What is water management?

Transcription

1 Performance Indicators in water management October Introduction 1. General performance indicators Examples from other domains Vulnerability index Measure for adaptive capacity 2. Risk-return ratio Jeroen Aerts This course is about exploring some indicators that may serve quantifying the Institute performance for Environmental of a (an Studies adaptive-) (IVM) 1 water management regime contents of the Institute coursefor Environmental Studies (IVM) What is water management? Managing quantity and quality of water such that it meets the requirements of the users Multi levels in water management Water Policies (national, EU); Policies facilitate ( set the boundaries ) for: Regional and local levels: develop measures to manage quantity and quality in order to meet user requirements Make clear that operational Water management is about managing quantity and quality of water. Water`Policy (EU, National legislation sets the boundary conditions for operational water Institute management for Environmental Studies (IVM) 3 This course is about indicators for operational water management, which happens at the more regional and local levels Institute for Environmental Studies (IVM) 4 3 4

2 Focus on short term solutions But increasingly influenced by long term developments (>30 yrs) Short term local management (~ 5-10yr): - Implement WFD - Make catchment visions - Ad hoc reactive management to extremes - technical measures (dikes, storage, etc) - increasingly land use planning - Climate change - Socio economic developments - Institutional developments However, water management has become more integrated (IWRM), and daily water management has to simultaneously address other sectoral issues as well (e.g. spatial planning, implementation of (inter-) national legislation such as the EU WFD) As water managers are mostly busy with daily operational issues their perception of developing visions, new strategies or measures does not exceed a period of more than 5 years ahead. In developing countries where daily problems are Institute relatively for large, Environmental the water Studies (IVM) 5 management perception / planning is logically- even shorter. Moreover, uncertainty in long term developments such as climate change and economic developments has not only reached water`policies at the higher levels, but also directly influences water managers at the lower operational levels: For example, in Some countries water managers have Institute to make for 5 Environmental year catchment Studies plans (IVM) in 6 which they have used climate scenarios to test the robustness of proposed measures. 5 6 Ganges Construction dam in Ganges: costs: 2 B U$ Gorai This is an example of a proposed barrage in the Ganges river in Bangladesh, which has not developed yet because of including new long term assessment studies. This remote sensing image shows the Institute for Environmental Studies (IVM) 7 Ganges river and possible location of the barrage (in orange). the same location 11 years Institute later for Environmental Studies (IVM) 8 7 8

3 Future is tackled by scenarios and impact studies 1993 uncertainty the same location 20 years later: as one can see, the barrage would have been located aside of the river instead of in the river: Hence very costly additional embankments Institute would for Environmental be needed Studies to ensure (IVM) the 9 proper functioning of the barrage other long term developments are important to water managers but also uncertain: here the outcome of different climate models showing the projected Institute for Environmental Studies (IVM) 10 temperature for the coming 100 years (IPCC, 2001) Adaptive management Future is inherently uncertain Focus on current situation Introduce adaptive management characteristics Participation Transparency What does Adaptive management bring for water managers? Adaptive management should deliver a more flexible and robust management style that is prepared for unexpected events Finance Information Etc. The key of adaptive water`management is that it assumes the future to be inherently uncertain. An AW regime should be able to cope with these uncertainties presumably better than Institute other for regimes: Environmental at least Studies that would (IVM) 11be an hypothesis Without knowing whether an AW regime performs better than an existing regime, we may assume that adaptive water management address a more flexible and robust management style that would be better prepared for unexpected shocks or events such as floods or droughts better than Institute for Environmental Studies (IVM) 12 water management practices that are fully controlled and fine-tuned to present situations 11 12

