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Goal-based water trading expands and diversifies supplies for enhanced resilience

Abstract

In response to rising water scarcity concerns around the world, water utilities are expanding and diversifying their water supply portfolios, including attempting to value and reuse every drop throughout the water cycle. This transition is creating new hybrid infrastructure systems that combine centralized and decentralized sources at various scales. To help strategize and manage these emerging hybrid systems, we introduce a flexible goal-based water-trading framework using a combination of regulatory and market incentives. We apply this framework in a simulation of the San Francisco Bay Area, and test the effects of policy parameters, local preferences and collaboration between utilities. Results show that the option of engaging in an open trading scheme can lead to a more strategic and holistic path to higher regional resiliency through increased diversity in water portfolios, at lower costs than if utilities were tasked with pursuing goals independently. Highest benefits are observed when utilities cooperate in the exchange of information, which highlights the importance of transparency and trust operating in conjunction with regulatory and market forces.

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Acknowledgements

We appreciate the partnership with Sonoma County Water Agency on this project, especially C. Pollard and J. Jasperse for their continuous support and constructive feedback. We also thank K. Quesnel, P. Bolorinos and P. Womble for providing useful suggestions and technical guidance that improved this paper. This work was financially supported by Sonoma County Water Agency and the National Science Foundation Engineering Research Center for Re-Inventing the Nation’s Urban Water Infrastructure (award number EEC-1028968). Any opinions, findings and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of Sonoma County Water Agency or the National Science Foundation. This work was completed at Stanford University as part of P.G.’s PhD dissertation.

Author information

P.G. and N.K.A. designed the study. P.G. performed the modelling work. P.G. and N.K.A. analysed the results and wrote the manuscript.

Competing interests

The authors declare no competing interests.

Correspondence to N. K. Ajami.

Supplementary information

Supplementary Information

Supplementary Methods, Supplementary Figures 1–6, Supplementary Tables 1–2, Supplementary References 1–24

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Fig. 1: Goal-based trading scheme concept.
Fig. 2: Marginal cost curves of alternative supply-diversification projects identified in eight water utilities served by the SCWA.
Fig. 3: Alternative supplies added to the regional portfolio over time under different simulated conditions of policy drivers, decision strategies and trading dynamics.
Fig. 4: Regional outcomes under various conditions at the end of the simulation period.
Fig. 5: Average cost of alternative supplies versus supply diversity (Gini–Simpson index).
Fig. 6: Policy design considerations.