Use of Economic Optimization to Evaluate New Facilities

by Andy Draper,
Jay Lund,



Document Type: Proceeding Paper

Part of: WRPMD'99: Preparing for the 21st Century

Abstract: (No paper) The confluence of the Sacramento and San Joaquin rivers and the San Francisco Bay forms the largest estuary on the West Coast. Known as the Bay-Delta, the region supplies drinking water for 22 million people and irrigation water for the Central Valley and State Water Projects. In 1994 the Delta Accord was signed between State, Federal and agricultural, urban and environmental interests. Its goal was to develop a long-term plan to restore the ecosystem of the Bay-Delta, improve water quality and provide for better water management. The improvement of water quality for urban supply to Southern California and increased supply reliabilities are two major issues. To this end new facilities both conveyance and off-stream storage are being considered. This paper discusses the use of an optimization model as a tool for screening the wide range of possible new facilities. California's inter-tied supply system is represented by the model. Using historic hydrology adjusted for a 2020 land use, the model allocates available surface and groundwater to meet agricultural and urban demands. The model uses a monthly time step for a 72-year period of record. Demands are met subject to environmental constraints and limits imposed by the physical system in terms of channel and storage capacity. Water is allocated so as to minimize the loss of revenue or opportunity cost of water. This is compared to a base case representing water allocated under the present system of water rights, long-term water contracts and legal constraints governing water transfers. Model output includes a set of monthly shadow prices or dual values for each constraint. The expected value of the shadow prices on the infrastructure constraints provides a measure of the willingness to pay for increased capacity of modeled facilities.

Subject Headings: Optimization models | Economic factors | Water rights | Water supply systems | Water quality | Irrigation water | Environmental issues | Urban areas | North America | California | United States | Sacramento

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