4 Flexibility and robustness for the local-regional levels? A more participative approach At the development and implementation side: Knowing the future is uncertain: can we invest in measures that can cope with long term uncertainty? Can we define indicators that measure flexibility and robustness? Can we define indicators that measure the performance of an adaptive management regime? 0. Introduction 1. General performance indicators Examples from other domains Vulnerability index Measure for adaptive capacity 2. Risk-return ratio 3. Multi Criteria Analysis But what does flexibility and robustness mean for the local-regional levels? Can we define indicators that show that through changing a particular regime to an AWM regime, the operational management is vrije improving? Universiteit amsterdam Institute for Environmental Studies (IVM) 13 Lets first examine some indicators that are used in other Institute research for Environmental domains. Studies (IVM) Amoebe Performance of fish species under different nutrient concentrations Amoebe 2 This chart shows an Amoebe diagram with in the circle, a reference situation of several fish species in a part of the Atlantic Ocean. The dotted line presents the required level for each of species that should be reached through implementing new measures and policies. The grey areas shows the current existence of the vrije species Universiteit amsterdam Institute for Environmental Studies (IVM) 15 This chart shows two Amoebe diagrams for two different sets of measures. One can see that Policy option 2A+ results in a more favourable situation for the species at the lower right of vrije the Universiteit circle. amsterdam Institute for Environmental Studies (IVM)

5 Performance Train schedule French railroads Paris-Lyon Performance Train schedule French railroads Paris-Lyon This chart shows the performance of daily train services between Paris and Lyon through time. it looks like vrijea Universiteit very complex amsterdam diagram. however, (next Jeroen slide Aerts, Version September 2006 Institute for Environmental Studies (IVM) 17 Here one see that the method actually clearly shows the performance of the trains. The red train starts later in time, but arrives earlier in Lyon as compared to the blue train Institute for Environmental Studies (IVM) General performance indicators Examples from other domains Vulnerability index Measure for adaptive capacity 2. Risk-return ratio Adaptation, adaptive capacity, vulnerability Adaptation is needed when vulnerability exceeds certain index or threshold The potential adaptation measures are dependent on the adaptive capacity of the system / country Another indicator type can be found in climate & vulnerability research Institute for Environmental Studies (IVM) 19 Another indicator type can be Institute found for in climate Environmental & vulnerability Studies (IVM) research

6 Vulnerability index look at other global indicator: The climate vulnerability index. It is based on numbers that expresses the state of a country based on the 6 classes described on the sheet in red. This is example of the Human vulnerability index which shows the social- vulnerability of people in the Philippines. How is such such a global indicator calculated? (O Sullivan, 2005) Institute for Environmental Studies (IVM) 21 Institute for Environmental Studies (IVM) Each class can be subdivided into sub classes, which can subsequently be quantified For example: Access to clean drinking water Institute for Environmental Studies (IVM) 23 Institute for Environmental Studies (IVM)

7 Suppose in the world the lowest access to drinking water is 12% in e.g. Mali. And the highest access is 100% in the USA. Than Mali gets the number 88, as it is highly vulnerable on this subindicator and the USA gets a 0 as it is not vulnerable on this particular indicator Institute for Environmental Studies (IVM) 25 Used only 1 CC scenario By combining all (sub-) indicators, one can develop these kind of tables. In this case they have used only 1 climate change scenario, so the table does not show the Institute for Environmental Studies (IVM) 26 uncertainty for each vulnerability class number General performance indicators Examples from other domains Vulnerability index Measure for adaptive capacity 2. Risk-return ratio 3. Multi Criteria Analysis Map projection showing the climate total vulnerability Institute for each Environmental country Studies by weighted (IVM) 27 summing of all vulnerability classes Another option is to measure the adaptive capacity, defined as the capacity of a system to adapt Institute to for a new Environmental situationstudies (IVM)

8 In the IPCC definition: vulnerability is determined by its adaptive capacity and the potential Institute impacts for Environmental (adapted from Studies Klein, (IVM) ) However, there is a cyclic or dynamic issue that makes the definition somewhat more complex: Institute vulnerability for Environmental also determines Studies (IVM) 30 adaptive capacity (Klein, 2004) Example of quantifying adaptive capacity (Klein, Institute 2004 for ; Environmental ATEAM / Dynacoast Studies (IVM) projects) 31 Example of quantifying adaptive capacity under different climate scenarios (Klein, 2004) Institute for Environmental Studies (IVM)

