OPTIMA INCO-MPC Fourth Management Board Meeting , December 19/20 2006 Milano

1. OPTIMA INCO-MPCFourth Management Board Meeting,December 19/20 2006Milano DDr. Kurt Fedra Environmental Software & Services GmbH A-2352 Gumpoldskirchen Austria kurt@ess.co.at http://www.ess.co.at

2. Tuesday, December 19 09:00-09:15 Welcome & agenda FEEM 09:15-09:30 Project Status Review ESS 09:30-10:00Optimization tools ESS 10:00-10:30 Coffee break 10:30-11:30WP 14 Decision Analysis, C.z. 11:30-12:30 WP 15, Comparative Analysis, ELARD 12:30 -14:00 Lunch break

3. WP 7-13: case studies • One or more baseline scenarios with “complete” economic assessment; • Case study specific INSTRUMENTS added to the water technology data base; • Optimization scenarios with CONSTRAINTS and INSTRUMENTS defined; • Optimization scenarios post-processed with the DMC tool, stakeholder involvement(proxies ?) • Structure inputs for • WP 14 post-optimal analysis • WP 15 comparative analysis • WP 16 dissemination

4. Water resource MC optimization Design or select policies to • Maximize the benefits • Minimize the costs Using multiple criteria in parallel: • physical/hydrological • monetary (socio-economic) • environmental Economic (participatory) approach: Assumes that (rational) individuals maximize welfare (individual and collective utility) as they conceive it, forward looking and consistently. G.Becker, 1993

5. Multi criteria optimization • Model the behavior of the system (river basin) in sufficient detail (distributed, dynamic, non-linear) to generate meaningful criteria • Generate large sets of feasible alternatives that meet all a priori constraints (minimum or maximum allowable values for key criteria) • Select optimal (compromise) solution from the set of non-dominate feasible alternatives by trading of conflicting objectives with multiple criteria (of different units) simultaneously.

6. A topological model: nodes and reaches The river basins (or interconnected hydraulic system) modeled as: NODES produce, consume, store, and change water quality; REACHES transport it between nodes AQUIFERS underlying the network • Coststo supply water, damages, shortfall • Benefitsfrom satisfied demand, compliance

7. Benefits and Costs Nodes are described by Costfunctions (direct monetary): • Investment (annualized): • Life time of project/structure • Discount rates • Operating cost (OMR) Benefits per unit water supplied and used. All computations on an annual basis

8. Benefits and Costs Direct monetary: • Investment, operations, damage, producer benefits (irrigation) Non-monetary: based on (contingent) valuation (hypothetical markets): • Shortfall costs, penalties, benefits of compliance (in stream use, environmental use)

12. Optimization: STEP 1 CONSTRAINTS: Specify an acceptable system performance in terms of lower and upper bounds of criteria: • Minimum amount of water available • Maximum costs acceptable • Minimum Benefits expected

13. Water resources systems optimization: Definition of optimality: • Acceptability, satisficing • Requires a participatory approach: • Identification and involvement of major actors, stakeholders • Shared information basis • Easy access, intuitive understanding • Web based, local workshops

14. Water resources systems optimization: Acceptability, satisficing: Easier for stakeholders to define several fixed targets as constraints than multiple objectives and trade offs, weights, preferences, etc.

15. Constraints: The constraints are formulated as • minimum or maximum values of System performance criteria These describe: • Hydrological criteria • Economic criteria • Suggestions for social criteria such as equity or performance for domestic demand ?

16. System performance criteria: • Supply/Demand ratio:  the ratio of demand (summed over all DEMAND NODES) to supply; if all demand is met, that value can reach a maximum of 1.0. • Reliability of Supply (%):  the percentage of all "events" (summed over all demand nodes and days) where the demand is met;

17. System performance criteria: • Reservoir performance (%):  the percentage of all "events" (summed over all reservoirs and all days) where the release targets is met; • Diversion performance (%):  the percentage of all "events" (summed over all diversion nodes and days) where the diversion target can be met;

18. System performance criteria: • Allocation efficiency (%):  the percentage of supply diverted to supply nodes that matches demands; all supply beyond demand is "wasted" and decreases allocation efficiency, • Unallocated (%):  the total amount of water that is unallocated at reservoirs (spilled), diversions (beyond diversion and downstream targets), control nodes (exceeding a minimum flow constraint), expressed as a percentage of the total amount of water the passes through these nodes.

19. System performance criteria: • Water Shortfall:  the total amount of water "missing" from the total demand, summed overall all reservoir, demand, diversion, recharge and control nodes, over all days, expressed as a percentage of all stated "demands" including releases, diversions, and in-stream flow constraints.

20. System performance criteria: • Content Change:  change of water value, expressed as a percentage from the initial state at the beginning of the current (water) simulation year: measure of sustainability • Flooding days:  days of flooding; a flood occurs if at any control node the flow exceeds a maximum flow constraint. • Flooding extent:  the percentage of all "floods" (summed over all control nodes with a maximum flow constraint and days) as a percentage of all "events";

21. System performance criteria: • Economic efficiency:  the total benefit per water available/supplied in €/m3 • Economic efficiency, direct:  the direct, monetary benefit per unit water available/supplied

22. System performance criteria: • Benefit/Cost:  ratio of all benefits divided by all costs accounted, including non-tangible elements and penalties. • Benefit/Cost, direct:  ratio of all direct monetary benefits over all direct monetary costs. • Net benefit:  Total benefit minus total cost, per capita. • Total Benefit:  Sum of all benefits, per capita.

23. System performance criteria: • Total Cost:  Sum of all costs, per capita. • Direct net benefits:  Sum of all direct monetary benefits minus sum of all direct monetary costs, per capita. • Direct benefit:  Sum of all direct monetary benefits, per capita. • Total Cost, direct.:  Sum of all direct monetary costs, per capita.

24. System performance criteria: • Water Cost:  Total cost of water, per m3: Sum of all costs divided by the total amount of water supplied against demands at demand nodes, (diversions, control nodes) • Water Cost, direct:  Total direct monetary costs of water: as above, but considering only direct monetary costs.

25. Optimization STEP 1: CONSTRAINTS: GLOBAL: apply to some general, aggregate measure for the entire basin SECTORAL: apply to a sector like agriculture industry, domestic, environment only LOCAL (node specific): At LOCATION node FROM day – TO day CONCEPT (flow, cost, benefit, ratio) Must be between MIN – MAX

36. Decision Support (multi-attribute) Reference point approach: utopia A4 efficient point A5 A2 criterion 2 A6 A1 dominated A3 better nadir criterion 1

37. Finding a compromise solution: Direct stakeholder involvement: • Introduce (secondary) constraints • Add or delete criteria • Change the reference point: default is UTOPIA

45. Optimization and simulation: • From any non-dominated solution shown in the DMC tool , a link is available directly back to the WRM simulation to re-run and explore detailed outputs from that scenario; • After modifications, that scenario can again be made the starting point of another round of optimization

48. Optimization targets: • Complete economic assessment, include all reasonable COSTS and BENEFITS - plausible results  • Input for WP 14 and 15 (comparative analysis – consistency !) • Use alternative scenarios, a rich set of • CONSTRAINTS • INSTRUMENTS

49. Optimization targets: Scenario editing support tools: Check the completeness of data with the check/analysis button for WRM scenarios: