Optimization of California’s Water Supply System: Results and Insights

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Optimization of California’s Water Supply System:Results and Insights

Marion W. Jenkins1; Jay R. Lund2; Richard E. Howitt3; Andrew J. Draper4; Siwa M. Msangi5;Stacy K. Tanaka6; Randall S. Ritzema7; and Guilherme F. Marques8

Abstract: This paper presents results of a large-scale economic-engineering optimization model of California’s water supplThe results of this 4-year effort illustrate the value of optimization modeling for providing integrated information needed to mcomplex multipurpose water system. This information includes economic benefits of flexible operations, economic valuation oexpansion opportunities, estimating user willingness to pay for additional water, economic opportunity costs of environmentalidentification of promising conjunctive use and water transfer opportunities. The limitations of such modeling also are discussethe results suggest improvements to system operation and water allocations with a statewide expected value potentially as hbillion/year. Significant improvements in performance appear possible through water transfers and exchanges, conjunctivvarious operational changes to increase flexibility. These changes also greatly reduce costs to agricultural and urban users odating environmental requirements. Model results also suggest benefits for expanding selected conveyance and storage faci

DOI: 10.1061/~ASCE!0733-9496~2004!130:4~271!

CE Database subject headings: Optimization; California; Water supply; Water shortage.

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Introduction

Water is scarce in California. Significant spatial and tempvariability of water supplies has led to construction of aintertied network of reservoirs, aqueducts, wells, and rechand reuse facilities throughout the state. Competition betweericultural, urban, and environmental demands has intensifiedpopulation growth and increasing environmental allocations.complexity of selecting efficient water management alternaat both state and regional levels suggests that perhaps a difmore integrated approach is needed to complement exsimulation-based planning approaches. This paper outlines rfrom a study utilizing CALVIN, a model combining ideas froeconomics and engineering optimization with advances in

1Professional Researcher, Dept. of Civil and Environmental Engiing, Univ. of California, Davis, Davis, CA 95616. [email protected]

2Professor, Dept. of Civil and Environmental Engineering, UnivCalifornia, Davis, Davis, CA 95616. E-mail: [email protected]

3Professor, Agricultural and Resource Economics, Univ. of CalifoDavis, Davis, CA 95616. E-mail: [email protected]

4Senior Engineer, Montgomery-Watson-Harza, San Francisco, C5PhD Candidate, Agricultural and Resource Economics, Univ

California, Davis, Davis, CA 95616.6Doctoral Student, Dept. of Civil and Environmental Engineer

Univ. of California, Davis, Davis, CA 95616.7Engineer, CH2M-Hill, Sacramento, CA 95833.8Post-Doctoral Researcher, Dept. of Civil and Environmental E

neering, Univ. of California, Davis, Davis, CA 95616.Note. Discussion open until December 1, 2004. Separate discu

must be submitted for individual papers. To extend the closing daone month, a written request must be filed with the ASCE ManaEditor. The manuscript for this paper was submitted for review andsible publication on September 13, 2003; approved on August 6,This paper is part of theJournal of Water Resources Planning anManagement, Vol. 130, No. 4, July 1, 2004. ©ASCE, ISSN 0733-94
2004/4-271–280/$18.00.
JOURNAL OF WATER RESOURCES P

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ware and data to suggest more integrated management ofsupplies regionally and throughout California~Jenkins et a2001; Draper et al. 2003!. The results presented here have imcations for long-term water policy, planning, and managemeCalifornia.

Water Management in California

California’s intertied water system serves almost 30 mipeople and over 2.3 million ha of irrigated farmland and suppsubstantial environmental resources~CDWR 1998!. Over 50 bil-lion cubic meters~bcm! of water are managed in this system inaverage year. It is one of the world’s largest, most productivemost controversial managed water systems~Bain et al. 1966Hundley 2001!. Like most large water systems, its governanclargely decentralized, involving a few dozen federal andagencies, roughly 3,000 local agencies and special districtsthe water demand decisions of thousands of farmers and mof urban users.

The geographic and seasonal mismatch between the avaity of water in the north and east of California in wet winmonths and major agricultural and urban water demandthe center, south, and west of the state in the dry springsummer has led to the development of extensive surface-and groundwater storage and conveyance facilities. Tdevelopments occur at a statewide scale under the auspifederal, state, and local governments. The intertying of wsheds in California, first proposed in the 1870s, planned in1920s and 1950s, and implemented between 1930 and 198lows major regions of the state to import and/or export lamounts of water. These major imports and exports are shoFig. 1.

