Reza Taheriattar

Supervisor: Prof. David Carmichael

Infrastructure Adaptability andSustainability

13th ACCARNSI National Early Career Research Forum and WorkshopUniversity of New South Wales – Manly Vale, 20-22 February, 2017

Outline

Research Significance

Research aim/approach

Research method

Case example

Concluding remarks

Research significance

Infrastructureobsolescence

Warragamba dam

Adaptation

• enormous costs• resource consumption/

waste production• disruption to services

Look-ahead approach

Uncertainty Design forAdaptability

adaptable infrastructure value – sustainability viewpoint

Designed-in adaptation

Fortuitous adaptation

Extra upfrontcost/effort !

1

Collaroy beach protection

Climatechange

Research aim/approach

Establish viability of adaptable infrastructure

• Designed-in adaptability features• Possible future adaptation

Estimation

Design

Analysis

Comparative study – two forms of adaptation: A and NA

Costs, social and environmental issues

Financial: Real options analysis (ROA)Social/Environmental: Life cycle assessment (LCA),

Social/Environmental costing(SEC)

2

Carmichael and Balatbat (2010); Carmichael (2014)

• Use of second order moment approach in DCF analysis

• Carmichael Equation: OV=×UV

1n

0i

n

1ijji

jin

0i2ii

n

0ii

i

1m

1k

m

1kltltk

m

1ktkt

m

1ktkt

2

r1

]X,Cov[X2

r1

]Var[XVar[PW]

r1

]E[XE[PW]

]Y,Cov[Y2]Var[Y]Var[X

]E[Y]E[X

a/6)(cVar[]P)/64M(OE[]

• Sensitivity analysis – discount rate (r) and adaptation time (T)

Research method

Financial analysis – ROA

3

Options analysis – only looks at differences at time T

Adaptability value = ×UV

Research method

Financial analysis – ROA

TTT ANAX

E[XT ] = E[NAT ]− E[AT ]

2][][][ TTT AVarNAVarXVar

E[PW] = E[XT ]

(1+ r)T

2TT

r)(1]Var[X

Var[PW]

4

ISO (2006); UNEP/SETAC (2009)

• Identify relevant social/environmental issues• Quantify the issues (inventory flows)• Compare NA and A (times 0, T)

Research method

Social/Environmental analysis – LCA

5

Research method

6

Sustainability analysis – ROA-SEC

Research method

7

Sustainability analysis – ROA-SEC

• Policy tools (taxes, fines), Insurance cost, Pollution control cost, …• Health/safety cost, Loss of productivity , Delay cost, …• Replacement cost, Remediation cost, Waste treatment costs, …

SEC techniques – shadow price estimation methods

i

iSET,iSET,FT,FT,T )A(NA)A(NAX

i

iSET,iSET,FT,FT,T ]E[A]E[NA]E[A]E[NA]E[X2

iiSET,iSET,FT,FT,T ]Var[A]Var[NA]Var[A]Var[NA]Var[X

E[PW] = E[XT ]

(1+ r)T

Var[PW] = Var[XT ]

(1+ r)2T

Adaptability value = ΦM

Design

NCCOE (2012a); Burcharth (2014)

NA)

A)

Designed-in adaptability features in A form• Build primary layer of larger armour units• Build parapet wall of stronger foundation

Future adaptation in NA form• Add bigger armour units on seawall face• Strengthen parapet wall foundation

Case example – rock seawalls

8

Estimation – differences between A and NA forms

9

Construction activities consideredTime A - Designed in form NA - Non-designed in formt = 0 Build armour layer of bigger rocks

Construct parapet wall foundation ofbigger size

t = T Add rocks – on the crest Add bigger rocks – on the crest andslope; in front of the toe

Enlarge parapet wall – drilled anchorsfor wall; reinforced concrete

Enlarge parapet wall – drilled anchors forwall and foundation; reinforced concretePavement – remove and rebuild

0 . . . . T

NAA

Schematic cash flowdiagram

Case example – rock seawalls

Financial analysis – results

Change in adaptability value with r (p.a.). T = 35 yrs.

Change in adaptability value with T. r = 5% p.a.

(A) extra upfront cost ≈ $60k

10

Case example – rock seawalls

Social/Environmental analysis – LCA results

SLCA LCA

Sustainability issue At t = 0 At t = T Combined t = 0 and T(A-NA)

Env

iron

. Materials consumption (t) 664 -2,536 -1,872Energy use (GJ) 185.1 -447.4 -262.3Emissions (tonne CO2-e) 20.2 -32.1 -11.9Solid wastes (t) 29.3 -122.9 -93.6Water pollution (kg) 35 -160 -125

Soci

al

Worker employment (h) 213 -855 -475Safety incidents (injuries no.) 0.0070 -0.0282 -0.0212Health damage (dBh) 4,933 -35,605 -30,672Traffic disruption (veh.h) 155 -686 -531

11

Case example – rock seawalls

12

Sustainability issue Adopted SEC methodsMaterials consumption -Energy use -Emissions Abatement cost (carbon tax), Damage costSolid waste production* Waste treatment costWater pollution Remediation costWorker employment Contribution to society, Comfort valueSafety incidents Insurance value, Loss of contributionHealth (noise pollution) Loss of productivityTraffic disruption Replacement cost, Delay cost

Social/Environmental analysis – ROA-SEC

Case example – rock seawalls

Treatment of intangibles uncertainty

n

1iii ]E[xwE[X]

n

1ii

2i ]Var[xwVar[X]

Change in adaptability value with r (p.a.). T = 35 yrs.

Change in adaptability value with T. r = 5% p.a.

13

(A) extra upfront costOnly-Financial – $60k

Potential for further encouraginginvestment in adaptability

Sustainability – $100k

Social/Environmental analysis – ROA-SEC results

Case example – rock seawalls

• An easy-to-use method for financial valuation of investment in adaptableinfrastructure presented.

• LCA could indicate whether infrastructure adaptability is sustainable… andwhether inclusion of environmental/social criteria enhances viability.

• Sustainability incorporated in options analysis – ROA-SEC captures intangiblesuncertainty and indicates to what extent environmental/social criteria enhanceviability… potential for further encouraging investment.

• Methods application demonstrated … no general conclusions on the viability –need for individual analysis.

14

Concluding remarks

Thank you for your attention

Infrastructure Adaptability andSustainability