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Optimization of environmental water purchases with uncertainty
Author(s) -
Hollinshead Sarah P.,
Lund Jay R.
Publication year - 2006
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/2005wr004228
Subject(s) - shadow price , probabilistic logic , sensitivity (control systems) , computer science , water use , linear programming , environmental science , operations research , environmental economics , risk analysis (engineering) , environmental resource management , business , engineering , mathematical optimization , economics , ecology , mathematics , algorithm , electronic engineering , artificial intelligence , biology
Water managers are turning increasingly to market solutions to meet new environmental demands for water in fully allocated systems. This paper presents a three‐stage probabilistic optimization model that identifies least cost strategies for staged seasonal water purchases for an environmental water acquisition program given hydrologic, operational, and biological uncertainties. Multistage linear programming is used to minimize the expected cost of long‐term, spot, and option water purchases used to meet uncertain environmental demands. Results prescribe the location, timing, and type of optimal water purchases and illustrate how least cost strategies change as information becomes available during the year. Results also provide sensitivity analysis, including shadow values that estimate the expected cost of additional dedicated environmental water. The model's application to California's Environmental Water Account is presented with a discussion of its utility for planning and policy purposes. Model limitations and sensitivity analysis are discussed, as are operational and research recommendations.