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Optimizing Flexibility and Value in California’s Water

SystemJay R. Lund

Richard E. Howitt

Marion W. Jenkins

Stacy K. TanakaCivil and Environmental Engineering

Agricultural and Resource Economics

University of California, Davis

http://cee.engr.ucdavis.edu/faculty/lund/CALVIN/

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Real work done byDr. Andrew J. Draper Dr. Kenneth W. Kirby

Matthew D. Davis Kristen B. Ward

Brad D. Newlin Stacy Tanaka

Brian J. Van Lienden Randy Ritzema

Siwa M. Msangi Guilherme Marques

Pia M. Grimes Dr. Arnaud Reynaud

Jennifer L. Cordua Mark Leu

Matthew Ellis Tingju Zhu

Inês Ferreira Sarah Null

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Funded by• CALFED Bay Delta Program

• State of California Resources Agency

• National Science Foundation

• US Environmental Protection Agency

• California Energy Commission

• US Bureau of Reclamation

• Lawrence Livermore National Laboratory

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Thanks for many things

We had a lot of help.

• Advisory Committee of ten, Chaired by Anthony Saracino

• Diverse staff of DWR, USBR, MWDSC, SKS Inc., USACE HEC, EBMUD, CCWD, USACE, SDCWA, SCWA, SWC, and others.

• Varied providers of ideas, data, and support.

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OverviewPart I – Assembling the Water Puzzle

• Motivation

• What is the CALVIN model?

• Approach and Data

Part II - CALVIN Results

4) Policy Alternatives

5) Results

6) Conclusions, Implications and Future

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Motivation for Project

• California’s water system is huge and complex

• Supplies, demands, return flows, and reuse

• Surface water and groundwater

• Controversial and economically important

• Major changes are being considered

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Motivation for Project

• Can we better understand this system?

• How could system management be improved?

• How much would changes benefit users?

• How much would users be willing to pay for:

– more water

– changes in facilities & policies?

These are not “back of the envelope” calculations.

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Themes1. Economic “scarcity” is a useful indicator of

good water management performance.

2. Integrated management of water resources, facilities, and demands can improve performance, esp. at regional scales.

3. The entire range of hydrologic events is important, not just “average” and “drought” years.

4. Optimization, databases, and newer methods, data, and software support more transparent and efficient management.

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What is Scarcity?

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What is CALVIN?

• Economic-engineering optimization model

– Economic Values for Agricultural & Urban Uses

– Flow Constraints for Environmental Uses

• Prescribes monthly system operation over the historical hydrology

• Entire inter-tied California water system

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What is Optimization?

Finding the “best” decisions within constraints.

• “Best” based on estimated performance.

• Decision options are limited by physical and policy constraints.

• Software searches available decisions for the “best” ones.

Optimization can identify promising solutions.

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Decisions: Water operations and allocations

Find “best” performance: Maximize net benefits over historic hydrology

(Minimize economic losses & costs)

Limited by: (1) Water balance (2) Flow and storage capacities (3) Minimum flows

CALVIN Optimization – In Words

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Approacha) Develop schematic of sources, facilities, &

demands.

b) Develop economic values for agricultural & urban water use for 2020 land use and population.

c) Identify minimum environmental flows.

d) Reconcile estimates of 1922-1993 historical inflows.

e) Develop documentation and databases for more transparent and flexible statewide analysis.

f) Combine this information in an optimization model.

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Approach (continued)g) Three policy alternatives:

1) Base Case

– current operation and allocation policies

2) Five Regional Optimizations/Water Markets

– current import and export levels

– economically driven decisions

3) Statewide Optimization/Water Market

h) Interpret results.