Aside from the water management and economic benefi
these statewide interties, these connections have also generated
LANNING AND MANAGEMENT © ASCE / JULY/AUGUST 2004 / 271

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controversies regarding water allocation, environmental impand management of water within regions of California~Hundley2001!. The decentralized administration of this system, whilesuring local accountability and responsiveness, has hindsomewhat the technical understanding of the system and brtechnical possibilities for its management. The CALVIN mo~Draper et al. 2003! is an attempt to provide a more unified tenical and economic understanding of California’s water sysand possibilities for improving its economic performance.

Optimization in Water Resources Management

An optimization or ‘‘what’s best?’’ approach is appealing in cawhere problems~1! are clearly defined with quantifiable objetives; ~2! are describable by a reasonably tractable mathemmodel; ~3! have a sufficient amount of available data to chaterize the effects of alternative solutions; and~4! are without anobvious best alternative~Haith 1982!. Although the last criterioclearly applies to California water management, the first tcriteria have historically been either prohibitive or intractablthe development of large-scale water optimization models. Iimplementation of the CALVIN model, several innovative stragies have successfully satisfied the requirements needed fveloping an effective optimization model.

First, economic performance is used in the objective funcas an effective, quantifiable way to capture the balance betsupply and demand. Here, scarcity quantity represents the dence between deliveries and beneficial use if supplies werestricted and free, and scarcity cost represents the economicto users of increasing deliveries to eliminate scarcity. Scarcityscarcity cost serve as rigorous and measurable indicators otem performance~Draper et al. 2003; Jenkins et al. 200!.CALVIN optimizes by minimizing the sum of water scarcity coand operating costs associated with water operations and a

Fig. 1. 1990 interregional water flows in California~CDWR 1993!

tions to maximize net economic benefit to the entire state.

272 / JOURNAL OF WATER RESOURCES PLANNING AND MANAGEMENT

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Second, until recently, large-scale computational tools neto model California’s water system have been unavailable. Radvances in software, data, computational speed, and ecowater management theory have removed some barriers totractability. CALVIN incorporates a variety of solver, databaand interface software that reflects these advances~Draper et al2003!.

Third, with considerable effort, data of many types and oriwere gathered, documented, and incorporated into a cohframework. This was not only a necessary modeling exercisealso highlighted areas where data quality was problematic~Jen-kins et al. 2001; Draper et al. 2003!.

Within this framework, an optimization model suchCALVIN offers relatively independent guidance in suggestinsupporting ideas for managing large and complex systems.search for the ‘‘best’’ management alternatives, it suggests otunities for joint management of complex systems of interrewater supplies and demands, using a wide variety of optionsa wide range of hydrologic conditions. Furthermore, the mestimates economic values for proposed changes in managregulation, and facilities and estimates the volumes and econcosts of scarcity to major water users.

CALVIN Model

CALVIN is an economic-engineering optimization model thatplicitly integrates the operation of water facilities, resources,demands for California’s intertied system. It is the first modeCalifornia where surface waters, groundwater, and water demare managed simultaneously statewide~Draper et al. 2003!.

The CALVIN model covers 92% of California’s populatiand 88% of its irrigated acreage with roughly 1,200 spatialments, including 51 surface reservoirs, 28 groundwater basinurban economic demand areas, 24 agricultural economic deareas, 39 environmental flow locations, 113 surface and growater inflows, and numerous conveyance and other links rsenting the vast majority of California’s water management instructure~Fig. 2!.

The model, unless otherwise constrained, operates facand allocates water to maximize statewide agricultural and ueconomic value from water use. This pursuit of economic obtives is initially limited only by water availability, facility capaity, and environmental and flood control restrictions. The mcan be further constrained to meet operating or allocationcies. CALVIN consists of two parts: first, an extensive seconnectivity, inflow, economic cost, constraint, parameter,metadata databases, and second, the HEC-PRM optimizatiowith its generalized network flow optimization solver. Typicathe model is run for an entire 72-year historical record of inflfor the entire intertied system, but can be run for different inperiods or synthetic inflows and is often run for smaller regimodels.

