An Integrated Risk Analysis Method for Planning Water Resource Systems to Support Sustainable Development of An Arid Region

Abstract

An interval-based two-stage risk analysis (ITRA) method is developed for planning water resource systems associated with uncertainties presented in terms of probability distributions and interval values. Risk measures are employed to assess the impacts of degrees of the preference of decision makers on the tradeoff between system benefits and expected economic losses. ITRA is applied to a case study of the Kaidu-kongque watershed located in an arid region of northwestern China. A series of scenarios are examined based on different risk measures, results of which reflect decision makers‟ attitudes toward risk aversion and options for water-resource allocation under system-reliability levels. Results disclose that both uncertainties of system components and risk attitudes of decision makers have significant effects on water-allocation patterns and economic benefits. Model outputs link the pre-regulated water-allocation targets in decision making with various scales of regionalization policies (due to existence of uncertainties of meeting target flows). Results reveal that the competitiveness can exacerbate the ecological water shortage when limited water resources are available for multiple users in the arid region. The methodology and findings can help managers to gain scientific understanding of the consequences of water allocation decisions when planning in a fast-growing economic development and extremely arid region.

Keywords: conditional value-at-risk, decision making, optimization, stochastic programming, water resource systems, uncertainty