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Model Schematic - North

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Model Schematic - South

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CALVIN’s Demand Coverage

ReservoirsNot in CALVINUpper Sacramento ValleyLower Sacramento Valley & DeltaSan Joaquin and Bay AreaTulare BasinSouthern California

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Economic Values for Water

• Agricultural: Production model SWAP

• Urban: Based on price elasticities of demand

• Operating Costs

• Environmental: Use constraints instead of economic values

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Coachella Valley

SACRAMENTO VALLEY REGIONS

SOUTHERN CALIFORNIA REGIONS

SAN JOAQUIN VALLEY REGIONS

Imperial Valley

Palo Verde

SWAP Model Regions

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Agricultural Crop Descriptions

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Tomato Production-Yolo County

WaterLand

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Efficiency-Cost Trade-offs: Orchards Sacramento Valley

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Agricultural Water Use Values

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Urban Water Use Values

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Operating Costs

• Fixed head pumping– Energy costs– Maintenance costs

• Groundwater recharge basins

• Wastewater reuse treatment

• Fixed head hydropower

• Urban water quality costs

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Environmental Constraints

• Minimum instream flows

• Rivers (e.g., Trinity, Sacramento, American, Feather, San Joaquin, San Joaquin tributaries)

• Lakes (Mono Lake, Owens Lake)

• Delta outflows

• Wildlife refuge deliveries in Central Valley

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Hydrology Surface & Groundwater

1921 - 1993 historical inflows

• Monthly flows

• Represents the wide range of water availability over 72 years.

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Data Flow for the CALVIN Model

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Database and Interface• Tsunami of data for a controversial system

– Political need for transparent analysis

– Practical need for efficient data management

• Databases central for modeling & management

• Metadata and documentation

• Database & study management software

Systematic data management is needed for transparency and informed decision-making.

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CALVIN’s Innovations

1) Statewide model

2) Groundwater and Surface Water

3) Supply and Demand integration

4) Optimization model

5) Economic perspective and values

6) Data - model management

7) Supply & demand data checking

8) Integrated management options

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Part IICALVIN Results & Policy Conclusions

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Policy Alternatives1) Base Case

• Current operating and allocation policies

2) Regional Optimization Case (5 regions)• Current inter-regional flows• Flexible operations within each region• 5 Regional water markets

3) Statewide Optimization Case• Statewide water market

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Some Results

• Water Scarcity & Economic Performance

• Willingness to pay and Import Values

• Costs of Environmental Flows

• Economic Value of Facility Changes

• Conjunctive Use

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Total Costs by RegionAverage Total Cost ($M/yr)

BC RWM SWM Upper Sacramento Valley 35 34 29

Lower Sacramento & Delta

212 166 166

San Joaquin and Bay Area

394 358 333

Tulare Lake Basin 453 424 417 Southern California 3074 1855 1838

TOTAL 4169 2838 2783

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Scarcity by Region Average Scarcity (taf/yr) Average Scarcity Cost ($M/yr)

Region BC* RWM* SWM* BC RWM SWM Upper Sacramento Valley 144 157 0 7 5 0 Lower Sacramento & Delta 27 1 1 36 1 1 San Joaquin and Bay Area 16 0 0 15 0 0

Tulare Lake Basin 274 322 33 37 19 2 Southern California 1132 929 857 1501 255 197

TOTAL 1594 1409 890 1596 279 200 Agriculture Only

Upper Sacramento Valley 144 157 0 7 5 0 Lower Sacramento & Delta 8 0 0 0 0 0 San Joaquin and Bay Area 0 0 0 0 0 0

Tulare Lake Basin 232 322 30 19 18 1 Southern California 309 703 703 6 28 28 Total Agriculture 693 1182 733 32 51 29

Urban Only Upper Sacramento Valley 0 0 0 0 0 0 Lower Sacramento & Delta 19 1 1 36 1 1 San Joaquin and Bay Area 16 0 0 15 0 0

Tulare Lake Basin 42 0 2 18 0 1 Southern California 823 227 154 1495 227 169

Total Urban 901 227 157 1564 227 170

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Agricultural Scarcity Cost Changes by Region - SWM

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Urban Scarcity Cost Changes - SWM

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Willingness-to-Pay Average WTP ($/af) BC RWM SWM

CVPM 2 42 15 0 CVPM 8 0 0 0

CVPM 15 40 26 14 CVPM 17 0 18 11 CVPM 18 162 40 0 Imperial 24 68 68

Napa-Solano 694 0 0 East Bay MUD 351 28 28 San Francisco 291 0 0

Fresno 472 0 42 Castaic Lake 10,495 645 519

Coachella 1,520 1,358 1,358 E & W MWD 831 219 2

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Value of Additional Imports to Southern California