Fig. 3 illustrates the assembly of a wide variety of dataCalifornia’s water supply, its systematic organization and dmentation in large databases for input to a computer code~HEC-PRM!. The HEC-PRM code finds the ‘‘best’’ water operationsallocations for maximizing regional or statewide economicefits. A variety of outputs and uses of outputs can be gainedthe model’s results. Over a million monthly flow, storage,allocation decisions are suggested by the model over a 72statewide run. Jenkins et al.~2001! and associated appendi
provide details of the CALVIN model and its results.
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Results

The CALVIN model was developed and run for three alternati~1! a base case~BC! representing year 2020 conditions with crent operating and allocation policies;~2! independent regionaeconomically driven operations and allocations for each ofhydrologic regions of California; and~3! statewide economicaldriven operations and allocations. The BC represents comresults of simulation models for surface water~DWRSIM! andgroundwater~CVGSM! operations and deliveries for 2020 us

Fig. 2. Regions, reservoirs, other major inflows,

Fig. 3. Data


current operating rules and policies as described in Draper~2003!. For simplicity, the other two alternatives can be thouof as ideal regional water markets~RWM! ~with interregionaflows kept at BC levels! and an ideal statewide water mar~SWM!. Some results of these model runs are presented tomarize overall scarcity, scarcity cost, and total cost results, asas estimate economic values of reservoir, conveyance, recand recycling facility expansions, conjunctive use, water trfers, finance and economic willingness to pay for water, andeconomic impact of environmental regulations. Additional res

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Scarcity, Scarcity Cost, and Total Cost Results

Tables 1 and 2 present regional and statewide water scarscarcity costs, and total costs for the three management altives. Under BC 2020 conditions, average annual water scaamounts to almost 2 bcm statewide, mostly for urban water uresulting in average scarcity costs of almost $1.6 billion/yimposed almost entirely on urban users. Most of the watercity and scarcity costs occur in Southern California, althoother regions also have significant scarcity volumes and cos

With unconstrained regional water markets within each ofive hydrologic regions, scarcity decreases slightly statewideincreases in some areas ‘‘selling’’ water. Nevertheless, scacosts decrease in all regions and decrease for agriculture excSouthern California. Statewide water scarcity costs with idearegional water markets are reduced more than 80%~$1.32 billion/year! from those in the BC, with total costs~including operatingcosts! reduced by $1.33 billion/year. Water transfers in Sout

Table 1. Regional and Statewide Total Cost Performance

Region

Average total cost~$M/year!

BC RWM SWM

Upper Sacramento Valley 35 34 29Lower Sacramento and Delta 212 166 16San Joaquin and Bay Area 394 358 33Tulare Lake Basin 461 434 415Southern California 3,074 1,855 1,83Total 4,176 2,847 2,780

Note: BC5base case; RWM5regional water market; and SW5statewide water market.

Table 2. Regional and Statewide Scarcity and Scarcity Costs

Region

Average scarci~mcm/year!

BC RWM

Upper Sacramento Valley 178 194Lower Sacramento and Delta 33 1San Joaquin and Bay Area 20 0Tulare Lake Basin 338 397Southern California 1,396 1,145Total 1,965 1,737Agriculture only

Upper Sacramento Valley 178 194Lower Sacramento and Delta 10 0San Joaquin and Bay Area 0 0Tulare Lake Basin 286 397Southern California 381 867Total agriculture 854 1,457

Urban onlyUpper Sacramento Valley 0 0Lower Sacramento and Delta 23 1San Joaquin and Bay Area 20 0Tulare Lake Basin 52 0Southern California 1,015 280

Total urban 1,111 280

Note: BC5base case; RWM5regional water market; and SWM5statewide w


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California from Colorado River-based agriculture to southCalifornian urban users and some reoperation and internal rcations of water in coastal Southern California are responsib95% ~$1.25 billion/year! of reduced scarcity costs~Newlin et al.2002!. These particular Southern California transfers aresteady and require none of the deterministic model’s hydroforesight.

With an unconstrained statewide water market, scarcity fudecreases in the Upper Sacramento Valley, the Tulare BasinSouthern California. This occurs largely because of changesuse of surface and groundwater through increased conjunoperation. Remaining agricultural scarcity costs outside of Sern California are reduced significantly, and statewide total~including operating and scarcity costs! decrease by only an aditional $67 million/year.

Regional water markets or other forms of regional, econcally based water management have potential to reduce bothcity and scarcity costs in all regions and statewide. Roughlyof the benefits of economically ideal statewide water manageare obtained with regional optimization, holding interregioflows of water at BC levels. Movement to a statewide waterket produces slight additional economic benefits and furthercity reductions.

