Risk Aversion Based Inexact Stochastic Dynamic Programming Approach for Water Resources Management Planning under Uncertainty

Zhenfang Liu, Yang Zhou, Gordon Huang and Bin Luo
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Zhenfang Liu: School of Public Administration, Hunan University, Changsha 410082, China
Yang Zhou: Water Science and Environmental Engineering Research Center, College of Chemical and Environmental Engineering, Shenzhen University, Shenzhen 518060, China
Gordon Huang: Environmental Systems Engineering Program, Faculty of Engineering, University of Regina, Regina, SK S4S 0A2, Canada
Bin Luo: Manitoba Infrastructure, Winnipeg, MB R3C 0R8, Canada

Sustainability, 2019, vol. 11, issue 24, 1-22

Abstract: In this study, a dual interval robust stochastic dynamic programming (DIRSDP) method is developed for planning water resources management systems under uncertainty. As an extension of the existing interval stochastic dynamic programming (ISDP) method, DIRSDP can deal with two-stage stochastic programming (TSP)-based planning problems associated with dynamic features, input uncertainties, and multistage concerns. Compared with other optimization methods dealing with uncertainties, the developed DIRSDP method has advantages in addressing uncertainties with complex presentations and reflecting decision makers’ risk-aversion attitudes within its optimization process. Parameters in the DIRSDP model can be represented as probability distributions as well as single and/or dual intervals. Decision makers’ risk-aversion attitudes can be reflected through restricting the deviation of the recourse costs to a tolerance level. Water-allocation plans can then be developed based on the analysis of tradeoffs between the system benefit and solution robustness. The developed method is applied to a case of water resources management planning. The solutions are reasonable, indicating applicability of the developed methodology.

Keywords: water resources management; stochastic dynamic programming; uncertainty (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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