Julien J. Harou

Economic consequences of optimized water management for a prolonged, severe drought in California

If abrupt climate change has occurred in the past and may be more likely under human forcing, it is relevant to look at the adaptability of current infrastructure systems to severe conditions of the recent past. Geologic evidence suggests two extreme droughts in California during the last few thousand years, each 120-200 years long, with mean annual streamflows 40%-60% of the historical mean. This study synthesized a 72 year drought with half of mean historical inflows using random sampling of historical dry years. One synthetic hydrological record is used, and sensitivity to different interpretations of the paleorecord is not evaluated. Economic effects and potential adaptation of Californias water supply system in 2020 to this drought is explored using a hydroeconomic optimization model. The model considers how California could respond to such an extreme drought using water trading and provides best-case estimates of economic costs and effects on water operations and demands. Results illustrate the ability of extensive, intertied, and flexible water systems with heterogeneous water demands to respond to severe stress. The study follows a different approach to climate change impact studies, focusing on past climate changes from the paleorecord rather than downscaled general circulation model results to provide plausible hydrologic scenarios. Adaptations suggested for the sustained drought are similar for dry forms of climate warming in California and are expensive but not catastrophic for the overall economy but would impose severe burdens on the agricultural sector and environmental water uses.

Estimating economic value of agricultural water under changing conditions and the effects of spatial aggregation.

Given the high proportion of water used for agriculture in certain regions, the economic value of agricultural water can be an important tool for water management and policy development. This value is quantified using economic demand curves for irrigation water. Such demand functions show the incremental contribution of water to agricultural production. Water demand curves are estimated using econometric or optimisation techniques. Calibrated agricultural optimisation models allow the derivation of demand curves using smaller datasets than econometric models. This paper introduces these subject areas then explores the effect of spatial aggregation (upscaling) on the valuation of water for irrigated agriculture. A case study from the Rio Grande-Rio Bravo Basin in North Mexico investigates differences in valuation at farm and regional aggregated levels under four scenarios: technological change, warm-dry climate change, changes in agricultural commodity prices, and water costs for agriculture. The scenarios consider changes due to external shocks or new policies. Positive mathematical programming (PMP), a calibrated optimisation method, is the deductive valuation method used. An exponential cost function is compared to the quadratic cost functions typically used in PMP. Results indicate that the economic value of water at the farm level and the regionally aggregated level are similar, but that the variability and distributional effects of each scenario are affected by aggregation. Moderately aggregated agricultural production models are effective at capturing average-farm adaptation to policy changes and external shocks. Farm-level models best reveal the distribution of scenario impacts.

A computationally efficient open-source water resource system simulator - Application to London and the Thames Basin

Interactive River-Aquifer Simulation-2010 (IRAS-2010) is a generalized water resource system simulation model. IRAS-2010 is a new release of IRAS previously released by Cornell University in 1995. Given hydrological inflows, evaporation rates, water allocation rules, reservoir release rules, consumptive water demands and minimum environmental flows, IRAS-2010 estimates flows, surface water and groundwater storage, water use, energy use, and operating costs throughout the water resource network at each user-defined time-step. Multi-reservoir release rule curves, streamflow routing, regional groundwater flow, ecological flows, hydropower, pumping, desalination, and other features can be represented. The IRAS-2010 model is linked to a generic user-interface called HydroPlatform; both model and user-interface are open-source. We present an IRAS-2010 model of Londons conjunctive use water resource system that satisfactorily emulates a more sophisticated model currently used by regulators. Results from daily and weekly time-step models are compared. IRAS-2010s fast run times make it appropriate for workshop settings and advanced planning methods that require many model evaluations. Model limitations, benefits, project organization and future plans are outlined.

Simulating water markets with transaction costs

This paper presents an optimization model to simulate short-term pair-wise spot-market trading of surface water abstraction licenses (water rights). The approach uses a node-arc multicommodity formulation that tracks individual supplier-receiver transactions in a water resource network. This enables accounting for transaction costs between individual buyer-seller pairs and abstractor-specific rules and behaviors using constraints. Trades are driven by economic demand curves that represent each abstractors time-varying water demand. The purpose of the proposed model is to assess potential hydrologic and economic outcomes of water markets and aid policy makers in designing water market regulations. The model is applied to the Great Ouse River basin in Eastern England. The model assesses the potential weekly water trades and abstractions that could occur in a normal and a dry year. Four sectors (public water supply, energy, agriculture, and industrial) are included in the 94 active licensed water diversions. Each licenses unique environmental restrictions are represented and weekly economic water demand curves are estimated. Rules encoded as constraints represent current water management realities and plausible stakeholder-informed water market behaviors. Results show buyers favor sellers who can supply large volumes to minimize transactions. The energy plant cooling and agricultural licenses, often restricted from obtaining water at times when it generates benefits, benefit most from trades. Assumptions and model limitations are discussed. Key Points Transaction tracking hydro-economic optimization models simulate water markets Proposed model formulation incorporates transaction costs and trading behavior Water markets benefit users with the most restricted water access

Virtues of simple hydro-economic optimization: Baja California, Mexico.

This paper uses simple hydro-economic optimization to investigate a wide range of regional water system management options for northern Baja California, Mexico. Hydro-economic optimization models, even with parsimonious model formulations, enable investigation of promising water management portfolios for supplying water to agricultural, environmental and urban users. CALVIN, a generalized hydro-economic model, is used in a case study of Baja California. This drought-prone region faces significant challenges to supply water to agriculture and its fast growing border cities. Water management portfolios include water markets, wastewater reuse, seawater desalination and infrastructure expansions. Water markets provide the flexibility to meet future urban demands; however conveyance capacity limits their use. Wastewater reuse and conveyance expansions are economically promising. At current costs desalination is currently uneconomical for Baja California compared to other alternatives. Even simple hydro-economic models suggest ways to increase efficiency of water management in water scarce areas, and provide an economic basis for evaluating long-term water management solutions.

