Planning and institutional design under uncertainty and
increasing water scarcity
Julien Harou, UCL
January 19, 2012, University of Oxford
UK Challenges• Scarcity: resources are over-licensed and over-
abstracted in numerous basins, e.g. South East • Uncertainty: Climate and demographic changes
could aggravate scarcity• Public demands for: ecological health, low water
prices, and generally fair, efficient and effective management of water resources
Challenges motivate formulation of new policies and increased sophistication in planning methods
Some proposed policy solutions• Innovative demand management schemes
including seasonal or block tariffs, smart meters, etc.
• Increase system reliability and robustness by better planning under uncertainty
• Enforce sustainability reductions and reform abstraction licensing system – move to a right to some proportion of environmentally
available water?– ‘Real-time’ licence pricing as a function of supply?
• Water trading– Regional: between water companies– Local: between catchment licence holders
General water planning challenges
1. Choosing amongst near-infinite set of different plans (infrastructures, policies)
2. Recognising multiple sources of performance: cost, environment, but also robustness, resilience, adaptability, flexibility, etc.
3. Representing sufficient complexity (physics, engineering, behaviour)
4. Decisions under uncertainty (physical & human, known randomness vs. unknowns)
Help! … tools required• Given systems are large, complex and
changing over space & time … models can help
• Models must adequately represent physics and management of the real system at appropriate scales
• Mix of simulation & optimisation methods appropriate
• Planning under uncertainty methods useful: M.C. sim., RDM, info-gap, real options, etc.
Some policy models
1. Supply-demand models for investing in new supplies & demand management under uncertainty
2. Regional water trading and water company incentives
3. Water rights (licensing) reform at catchment level
Funders: EPSRC, EA, HR Wallingford, Thames Water, Ofwat
Collaborators: HR Wallingford, Cranfield, Oxford, Leeds, Loughborough, Heriot Watt, etc.
1. Supply demand planning
• Investment planning: what is best portfolio of supply and demand management schemes for the future?
• Objectives: least cost, environmental performance, reliability, …
• Current industry standard approach: EBSD• Research: evaluating stochastic approaches for
more rigorous risk based assessment (RDM, Info-Gap, etc.)
• Next slides: Thames study (ARCC project applying similar method to SE)
London and Thames Basin
EBSD model (optimisation) IRAS-2010 model for stochastic simulation (RDM, info-gap)
Stochastic simulation considers uncertainty in hydrological inflows, demands & energy prices
Performance criteria: cost (capital, operating), reliability, environmental & engineering targets
HKi
RZ4
RZ5
jSTLM (Welsh 36)
CENT
SUT
ES
SWA
KEV
SOUTH
GFD
LDN
NORTH
jARo
sjRA75
sjRAP1
sjRAP2
sjRA3Z sjRA150 jwRA3Z
jlRAP2jlRA3Z
jlRA150jlRAP1jlRA75
j44
HEN
j45
jSOB
jNETC (Nothumbrian)
SWOX
ESSEX
jun2
jun3
LONDON
SWOX
SLARS
SWT
Southern
Central
existing nodes
supply node leakage control
water efficiency improvements
metering
export to external WRZs
DYCP supply options
source junction
future link between WRZs
intra-company existing link
inter-company existing link
UTR150
UTR100
LONDON
SWOX
SWT
VTVW_Abs
Southern
Central
VTVW_T_BS
VTVW+ESW_BS
Supply node Leakage control
Water efficiency improvements
Metering
Seasonal tariffs
Mains replacement
UTR75
HKi
RZ4
RZ5
CENT
SUT
ES
SWA
KEV
SOUTH
GFD
LDN
NORTH
HENjSOB
SWOX ESSEX
P089 P090 P091
cdLCN
P088
P104
P099
ldELRD
ldNNR
ldECR
ldLRD
ldAL1 ldTCM
ldEWE
sdAL1 rkSOB
scEWE
cpBB
cpDW cpTC cpHLR
cpLG
P105
srCGW
P087
P086
crGERR
ldARK
ldSLA
ldD25
lrSW
ldHB ldASR
ldST
ldSEA
ldADL3
ldAL2
jARo jlRA75
sjRA75 jun2
P092
P093
P094 P095
P096 P097
P098
P106 P107
P108
P111 P110
P109
ldSEA ldDV2 ldAST ldESD
ldDV1
ldBSS
ldBSN
cpFS
cpWL
cpTT
P101
P100
P083 P084
P085
P102
P103
ldADL4
VTVW_Abs
VTVW_T_BS
VTVW+ESW_BS
2. Inter-regional water trading
• Considers trade between regions: interconnections between water companies mains supplies
• Potentially high OPEX, high energy-carbon solution but may strongly increase flexibility /adaptability of system at lower costs
• Multi-region EBSD models help – estimate economic costs/benefits of trading– investigate how regulations incentivise water
company investments
CAMS Map
Annual Rainfall
3. Water rights reform
Policy simulator: develop a framework to evaluate for any catchment:
– How could different licensing arrangements affect water abstraction, consumption and trade
– Replacing fixed volume licences with rights to some proportion of environmentally available supply
– How do different licensing systems affect potential for trade?
Water market simulator
• Model considers trading between pairs of water rights holders at each time step
• Challenge: representing granular transaction costs e.g. institutional uncertainty
Inflows
Water Demands Jaguaribe, Brazil, collaboration with World Bank, HR Wallingford
www.HydroPlatform.org
Conclusion• I’ve presented a very incomplete snapshot
of ongoing research• Challenges: scarcity, uncertain climate
and demographic changes, sophisticated societal expectations
• Objective of water management modelling:– Help design effective policies to manage
water scarcity– Help better plan future systems– Improve real-time management?