Reservoir, Conveyance, Recharge, and RecyclingExpansion

Table 3 presents the average marginal economic values tocultural and urban users of expansions in various surfacevoir, conveyance, and other facilities over the 72-year histohydrology. These results apply only to small changes in capand thus might overestimate economic values for large capchanges. However, the deterministic model’s perfect foresigh~oromniscience! leads to overoptimistic operations, decreasing sshadow values for facility expansion, although this problem

Average scarcity cost~$M/year!

SWM BC RWM SWM

0 7 5 01 36 1 10 15 0 0

41 37 19 21,057 1,501 255 19

1,097 1,596 279 200

0 7 5 00 0 0 00 0 0 0

37 19 18 1867 6 28 28904 32 51 29

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2 18 0 1190 1,495 227 16194 1,564 227 170

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not often overwhelm results~Draper 2001; Newlin et al. 2002!.Capacity expansion values are particularly great for some coance and groundwater management facilities. The value opanding most reservoirs decreases with the increased flexibistatewide operations. Conveyance facility expansions tenhave greater economic value than surface storage expangiven the availability of groundwater storage for conjunctiveSome wastewater recycling facilities also show economic vfor water supply. These potential economic values for facilonly indicate economic promise and should be considered icontext of detailed implementation aspects and comparedconstruction and other implementation costs.

Economic Willingness to Pay

Table 4 summarizes the willingness of users to pay for additwater beyond that delivered in each model run. These estimcome from the time series of shadow values for conservatiomass constraints at each agricultural and urban water delocation. @Demand areas in Table 4 are arranged geographfrom north to south; CVPM regions come from the Central VaProduction Model representation of Central Valley agricul~Jenkins et al. 2001!.# Demand regions without water scarcityunwilling to pay for additional water. In the BC, water users sha wide range of willingness to pay for additional water, frnothing to over $8,000/thousand cubic meters~tcm!. Within theagricultural sector, willingness to pay averages between zer$130/tcm. Regional water markets considerably reduce theability in the value of additional supplies, but when water is sfrom some agricultural users, their willingness to pay for ational water increases.

The willingness to pay for additional water imports to demregions decreases considerably with regional water markets.a statewide water market, willingness to pay for additional wtypically decreases further, often considerably. Differences

Table 3. Average Marginal Economic Values of Selected Facility

Facility Physical capacity~mcm/y

Surface reservoirsPardee 259East Bay Local 189South Bay Local 210Kaweah 176Success 101Grant 58Southern California SWP storage 856

ConveyanceColorado River Aqueduct 1,607Hetch Hetchy Aqueduct 414East Bay/South Bay Connector 0EBMUD/CCWD Cross Canal 0Folsom South Canal Extension 0Los Angeles Aqueduct 697

Other facilitiesCoachella Artificial Recharge 148SCV Groundwater Pumping 451SFPUC Recycling 0SCV Recycling Facility 20EBMUD Recycled Water Facility 31

tween average and maximum willingness to pay illustrate the


,

variability of willingness to pay with hydrologic and demand cditions. Economically, there are cases where regions would stimes import additional water and export more water at otimes.

Environmental Regulation

Table 5 presents the cost to agricultural and urban water usunit changes in the environmental flow constraints included iCALVIN model. With regional water markets, these costs arhigh as $1,400/tcm in the Mono and Owens basins~due mostly tothe value of hydropower there—the only locations with hypower modeled!, but with frequent average costs on the orde$35/tcm. However, many environmental flow requirementspear to have no consequence to agricultural and urban waterunder regional water market conditions. This is especially truinstream flows, which can often be reused downstream.sumptive wildlife refuge deliveries often have higher opportucosts. Moving from regional to statewide water markets tenreduce the economic impacts of riparian flow requirements,haps the greatest potential benefit of statewide managemen

Conjunctive Use

Conjunctive use of ground and surface waters is already comin many parts of California. California’s intertied water syshas about 50 bcm of surface water storage and over 170 bavailable groundwater storage. With current operations, forpeat of the historical hydrology, roughly 71 bcm of groundwstorage capacity is used over the longest drought periodrought storage in California is mostly groundwater based.statewide economic optimization, groundwater storage capuse increased to roughly 90 bcm. For both the BC and optim

nsion Options

Annual marginal expansion value~$/year/tcm or $/tcm!