917

628486

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2849

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Marginal Cost of Trinity River Flows

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Environmental Flow Costs Avg Opportunity Cost ($/af)

Environmental Requirement RWM SWM Trinity River 46 1

American River 0 0 Stanislaus River 4 1

Merced River 3 2 Mono Lake Inflows 963 818

Owens Lake Dust Mitigation 750 611 Sacramento West Refuge 42 ~0

Kern Refuge 43 34 Delta Outflow 0 0

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Economic Value of Facility ChangesAnnual Expansion Value ($/af)

RWM SWM Surface Reservoirs

Pardee 15 15 Kaweah 56 32 Success 48 26

S. Cal. SWP Storage 12 3 Conveyance

EBMUD/CCWD Cross Canal 146 145 East Bay/South Bay Connector 237 253

Hetch Hetchy Aqueduct 268 280 Colorado River Aqueduct 351 209

Other Facilities Coachella Artificial Recharge 2,654 2,796 SCV Groundwater Pumping 230 178

SFPUC Recycling 55 71 SCV Recycling Facility 30 46

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1922 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 1988

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Base Case

Statewide Unconstrained

Statewide Groundwater Storage

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Conjunctive Use

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BASE CASE

REGIONAL WATER MARKET

STATEWIDE WATER MARKET

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Policy Conclusions

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Markets, Transfers, & Exchanges

a) Regional & statewide markets can reduce water scarcity and scarcity costs. Most benefits occur with regional markets.

b) Flexibility of markets allow environmental flows to be more easily accommodated.

c) Markets never reduced deliveries to any major user more than 15%.

d) Exchanges and transfers improve operational efficiency and increase overall deliveries.

e) If ~20% of water is allocated by markets, most scarcity disappears statewide.

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Infrastructure Capacity

a) Additional infrastructure is very valuable economically at some locations and times.

b) Select inter-ties, recharge, and other conveyance expansions show the greatest benefits – by far.

c) Surface storage expansion has much less value, assuming conjunctive use is available.

d) Water reuse can have significant water supply value.

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Conjunctive Usea) Statewide: surface storage ~40 MAF

groundwater storage 140+ MAF CALVIN uses ~73 MAF Base Case uses ~58 MAF

b) Regional and statewide optimization employs more conjunctive use.

c) Conjunctive use of ground and surface waters has large economic and operational benefits for every region.

d) Most benefits are within regions, but substantial statewide benefits also exist.

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Water Demands

a) Water use efficiency measures are useful, but do not have unlimited potential.

b) Most water demands can be satisfied. Most unsatisfied demands could be well compensated with markets.

c) Satisfying all demands is not always economically worthwhile. Some scarcity is optimal.

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Environmental Flows

a) Consumptive environmental flows impose greater costs to agricultural and urban water users than instream flows.

b) With flexible operations and markets, most environmental flows impose little cost on other water users.

c) A statewide water market greatly reduces environmental costs to other water users.

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Regional vs. Statewide Management

a) The vast majority of potential economic improvement in California’s water system is from local and regional changes.

b) Local and regional improvements greatly reduce demands for additional imported water, often by 70-90%.

c) Statewide management has some additional benefits, especially for mitigating economic impacts of environmental requirements.

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Uses for CALVIN

1) Integrated long-term regional and statewide planning

2) Integrated supply & demand data management

3) Preliminary economic evaluation

4) Planning & operations studies:

Facility expansion, Joint operations, Conjunctive use, Catastrophe response, Climate change, Water transfers, ...

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Future of CALVIN

1) Continuing University development (climate change, flood control, hydropower, …).

2) Discussions with DWR, USBR, and LLNL regarding adoption, improvement, and use of the model and related ideas.

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Concluding Thought

Purposes of Computer Models:

- Make better sense of complex systems

- Suggest promising infrastructure & operations

- Develop ideas for better management

http://cee.engr.ucdavis.edu/faculty/lund/CALVIN/