Insights into Robustness as a Criterion to Support Cost-benefit Analysis of Supply-enhancing Investments Under Uncertainty Part I – Shaping the Uncertainty Environment

Claudio Arena (), Marcella Cannarozzo and Giorgio Gullotti
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Claudio Arena: Università degli Studi di Palermo
Marcella Cannarozzo: Università degli Studi di Palermo
Giorgio Gullotti: Università degli Studi di Palermo

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), 2025, vol. 39, issue 11, No 29, 5989 pages

Abstract: Abstract The paper, in conjunction with its companion (Arena et al. 2025), introduces and demonstrates a procedure based on Cost-Benefit Analysis for comparing supply-enhancing alternatives in multi-purpose water resource systems featuring reservoirs with over-year storage capacity, explicitly accounting for uncertainty in the form of scenarios. The study aims to advance the evaluation practices for such projects by embedding uncertainty in the evaluation process through an “uncertainty environment” starting from the construction of the business-as-usual situation. This paper focuses on the detailed description of this “uncertainty environment.” It is modelled as a regional water resource system where several parameters are subject to uncertainty. Key uncertainties arise from two primary sources: water supply, due to the relatively short historical records available, and water demand, influenced by factors such as declining per-capita consumption and improvements in the efficiency of downstream water distribution networks. The methodologies used to model these uncertainties are introduced and discussed considering the available data. Data are drawn from a part of the water resource system of the Southern Apennines River Basin District in Italy which supplies water to over 4 million residents, approximately 60,000 hectares of irrigated agricultural land, and hydropower production facilities. The application illustrates how the proposed procedure quantifies the scarcity level of the water system, providing a basis for assessing the merits of different supply-enhancing alternatives. The appraisal of these alternatives is addressed in detail in the companion article.

Keywords: Water Resources Systems; Droughts; Cost-Benefit Analysis; Uncertainty; Robustness (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11269-025-04236-0

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