Regional water market Statewide water mark

11.8 11.811.1 11.110.1 10.145.1 25.739.1 21.4

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Table 4. Marginal Demand Area Willingness to Pay for AdditioWater

Average WTP~$/tcm! Maximum WTP~$/tcm!

BC RWM SWM RWM SWM

AgriculturalCVPM 1 0 10 0 15 0CVPM 2 34 12 0 18 0CVPM 3 20 22 0 30 0CVPM 4 0 19 0 28 0CVPM 5 0 0 0 0 0CVPM 6 0 0 0 0 0CVPM 7 0 0 0 0 0CVPM 8 0 0 0 0 0CVPM 9 20 0 0 0 0CVPM 10 0 0 0 0 0CVPM 11 0 0 0 0 0CVPM 12 0 0 0 0 0CVPM 13 0 0 0 0 0CVPM 14 0 0 0 0 0CVPM 15 32 21 12 32 32CVPM 16 0 13 8 21 21CVPM 17 0 14 9 26 26CVPM 18 131 32 0 50 0CVPM 19 0 26 0 53 0CVPM 20 0 4 0 55 0CVPM 21 0 33 0 50 0Palo Verde 17 46 46 58 58Coachella 0 50 50 50 50Imperial 19 55 55 55 55

UrbanYuba 54 0 0 0 0Napa-Solano 563 0 0 0 0Contra Costa 19 0 0 0 0East Bay MUD 285 22 22 916 916Sacramento 0 0 0 0 0Stockton 6 0 0 0 0San Francisco 236 0 0 0 0Santa Clara Valley 202 0 0 0 0SB-SLO 0 0 0 0 0Fresno 383 0 34 0 278Bakersfield 0 0 0 0 0Castaic Lake 8,512 523 421 843 474Antelope Valley 2,088 193 0 727 0Coachella 1,233 1,101 1,102 1,583 1,583Mojavea 1,238 0 0 0 0San Bernardino 255 118 0 611 0Central MWD 727 177 0 888 0E & W MWD 674 178 1 827 649San Diego 504 157 0 860 0

aNeglects conveyance capacity constraint entering Mojave region.5willingness to pay; BC5base case; RWM5regional water market; anSWM5statewide water market.

different levels of groundwater use. Statewide, the median


groundwater use is about 33% of total water deliveries focases. In wet years, this use can decline to as low as about22%, and in dry years it can increase to as high as aboutRegional water markets, or other economically based operaand allocations, would tend to use groundwater far more contively than in the BC, with greater variation in groundwaterbetween years. With a statewide water market, conjunctiveappears to be somewhat greater still. While this use represeextreme of efficiency and coordination for groundwater options, it also indicates significant additional potential for conjutive use operations in California.

Water Transfers

Table 6 shows changes in deliveries and scarcity costs foeconomic regions represented in the CALVIN model withgional and statewide water markets~values reported in the tabrepresent individual demand areas within the hydrologic reg!.With the more restricted regional water markets, and summinregional totals, on average 747 million cubic meters~mcm!/yearof water ‘‘sold’’ in the markets is from agriculture and 227 mcyear is from improved operational efficiencies. Of the w‘‘bought,’’ 143 mcm/year goes to agricultural users and 831 myear to urban users. With a statewide water market, agricuusers sell less water~510 mcm/year! and 867 mcm/year becomavailable from operational improvements. Agricultural users460 mcm/year and urban users 917 mcm/year.

The bulk of water transfers occur in Southern California anthe Tulare Basin, with some additional transfers elsewherewater transfers in Southern California from agricultural to urusers alone account for over $900 million of the $1.6 billion/yof average year benefits. These transfers are steady each yemonth and require no operational foresight~Newlin et al. 2002!.Otherwise, user participation in water markets sometimes vwith hydrologic circumstances, with buyers and sellers someswitching in different years.

With regional water markets statewide, all increases anductions in deliveries amount to less than 4% of total BC deries. In Southern California, the region with the most extenwater transfers, slightly more than 10% of water is realloc~including both increases and decreases in deliveries!. With astatewide water market, the proportion of water reallocatedtemwide increases slightly to 4.2%, with reallocations in SoutCalifornia amounting to 11% of BC deliveries. Colorado Rdeliveries to agriculture are diminished by less than 12% forregional and statewide water markets; these are the greatesreductions in deliveries for the entire state. Small changewater allocations, along with more flexible operations andjunctive use, are responsible for the vast majority of econimprovements suggested by the model. Exchanges ofsources to support the greater conjunctive use suggestCALVIN are somewhat greater in some regions. Some exchaalso support urban water quality benefits for the Solano-NSacramento, Tulare, and San Francisco Bay areas.