Introduction to the Special Issue on “Adaptation and Resilience of Water Systems to an Uncertain Changing Climate”

This special issue demonstrates the value of multidisciplinary and interdisciplinaryapproaches to addressing the future adaptation and resilience of water systems. The range of articles in this special issue, largely based on work from the UK, offers an interdisciplinary perspective on the issues associated with the adaptation and resilience of water systems to an uncertain changing climate. Such themes will resonate with a broad international audience interested in water resources management and adaption to climate change. This special issue has in large part emerged from research associated with the Adaptation and Resilience in aChanging Climate (ARCC-Water) project funded by the EPSRC (Engineering and Physical Sciences Research Council) with co-funding by the ESRC (Economic and Social Research Council).

Screening reservoir systems by considering the efficient trade-offs—informing infrastructure investment decisions on the Blue Nile

Multi-reservoir system planners should consider how new dams impact downstream reservoirs and the potential contribution of each component to coordinated management. We propose an optimized multi-criteria screening approach to identify best performing designs, i.e., the selection, size and operating rules of new reservoirs within multi-reservoir systems. Reservoir release operating rules and storage sizes are optimized concurrently for each separate infrastructure design under consideration. Outputs reveal system trade-offs using multi-dimensional scatter plots where each point represents an approximately Pareto-optimal design. The method is applied to proposed Blue Nile River reservoirs in Ethiopia, where trade-offs between total and firm energy output, aggregate storage and downstream irrigation and energy provision for the best performing designs are evaluated. This proof-of concept study shows that recommended Blue Nile system designs would depend on whether monthly firm energy or annual energy is prioritized. 39 TWh/yr of energy potential is available from the proposed Blue Nile reservoirs. The results show that depending on the amount of energy deemed sufficient, the current maximum capacities of the planned reservoirs could be larger than they need to be. The method can also be used to inform which of the proposed reservoir type and their storage sizes would allow for the highest downstream benefits to Sudan in different objectives of upstream operating objectives (i.e., operated to maximize either average annual energy or firm energy). The proposed approach identifies the most promising system designs, reveals how they imply different trade-offs between metrics of system performance, and helps system planners asses the sensitivity of overall performance to the design parameters of component reservoirs.

Extreme Drought and Water Supply Management in California

The geological record contains extreme droughts beyond those seen in historical hydrologic records. For California, the geological record contains several extreme droughts the last few thousand years. Two of these droughts are 120-200 years long, with mean annual streamflows between 40% and 60% of the historical mean. This study synthesized a 72-year historical record for a drought of this character, having a mean flow of 40% of the historical record. This hydrologic time series was used as input to an economic-engineering optimization model of California’s water supply system (CALVIN). The model allows exploration of how California’s water management system might respond to such an extreme drought and provides preliminary estimates of economic costs and effects of such a drought on water operations and demands. The overall results show the importance of management flexibility and adaptation in response to extreme stresses on water systems. Results also illustrate the physical ability of extensive, diversified, and highly intertied water systems with heterogeneous water demands to economically respond to such extreme stresses. The study provides a different approach to climate change studies, focusing on observed past changes in climate from the geologic record rather than downscaled general circulation model results to provide hydrologic scenarios.

Design and assessment of an efficient and equitable dynamic urban water tariff. Application to the city of Valencia, Spain

Abstract Water pricing policies have a large and still relatively untapped potential to foster more efficient management of water resources in scarcity situations. This work contributes a framework for designing equitable, financially stable and economically efficient urban water tariffs. A hydroeconomic simulation model links the marginal value of water, which reflects water scarcity given its competing uses, to water supply reservoir levels. Varying reservoir levels trigger variations in the second block of the proposed two-block increasing-rate tariff; these variations then reflect waters value at that time. The work contrasts the two-block scarcity tariff with a constant volumetric rate for the city of Valencia, Spain, and the drought-prone Jucar basin, where most of 430,000 households are equipped with smart meters. Results show urban consumption is reduced by 18% in the driest years, lowering basin-wide scarcity costs by 34%.

Hydroeconomic Models as Decision Support Tools for Conjunctive Management of Surface and Groundwater

Conjunctive use (CU) of surface and groundwater storage and supplies is essential for integrated water management. It is also a key strategy for supporting groundwater-dependent ecosystems, and for adapting water systems to future climate and land use changes. CU has become increasingly sophisticated and integrated with other innovative and traditional water management techniques, such as water transfers, water reuse, demand management, and aquifer remediation. CU adds value for society (increasing average yield and reliability) but can also induce costs to some parties, such as damaging senior water rights of surface water users when pumping from the aquifer reduces streamflow. Groundwater overexploitation also can produce a host of undesirable economic and environmental impacts. Successful CU implementation typically requires changes in infrastructure and operations, but also changes in institutions and institutional arrangements to offset potential third party costs and protect ecosystems. This chapter analyses first the management and economic implications of CU, addressing advantages, costs and limitations, as well as the potential contribution of economic instruments to the conjunctive operation of groundwater and surface storage and resources. CU management models are then classified according to the CU problem, their formulation and solution techniques. Different applications of hydroeconomic models are reviewed in a wide range of CU problems. A few applications are discussed more in-depth, using cases from California and Spain. Then, we discuss the relevance of these models in decision-making, and the policy and institutional implications. Finally, we address limitations and challenges, and suggest future directions.