Formal risk‐transfer mechanisms for allocating uncertain water resources: The case of option contractsGómez Ramos, Almudena; Garrido, Alberto
doi: 10.1029/2004WR003340pmid: N/A
Water allocation in Mediterranean basins is characterized by increasingly uncertain availability. Mechanisms that facilitate water transfers and efficient risk sharing are critical for dealing with cyclical water shortages. An option contract can be an appropriate instrument for aiding such exchanges based on specific water rights attributes. Access to certain amounts of water under preestablished conditions could provide the basis for the option contract. The main objective of this paper is to test the hypothesis according to which an option contract may be a viable instrument for achieving efficient sharing of hydrological risks. A dynamic, stochastic, and discrete time model is developed to characterize the contract from the viewpoint of the selling party. The application of this methodology can find the compensating premium, which is computed as a risk premium. The premium ensures adequate compensation for the seller as well as for the additional risk imposed by the contract. The hypothesis is empirically tested by simulating the contract as a partial solution to the problems faced by the urban supply system of Seville (Spain). The other party is an irrigation district. Results show that the option contract would be a viable solution for both parties. For Seville's urban water supply system the option contract provides a more cost‐effective alternative water supply than those presently considered by the city's water company. We find that mixed strategies including company's drought plans and option contracts are the most efficient, leading to less severe and less likely water shortages within the city supply system.
Hydraulic tests in highly permeable aquifersButler, James J.; Zhan, Xiaoyong
doi: 10.1029/2003WR002998pmid: N/A
A semianalytical solution is presented for a mathematical model describing the flow of groundwater in response to a slug or pumping test in a highly permeable, confined aquifer. This solution, which is appropriate for wells of any degree of penetration and incorporates inertial mechanisms at both the test and observation wells, can be used to gain new insights into hydraulic tests in highly permeable settings. The oscillatory character of slug‐ and pumping‐induced responses will vary considerably across a site, even in an essentially homogeneous formation, when wells of different radii, depths, and screen lengths are used. Thus variations in the oscillatory character of responses do not necessarily indicate variations in hydraulic conductivity (K). Existing models for slug tests in partially penetrating wells in high‐K aquifers neglect the storage properties of the media. That assumption, however, appears reasonable for a wide range of common conditions. Unlike in less permeable formations, drawdown at an observation well in a high‐K aquifer will be affected by head losses in the pumping well. Those losses, which affect the form of the pumping‐induced oscillations, can be difficult to characterize. Thus analyses of observation‐well drawdown should utilize data from the period after the oscillations have dissipated whenever possible. Although inertial mechanisms can have a large impact on early‐time drawdown, that impact decreases rapidly with duration of pumping and distance to the observation well. Conventional methods that do not consider inertial mechanisms should therefore be viable options for the analysis of drawdown data at moderate to large times.
Bayesian identification of the local transmissivity using time‐drawdown data from pumping testsCopty, Nadim K.; Findikakis, Angelos N.
doi: 10.1029/2004WR003354pmid: N/A
Conventional pumping test analysis techniques focus mostly on estimating the effective transmissivity of the perturbed subsurface volume surrounding the extraction and observation wells, ignoring the existing local‐scale heterogeneity. The purpose of this paper is to explore whether transient drawdown data derived from pumping tests can also be used to identify the statistical spatial structure of the local transmissivity field. The log‐transmissivity is modeled as a multivariate random spatial function with stationary mean, and exponential semivariogram. Monte Carlo simulations are used to compute the transient drawdown for different values of the log‐transmissivity variance and integral scale. On the basis of these simulations, a Bayesian procedure is developed to estimate the probability density functions of these two statistical parameters. The main benefit of using a Bayesian approach is that it readily accounts for the uncertainty of the estimated parameters. Application of the proposed procedure to simulated drawdown data shows that it is possible to characterize the local transmissivity from pumping test data and that the reliability of the estimates increases with an increase in the number of available tests.
Delineation of hydrochemical facies distribution in a regional groundwater system by means of fuzzy c ‐means clusteringGüler, Cüneyt; Thyne, Geoffrey D.
doi: 10.1029/2004WR003299pmid: N/A
In this paper, classification of a large hydrochemical data set (more than 600 water samples and 11 hydrochemical variables) from southeastern California by fuzzy c‐means (FCM) and hierarchical cluster analysis (HCA) clustering techniques is performed and its application to hydrochemical facies delineation is discussed. Results from both FCM and HCA clustering produced cluster centers (prototypes) that can be used to identify the physical and chemical processes creating the variations in the water chemistries. There are several advantages to FCM, and it is concluded that FCM, as an exploratory data analysis technique, is potentially useful in establishing hydrochemical facies distribution and may provide a better tool than HCA for clustering large data sets when overlapping or continuous clusters exist.
