Risk-aversion optimal hedging scenarios during droughts

Abstract

The primary purpose of a water supply reservoir is to regular highly fluctuating streamflow for providing reliable water supplies. Reducing water shortage risk for impending droughts is a challenge task in real-time reservoir operation due to future inflow uncertainty. The main aim of this study is to propose risk-aversion optimal hedging scenarios during droughts, which is achieved by a two-stage approach. The water shortage probabilities of future lead times are analytically estimated first, then follows an optimization framework that simultaneously minimizing water shortage probabilities of future lead times and sustaining long-term water supply reliability. With an illustration application of the Nanhua Reservoir located in southern Taiwan, the results indicate that the proposed optimization framework provides an efficient hedging to reduce future water shortage probabilities and mitigate severe water shortages in real-time operation. The proposed optimal hedging scenarios outperforms the rule-curve-based current operation. Further improvements are noted for the time-varying rationing coefficient scenarios than the constant-coefficient scenario and the most favorable scenario is the scenario with the highest time-varying frequency. Using the storage to trigger hedging associated with estimated future lead-time water shortage probabilities as the objective functions, the proposed optimal hedging scenarios are not only risk aversion but also executable in real-time operation during droughts.