Balancing cost-risk in management optimization of water resource systems under uncertainty

When a scarce water resource is distributed between different users by a Water Resource Management Authority (WRMA), the replenishment of this resource as well as the meeting of users’ demand is subject to considerable uncertainty. Cost optimization and risk management models can assist the WRMA in its decision about striking the balance between the level of target delivery to the users and the level of risk that this delivery will not be met. Addressing the problem as a multi-period dynamic network optimization, the proposed approach is also based on further developments in stochastic programming for scenario optimization. This approach tries to obtain a “robust” decision policy that minimizes the risk of wrong decisions when managing scarce water resources. In the paper we also illustrate two application examples for water resources management problems.