LimitationsAll models require simplification of the true conditions, pcesses, and operations occurring in a given system andheavily on the ability to quantify these as a solvable set of etions with appropriately specified parameters and inputModel simplifications and the quality of data can impose lim
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ness of some model applications. This is no less trueCALVIN, representing the diverse and complex nature ofstate’s intertied surface and groundwater systems and watein an optimization modeling approach~Jenkins et al. 2001!. Limi-tations of the CALVIN model, indicative of those faced by larscale water resource optimization modeling, arise from threesources.

Fig. 4. Reliance on gr

Table 5. Opportunity Costs of Environmental Flows to Agricultu

Annual requirement~mcm/year!

RiverTrinity River 290Clear Creek 34Sacramento River~upper! 2,528Feather River 759American River 873Mokelumne River 71Calaveras River 1Yuba River 138Sacramento River~lower! 2,935Stanislaus River 159Tuolumne River 97Merced River 64Mono Lake inflows 60Owens Lake dust mitigation 32

Wildlife refugeSacramento West Refuge 86Sacramento East Refuge 50Volta Refuges 29San Joaquin/Mendota Refuges 192Pixley 1Kern 9

Delta outflowBay Delta 4,536

Note: RWM5regional water market and SWM5statewide water marke


s

Data Quality

First, the input data used to characterize surface and groundsupplies, water demands, and BC operations in the CALmodel are limited by the quality of existing data sets, tenuouunavailable information for some parts of the state~especially thTulare Basin!, and project time constraints. The CALVIN calib

ater and conjunctive use

d Urban Users

Average opportunity cost~$/tcm!

Maximum opportunity cost~$/tcm!

RWM SWM RWM SWM

37.0 0.6 40.2 5.10.4 0.3 37.6 4.1

0.6 0.2 38.9 3.00 0.1 0 0.60 0 0.2 0.9

0.1 0.1 0.7 1.10 0 0 00 0 0.2 0.40 0 0 0.63.6 1.1 11.1 19.9

1.9 0.5 11.0 19.22.5 1.6 10.9 18.1781 663 1,392 985608 496 950 540

33.9 0.2 36.8 3.20 0.2 1 1

6.7 16.1 16.6 18.55.4 12.9 14.4 17.

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Table 6. Average Water Deliveries and Scarcity Costs~from Deman

Demand region

Deliveries~mcm/year! DDeliveries~m

Maximuma BC RWM-BC

CVPM 1 124 124 21CVPM 2 565 519 38CVPM 3 1,321 1,251 6CVPM 4 891 891 254CVPM 5 1,409 1,409 0CVPM 6 850 850 0CVPM 7 458 458 0CVPM 8 725 725 0CVPM 9 960 954 6CVPM 10 1,377 1,377 0CVPM 11 703 703 0CVPM 12 651 651 0CVPM 13 1,534 1,534 0CVPM 14 1,213 1,214 0CVPM 15 1,616 1,608 253CVPM 16 402 404 24CVPM 17 677 678 211CVPM 18 1,752 1,572 44CVPM 19 776 776 231CVPM 20 549 549 0CVPM 21 942 942 219Palo Verde 640 536 292Coachella 158 158 211Imperial 2,216 2,068 2216

Total agriculture 22,509 21,952 2397Napa-Solano 93 85 8Contra Costa 109 109 0East Bay MUD 241 235 6Sacramento 551 551 0Stockton 77 77 0San Francisco 193 188 5Santa Clara Valley 532 524 8SB-SLO 113 113 0Fresno 308 274 34Bakersfield 212 212 0Castaic Lake 104 36 61Antelope Valley 225 151 71Coachella 487 282 84Mojaveb 285 182 103San Bernardino 230 226 0Central MWD 3,026 2,866 123E & W MWD 600 573 21San Diego 801 774 21

Total urban 8,230 7,499 547

Note: BC5base case; RWM5regional water market; and SWM5statewaDelivery volume without economic scarcity.bNeglects conveyance capacity constraint entering Mojave region.


System SimplificationSecond, choice of a network flow with a gains optimization so~HEC-PRM! imposes several restrictions on the model’s abilitrepresent the system accurately. In particular, flow relationconstraints, such as those involved in environmental regulawater quality, and stream-aquifer and other groundwater beh

as!

ear!Scarcity costs

~$M/year! DScarcity costs~$M/year!

