Riccardo Zucca

Water Costs Allocation in Complex Systems Using a Cooperative Game Theory Approach

The management of complex water resource systems that address water service recovery costs and consider adequate contributions and priorities require methods that integrate technical, economic, environmental, social and legal aspects into a comprehensive framework. In Europe, the Water Framework Directive (WFD) 2000/60/EC recommends that the pricing politics in a river basin take into account the cost recovery and the economic sustainability of the water use. However, the current cost allocation methods do not consider the user’s willingness to pay and often do not permit a total cost recovery. Thus, a new approach is required that includes these requirements when defining water rates. This article presents a methodology to allocate water service costs in a water resource system among different users that attempts to fulfil the WFD requirements. The methodology is based on Cooperative Game Theory (CGT) techniques and on the definition of the related characteristic function using a mathematical optimisation approach. The CGT provides the instruments that are necessary to analyse situations that require a cost-sharing rule. The CGT approach can define efficient and fair solutions that provide the appropriate incentives among the parties involved. Therefore, the water system cost allocation has been valued as a game in which it is necessary to determine the right payoff for each player that is, in this case, a water user. To apply the CGT principles in a water resources system, the characteristic function needs to be defined and evaluated using an adequate modelling approach; in this study, it is evaluated using the optimisation model WARGI. (Sechi and Zuddas 2000). The so-called “core” represents the game-solution set. It represents the area of the admissible cost allocation values from which the boundaries on the cost values for each player can be supplied. Within the core lie all of the allocations that satisfy the principles of equity, fairness, justice, efficiency and that guarantee cost recovery. The core of a cooperative game can represent a useful instrument to define the water cost rates. Furthermore, it can be used as a valid support in water resource management to achieve the economic analysis required by the WFD. The methodology was applied to a multi-reservoir and multi-demand water system in Sardinia, Italy.

Water Resource Allocation in Critical Scarcity Conditions: A Bankruptcy Game Approach

Water resource allocation in critical scarcity conditions represents a common problem in water-system management in Mediterranean regions. This article describes a methodology for the allocation of scarce resources in a complex supply system by using the Bankruptcy Games techniques. A classical bankruptcy problem arises from a situation in which some agents have claims on the available estate to be divided, such that each agent might receive a non-negative amount that cannot exceed its claim. The methodological approach described in this article is linked to Cooperative Games Theory and allows the evaluation of a sharing rule for goods that are not sufficient to satisfy the total requests of the users in the system. Moreover, a new criterion is developed that, in resource allocation, privileges those users with higher priority. Users’ willingness to pay is considered to define priority; the methodology can be considered innovative in this field of research. This approach has been applied in water resource systems using critical scarcity scenarios: initially, a simplified water system is used; then, the complex and multi-purpose Tirso-Flumendosa-Campidano water system in southern Sardinia, Italy, is examined.

The Water Pricing Problem in a Complex Water Resources System: A Cooperative Game Theory Approach

The research presents a methodology to allocate water services costs in a water resources system among water users using a Cooperative Game Theory approach based on the integral river basin modelling. The proposed approach starts from the characterization of the system to be modelled. The Decision Support System WARGI [7, 4, 6] is then used to achieve the best water system performances and to calculate the least cost of each one of the users’ coalitions that may arise using the resources. The cost allocation is evaluated by the Cooperative Game Theory methods. The aim of the work is to suggest a tool for decision makers to define water price policies in accordance with the sustainability and fairness principles settled by European Water Framework Directive [2].

Combining water supply and flood control purposes in the Coghinas Basin (Sardinia, Italy)

ABSTRACT The increased level of impact on life and infrastructure and the environment caused by flooding in Sardinia (Italy) has resulted in the need for the Flood Risk Management Plans (FRMP). The FRMP has been developed by Sardinian Region Administration that selected the Coghinas Basin (North Sardinia) as a pilot basin in according with the EU and National legislation. Recently, the European Flood Directive 2007/60/CE has stated that the flood-risk evaluation should include a cost–benefit analysis and an integrated decision-making tool should help optimize operating rules for multipurpose reservoirs, primarily with regard to the mitigation of flood risks and high priority demand supplies, and selected flood control works. The main purpose of this study was to develop an integrated flood management model to predict flood inundation in the flood-prone areas for various probabilities of occurrence, identify the flood operating rules in a multipurpose reservoir which accomplish a reduction in flood risk, and assess the total damage due to flooding. The FRMP is currently assessing the impacts of new reservoir operating rules reservoir and new works for flood damage mitigation. Based on a calibrated benefit–cost analysis, the proposed model suggested the best scenario of reservoir operating rules and flood control works with a significant saving of money compared to the actual scenario in the FRMP.

A Cost-Simulation Approach to Finding Economic Optimality in Leakage Reduction for Complex Supply Systems

When negotiating for optimal decisions considering complex multi-centre (or multi-district) water supply systems, the optimal economic level of a renovation strategy for leakage reduction must be defined as reaching an equilibrium between the marginal benefits of saving water and the marginal costs of additional actions undertaken in achieving leakage reduction. This concept is used in the present paper to answer the question of what the leakage reduction target should be and how related costs can be justified. However, such a problem may be much more difficult to analyse if renovation is constrained by reduced water resources and limited funds. Here the optimal renovation strategy is thus based on a cost-simulation approach, evaluating a cost function for the water supplied to demand centres in the system. The water cost function is evaluated using a simulation tool for water system management and via cumulative cost evaluation of the paths connecting supply to demand nodes. This procedure enabled the identification of investment priorities in renovation strategies for leakage reduction between the centres in the network. An example application to a real-life water system in Sardinia (Italy) is provided for illustration.