanding the volume and timing of transfers is important for developing contracts between buyer and seller and can be challenging due to the transient nature of drought, a situation complicated by the uncertainties associated with climate change. While transfer arrangements have received some attention in the literature, the effects of climate change on such agreements remain unexplored. This paper investigates these impacts using an improved method for developing new hydro-climate scenarios. A technique for producing stochastic time series of inflows is described, one which effectively replicates the autocorrelation present in the historic record. Unlike autoregressive (and similar) models that assume complete stationarity, the modified fractional Gaussian noise (mFGN...

Cooperative drought adaptation: Integrating infrastructure development, conservation, and water transfers into adaptive policy pathways

A considerable fraction of urban water supply capacity serves primarily as a hedge against drought. Water utilities can reduce their dependence on firm capacity and forestall the development of new supplies using short-term drought management actions, such as conservation and transfers. Nevertheless, new supplies will often be needed, especially as demands rise due to population growth and economic development. Planning decisions regarding when and how to integrate new supply projects are fundamentally shaped by the way in which short-term adaptive drought management strategies are employed. To date, the challenges posed by long-term infrastructure sequencing and adaptive short-term drought management are treated independently, neglecting important feedbacks between planning and management actions. This work contributes a risk-based framework that uses continuously updating risk-of-failure (ROF) triggers to capture the feedbacks between short-term drought management actions (e.g., conservation and water transfers) and the selection and sequencing of a set of regional supply infrastructure options over the long term. Probabilistic regional water supply pathways are discovered for four water utilities in the “Research Triangle” region of North Carolina. Furthermore, this study distinguishes the status-quo planning path of independent action (encompassing utility-specific conservation and new supply infrastructure only) from two cooperative formulations: “weak” cooperation, which combines utility-specific conservation and infrastructure development with regional transfers, and “strong” cooperation, which also includes jointly developed regional infrastructure to support transfers. Results suggest that strong cooperation aids utilities in meeting their individual objectives at substantially lower costs and with less overall development. These benefits demonstrate how an adaptive, rule-based decision framework can coordinate integrated solutions that would not be identified using more traditional optimization methods.

Synthetic Drought Scenario Generation to Support Bottom-Up Water Supply Vulnerability Assessments

AbstractExploratory simulation allows analysts to discover scenarios in which existing or planned water supplies may fail to meet stakeholder objectives. These robustness assessments rely heavily on the choice of plausible future scenarios, which, in the case of drought management, requires sampling or generating a streamflow ensemble that extends beyond the historical record. This study develops a method to modify synthetic streamflow generators by increasing the frequency and severity of droughts for the purpose of exploratory modeling. To support management decisions, these synthetic droughts can be related to recent observed droughts of consequence for regional stakeholders. The method approximately preserves the spatial and temporal correlation of historical streamflow in drought-adjusted scenarios. The approach is demonstrated in a bottom-up planning context using an urban water portfolio design problem in North Carolina, a region whose water supply faces both climate and population pressures. Synth...