-BC BC RWM SWM RWM-BC SWM-BC

0.01 0.02 0 0.01 20.016 3.46 0.22 0 23.23 23.46

70 3.15 2.94 0 20.21 23.150 2.11 0 2.11 0

0 0 0 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 06 0.11 0 0 20.11 20.110 0 0 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 0

9 0.35 2.90 0.80 2.55 0.452 0 0.12 0.05 0.12 0.056 0 0.36 0.21 0.36 0.2180 18.8 10.4 0 28.41 218.8

0 2.51 0 2.51 00 0 3 0 3 0

0 1.43 0 1.43 02 1.43 6.91 6.89 5.47 5.461 0 0.87 0.87 0.87 0.8716 4.35 20.5 20.5 16.2 16.23 32 51 29 20 228 22 0 0 222 2220 0 0 0 0 0

6 12 1 1 212 2120 0 0 0 0 0

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must be simplified. In addition, water allocation and storagecisions are biased somewhat by perfect foresight in the deteistic optimization solution~Draper 2001; Newlin et al. 2002!.However, in many cases changes in operations suggestedmodel are so consistent that hydrologic foresight is not needachieve these benefits. The model also assumes that operand allocation changes suggested by the model are possibletutionally. This might not be possible given California’s compset of management institutions. Nevertheless, as seen withtransfers, large benefits can occur when implementing achanges.

Nonexhaustive Economic Representation

Third, hydropower, flood control, and recreation benefit functwere generally not included in this initial model due to time cstraints~seasonal flood storage constraints were included,ever!. The absence of these purposes will distort operationsome parts of the model, limit the identification of opportunifor storage reoperation, and somewhat reduce the valuestream storage options. While major water quality differenceurban uses are represented in terms of their treatment andsumer costs, smaller economic differences between surfacgroundwater for agricultural production are not yet represeRepayment and financing of existing facilities, which affect sdecisions, have been regarded as sunk costs and neglected

ConclusionsThe limitations above can be significant and lead one to looqualitative insights and guidance, rather than precise quantion, from model results. Considering these limitations, thelowing qualitative conclusions are supported by model resultspoint to promising directions for practical water managemen

Optimization results provide considerable information andsight for policy and operations planning.These results illustrathe ability of economic and engineering-based optimization meling to assemble and digest large quantities of informatiomake useful and insightful conclusions for regional and statewater management. The results of these models identify ecocally promising facility locations for expansion, changes in option and water allocations, opportunity costs of environmentaother institutional regulations, and a general quantitative cofor understanding the engineering and economic potential oftem operations and policies. CALVIN or similar economengineering optimization models could be applied to integrlong-term regional and statewide planning, integrated supplydemand data management, preliminary economic and finaevaluation, and planning and operations studies. In additionmodel can be used for integrated system studies regardingissues as facility expansion, joint operations, conjunctive usetastrophe response, climate change, and water transfers. Ntheless, the limitations of such optimization models indicatetheir results should not be interpreted with undue precision. Cmonly, precise applications of optimization insights will requtesting and refinement by more detailed simulation studies.

Nevertheless, some policy conclusions emerge from modsults:

Regional and statewide water markets, transfers, andchanges have great potential to improve the flexibility andnomic performance of California’s water system, considerablducing both water scarcity and scarcity costs.Within some
regions, particularly Southern California, water markets or other

l-

-

-

forms of economic reallocation with existing facilities havepotential to greatly reduce regional water scarcity costs, peby as much as 80%. Results also indicate that the potential ogains from regional water markets to California average asas $1 billion per year. The large majority of economic and dery improvement benefits occur with regional markets, witha small additional improvement from a theoretically perfect swide market. In some cases, a series of water exchangesallow environmental flows to be more easily accommodatedchanges and transfers improve operational efficiency and incoverall deliveries.

Economically efficient improvements in local and regiowater management reduce demands for imports.Economicallyefficient operation and allocation of water within each reggreatly reduce economic demands for importing additional wfrom other regions. This is true for all regions~Table 4!. Forexample, Bay Area results suggest that regional water markother forms of flexible and coordinated operations among uagencies could substantially reduce or eliminate urban watercity with existing infrastructure and water resources, if institutally feasible.

Ideal water markets never reduced deliveries to any muser more than 15%.Although important changes often were sgested for how water could be delivered and for the sourcwater for users, overall it appears that if about 20% of Calnia’s water were allocated by markets or other flexible menisms, most water scarcity would disappear statewide.