Transport of colloids in unsaturated porous media: Explaining large‐scale behavior based on pore‐scale mechanismsKeller, Arturo A.; Sirivithayapakorn, Sanya
doi: 10.1029/2004WR003315pmid: N/A
We conducted column‐scale experiments to study the transport of colloids (latex particles and bacteriophage MS2) under water‐unsaturated conditions. The objective was to draw connections between observations at the pore scale and the results obtained from column‐scale experiments. The same system had been previously operated under saturated conditions to determine colloid collision efficiency. Breakthrough of colloids was first evaluated under unsaturated but steady water content conditions, with constant trickling flow. After monitoring the steady breakthrough of the colloids, the column was flushed with water at higher flow rate to increase the water content up to a saturated condition. Colloid breakthrough was monitored during the entire experiment, as water content increased. Colloid removal increases significantly with decreasing initial water saturation, reflecting retention at the air‐water interface and straining in thin‐water films. Colloid breakthrough occurs earlier than a conservative tracer even under unsaturated conditions, although the colloid concentrations are much lower than the tracer. After flushing at similar flow rates, there is increased colloid retention under unsaturated conditions even as the system approaches water saturation, indicating that additional removal is occurring, due possibly to the formation of colloidal clusters. These results can be explained to a great extent by pore‐scale observations of retention and remobilization mechanisms.
Simulating soil water dynamics in a cutover bogKennedy, G. W.; Price, J. S.
doi: 10.1029/2004WR003099pmid: N/A
A simulation model flow in cutover peat systems (FLOCOPS) was developed to improve the current understanding of the hydrology of cutover peatlands and the water management programs designed to restore them. FLOCOPS considers temporal variability in peat bulk density, shrinkage character and θ‐Ψ (soil moisture–pressure head) relationships, volume changes due to compression, and changes to saturated hydraulic conductivity (KS) and saturated volumetric soil moisture (θS). FLOCOPS was evaluated by comparing simulated and observed 1998–1999 trends in elevation change (thickness of peat deposit), water table, θ, and Ψ. FLOCOPS effectively represented observed trends in elevation change, θ, and Ψ. A sensitivity analysis indicated that FLOCOPS was most sensitive to the retention, storage, and consolidation characteristics of the peat. Volume changes reduced hydrological variability, whereas low water retentivity and high water storage helped maintain high and stable θ, Ψ, and water table position. The sensitivity of the peat system's hydrology to changes in pore structure suggests that minimizing changes to the peat's characteristic pore structure during extraction and subsequent abandonment of the peatland will result in significantly more favorable hydrological conditions for bog restoration.
Entering the policy debate: An economic evaluation of groundwater policy in fluxLivingston, Marie Leigh; Garrido, Alberto
doi: 10.1029/2003WR002737pmid: N/A
This is an age of transition in groundwater policy. The ownership and control of aquifers, changing groundwater quality, and the impact of groundwater on the environment command the attention of policy makers around the globe. Substantial pressure exists for change in the laws and regulations governing groundwater, which are critical to the management of this critical resource. The objective of this paper is to contribute to the practical policy debate from an economic perspective. This study begins by outlining the basic stages of change in groundwater policy and their economic relevance. A set of physical, economic, and institutional indicators are suggested that may help to understand various country issues. The indicators are used to describe some actual experiences in groundwater policy in the United States and Spain that are examined for insights into common policy questions. This study suggests that the public authority to initiate groundwater policy innovations often results from the physical ties between surface and groundwater. In contexts rich with spatial and temporal externalities the situation is more complex, but this increases the social benefits that result from successful reform. A credible threat of losing rights is often necessary to create enough incentives to firm existing rights. Reductions in overall use are better achieved through purchasing and retiring rights, rather than through compensation for nonuse. Finally, the policy issues important to groundwater are often more fundamental than pricing alone. These insights may help policy makers adapt to emerging groundwater management problems.
Estimation of gradients from sparse data by universal krigingPardo‐Igúzquiza, Eulogio; Chica‐Olmo, Mario
doi: 10.1029/2004WR003081pmid: N/A
The determination of a gradient, or directional derivative, of a spatial variable is a common problem in many Earth science applications. For hydraulic heads, for example, the gradient defines the direction of the groundwater flow and is used in solving groundwater flow and transport equations. Kriging provides a methodology for estimating gradients directly from experimental data without the need to estimate the variable at the nodes of a regular grid (even when the data are widely and irregularly scattered) and without the need to use finite difference approximations. Kriging is more efficient than other methods of gradient estimation because it uses a probabilistic approach that gives an estimator that is unbiased and with minimum estimation variance. In addition, it provides a standard error of estimation, which is not available from deterministic methods. We extend the kriging formulation of gradient estimation to the universal kriging formulation to account for the frequently observed drift in spatial variables; this is almost always present at the regional scale, for example, for hydraulic head. We present an alternative approach to kriging the gradient that is simpler than previous formulations. This new formulation uses linear systems theory, which facilitates the inference of the required covariances as functions of the covariance of the primary variable whose gradient is to be estimated. An example of estimating the gradient of hydraulic head in an aquifer in southern Spain is presented to illustrate the methodology.