9 Relation Adaptive management regime: vulnerability / adaptive capacity (1) Regime (3) Vulnerability Participation Transparency Finance Information (Vulnerability) Adaptive capacity: potential set of measures a system can use to adapt to changes (Ionescu et al. 2006) Etc. Going back to adaptive water`management: The question remains: what is the quantitative Institute relation for Environmental between Studies an adaptive (IVM) 33 system and vulnerability? Ionescu et al. 2006) state that the performance of an adaptive system Institute for Environmental Studies (IVM) 34 can be measured through its adaptive capacity Relation Adaptive management regime: vulnerability / adaptive capacity (1) Regime Participation Transparency Finance Information Etc. (2) Potential measures (3) Vulnerability (Adaptive capacity) Policy 1 Policy 2 Measure 1 (Vulnerability) And adaptive capacity by (Ionescu et al. 2006) is defined as the potential set of measure a manager or Institute for Environmental Studies (IVM) 35 policy maker can develop or implement But: Future is inherently uncertain Vulnerability method or measuring Adaptive capacity assumes we know how the future will develop Suppose we do not know anything about the future, but we do know about the characteristics of our methods and measures However, this still assumes we know something about the future. I.o.w: as we know the adaptive capacity defined as the potential set of measure, we will select measures according to some idea of what will happen in the future. But, are there methods that help water managers deciding on Institute for Environmental Studies (IVM) 36 selecting measures / investments without knowing what the future will bring? 35 36

10 Financial economics In financial economics, investments under uncertainty is commonly accepted 1. General performance indicators Examples from other domains Vulnerability index Measure for adaptive capacity 2. Risk-return ratio Yes! this is daily Institute practice for Environmental of financial Studies experts (IVM) 37 financial experts decide on investing in stocks or generally in assets Institute on the for basis Environmental of the Studies risk return (IVM) 38 ratio Modern Portfolio Theory (MPT) Modern Portfolio Theory (MPT) Markovitz (1952) Don t "put all your eggs in one basket Diversification of assets in one portfolio reduces risk (= variation, uncertainty, volatility ) risk-return ratio Markovitz quantitatively proved that by diversifying investments in a portfolio, one can actually lower the overall risk of a portfolio Hence, an investor should not only assess the return of the investments but also the risk (or the uncertainty that this return will be achieved. Institute for Environmental Studies (IVM) 39 Markovitz quantitatively proved that a portfolio that is invested in multiple assets whose returns are uncorrelated will: (1) have an expected return, which is the weighted average of the individual assets returns. (2) Portfolio risk will be less than the weighted average of the individual asset risk Institute for Environmental Studies (IVM)

11 Modern Portfolio Theory (MPT) Find portfolio that reduces uncertainty and maintains acceptable return When can you diversify investments? (1) there is more than one possible investment at any given time (2) these investment are subject to risk and (3) the same (economic) conditions do not affect all investments equally So the question is to find a portfolio of investments that has an acceptable return Institute for Environmental Studies (IVM) 41 and risk Diversification is possible when these conditions are present: this is the case in many Institute for Environmental Studies (IVM) 42 water management issues MPT formula s Markovitz algorithm to calculate risk return ratio s for different portfolios An example for calculating the risk return ratio for two assets for which some historical (or expected) return and risk numbers are available through either historical analysis or expert knowledge Institute for Environmental Studies (IVM) 43 Institute for Environmental Studies (IVM)