There is economic value to expanding some storage, coance, recharge, and recycling facilities in California at somecations and times.By far the greatest benefits appear to cofrom select interties, recharge, and other conveyance expanparticularly in Southern California and in the San FranciscoArea. Assuming conjunctive use is available, surface storagpansion typically has much less value.

Expanded conjunctive use, particularly over interannuadrought periods, could result in economic and operational befits for every region.Most of these benefits occur with regiooptimization, but some additional statewide benefits also eThe availability of conjunctive use operations in CALVINduces the value of increasing surface storage at most locaGreater conjunctive operation of local, regional, and statewater resources decreases competition with environmentalespecially in dry years when agricultural and urban reliancsurface flows is significantly reduced from BC levels. Forample, under the statewide water market, total diversions fromSacramento River are reduced on average by 529 mcm ddrought years, with supplies made up by greater use of growater.

Optimized operations and allocations can satisfy most agrtural and urban water demands for the California intertied sysat 2020 levels.Most unsatisfied demands could be well compsated with revenues from market transactions~Table 6!. Howeversatisfying all demands is not always economically worthwhilis neither economically feasible nor desirable to eliminatewater scarcity and scarcity costs in California. The costs ofviding additional water from new sources, efficiency improments, or reallocations from other water users sometimes escarcity costs associated with conservation or rationing. Incases, some scarcity is optimal, indicating economically effiopportunities for increasing local water conservation.

Some environmental flows impose costs on agriculturalurban users under economically optimized operations,
many flow requirements need not impose any significant costs.

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’’

Flexible operations greatly reduce the costs of environmflows to other users. This is especially true of statewide opzation. Consumptive wildlife refuge deliveries tend to impgreater costs upon agricultural and urban water users thastream flows.

CALVIN model results indicate the vast majority of poteneconomic improvements in California’s water system arelocal and regional changes.These local and regional improvments greatly reduce demands for additional imported woften by 70 to 90%. Statewide management has some addibenefits, especially for mitigating economic impacts of envimental requirements.

As a concluding thought, the purposes of computer modeto ~1! make better sense of complex systems;~2! suggest promising operations and infrastructure; and~3! develop ideas for beter management. The application of large-scale econoengineering optimization to California’s intertied water supsystem appears to offer benefits in all these areas.

Acknowledgments

The writers thank those throughout California involved indevelopment of the CALVIN model and the thoughtful commeof three anonymous reviewers for their suggestions for impro
the paper.

References

Bain, J. S., Caves, R. E., and Margolis, J.~1966!. Northern California’swater industry, University of California Press, Berkeley, Calif.

California Dept. of Water Resources~CDWR!. ~1993!. ‘‘California waterplan update.’’Bulletin 160-93, Sacramento, Calif.

California Dept. of Water Resources~CDWR!. ~1998!. ‘‘California waterplan update.’’Bulletin 160-98, Sacramento, Calif.

Draper, A. J.~2001!. ‘‘Implicit stochastic optimization with limited foresight for reservoir systems.’’ PhD dissertation, Dept. of Civil andvironmental Engineering, Univ. of California, Davis, Davis, Calif.

Draper, A. J., Jenkins, M. W., Kirby, K. W., Lund, J. R., and Howitt, R~2003!. ‘‘Economic-engineering optimization for California wamanagement.’’J. Water Resour. Plan. Manage.,129~3!, 155–164.

Haith, D. A. ~1982!. Environmental systems optimization, Wiley, NewYork, 306.

Hundley, N.~2001!. The great thirst: Californians and water, Universityof California Press, Berkeley, Calif.

Jenkins, M. W., et al.~2001!. Improving California water managemeOptimizing value and flexibility, Center for Environmental and WaResources Engineering, Univ. of California, Davis, Davis, C^http://cee.engr.ucdavis.edu/faculty/lund/CALVIN&.

Jenkins, M. W., Lund, J. R., and Howitt, R. E.~2003!. ‘‘Using economicloss functions to value urban water scarcity in California.’’J. Am.Water Works Assoc.,95~2!, February.

Newlin, B. D., Jenkins, M. W., Lund, J. R., and Howitt, R. E.~2002!.‘‘Southern California water markets: Potential and limitations.J.
Water Resour. Plan. Manage.,128~1!, 21–32.

Optimization of California’s Water Supply System: Results and Insights

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