Technical Memorandum Report No. 33
A Programming Approach to the Valuation of Water in Alternative Uses
James E. T. Moncur
February 1972
ABSTRACT
The problem of evaluating water resources is approached in terms of value foregone due to a substantial extra-basin diversion. A model was constructed to optimize storage-release schedules at each of several parallel and serially-located units of a multiple reservoir system, producing firm and dump energy, irrigation and downstream water, and assimilation of biochemical oxygen demanding wastes. The model is based on the decomposition algorithm for linear programs, with dynamic programs at the subsystem level. A method of allowing individual serially-located subsystems (reaches) to “bid” for releases greater than indicated by the Master (linear) programs from upstream reaches is built into the model. Data for the Columbia and Snake Rivers were used to solve the model, first under “natural” water supply conditions, then under various assumed depletions. The difference between resulting optimal returns in the two cases is interpreted as the value foregone to a region due to a diversion of its water supplies. For the Columbia basin system, values estimated are $.95 and $4.75 per acre-foot, depending on how far upstream the diversion occurs. Keywords: Economics; Evaluation; Inter-basin diversion; Mathematical Programming.