12 return Risk-return ratio of Portfolio s (A-E) of 2 assets Results of the Markovitz algorithm plotted as the so called efficient frontier. Each A,.. E represents a portfolio where one has varied the % investments in either asset 1 or Asset 2. For example, portfolio B Institute consist for Environmental of 25% Studies of Asset (IVM) 245 and 75% Risk / standard deviation of Asset 1. MPT applied in biodiversity & Agriculture research Figge (2004): biodiversity Fraser et al (2005): Agriculture Using panarchy for the vulnerability of ecosystems Wealth of a system Connectivity Diversity / MPT Some literature references where diversification has been used to indicate the Institute vulnerability for Environmental of systems Studies (IVM) Apply MPT on water management Apply MPT on water management (1) Regime Participation Transparency Finance Information Etc. Potential measures (Adaptive capacity) Policy 1 Policy 2 Measure 1 Return (3) Return & Risk (Vulnerability) So, now we may use the adaptive capacity expressed as the full potential of measures and policies at the disposal of water`manager to formulate Institute different for Environmental portfolios Studies of measures (IVM) 47 (1) Regime Participation Transparency Finance Information Etc. Next we may calculate the return and risk for each portfolio as an indicator for the performance of our water`management regime The risk return ration cab be seen as an indicator for Institute for Environmental Studies (IVM) 48 vulnerability Potential measures (Adaptive capacity) Policy 1 Policy 2 Measure 1 { { { (2) Adaptation Portfolio s Policy 1 Measure 1 Policy 2 Return (3) Return & Risk (Vulnerability) 47 48

13 Case Studie Hollands Noorderkwartier Flood safety standards Urban area: 1:100 Crops 1:50 Grassland, 1:10 costs 220 of 1770 areas do not meet standards Source: Hoes, 2004 Consider an area in The Netherlands where the water`board has to invest in new measures in order to mitigate inundations caused by heavy rainfall. It appears that all Bron: red Hoes areas (2004) do not meet the national safety standard for inundations (e.g. urban areas may only inundate once in 100 Institute for Environmental Studies (IVM) 49 years) benefit Cost-benefit ratio Measures waterboard souce: Hoes (2004) The waterboard proposes to develop additional pumping capacity. however, a cost benefit analysis shows that investing 270 M. Euro in new pumping does not solve the problem, and Institute for Environmental Studies (IVM) 50 sfaety standards are still not achieved for large parts of the area. Hence, Other type of measures should be considered Possible investments Pumping stations Storage areas Insurance two other measures / policies are (1) Storage areas: these are pasture area which can be flooded to temporarily store water`when the pumping stations fail. next (2) if both the pumping stations and the storage areas can not cope with excessive rainfall, then insurance could cover Institute for Environmental Studies (IVM) 51 the residual damage This can be graphically represented like this: at the left the total damage probability curve has been calculated (low probable rainfall events cause the highest damage) Institute for Environmental Studies (IVM)

14 The next graph sows which part of the damage is covered by which investment: it is shown that the pumping stations cover the low probable rainfall events. however, when precipitation is more intense, the pumping stations reach their maximum capacity and storage areas must be used. If these two measures fail in times of extreme precipitation, then insurance may cover the residual risk. vrije The Universiteit overlap amsterdam between the measures can be seen as the degree Institute to for which Environmental measure Studies correlate (IVM) 53 with respect to their return (= avoiding damage through inundations) There will always be residual risk, and the remaining damage/ probability surface can be regarded as the vulnerability of the system after the full adaptive capacity of the waterboard has been utilized. Institute for Environmental Studies (IVM) Future research: relate Adaptive regime to potential sets of measures Conclusions (1) Regime Participation Transparency Finance Information Etc. Potential measures (Adaptive capacity) Policy 1 Policy 2 Measure 1 { { { (2) Adaptation Portfolio s Policy 1 Measure 1 Policy 2 Return (3) Return & Risk (Vulnerability) Diversification supports identification of adaptive portfolio s of measures MPT provides incentive to formulate adaptive portfolios The risk-return ratio could serve as a measure for vulnerability Institute for Environmental Studies (IVM) 55 Institute for Environmental Studies (IVM)

15 Thank you! Institute for Environmental Studies (IVM) 57 57