Adjustable Robust Strategies for Flood Protection

CentER Discussion Paper Series No. 2016-038

24 Pages Posted: 26 Sep 2016 Last revised: 30 Sep 2016

See all articles by Krzysztof Postek

Krzysztof Postek

Tilburg University - Center for Economic Research (CentER)

Dick den Hertog

Tilburg University - Department of Econometrics & Operations Research

Jarl Kind

Deltares

Chris Pustjens

ORTEC

Date Written: September 21, 2016

Abstract

Flood protection is of major importance to many flood-prone regions and involves substantial investment and maintenance costs. Modern flood risk management requires often to determine a cost-efficient protection strategy, i.e., one with lowest possible long run cost and satisfying flood protection standards imposed by the regulator throughout the entire planning horizon. There are two challenges that complicate the modeling: (i) uncertainty - many of the important parameters on which the strategies are based (e.g. the sea level rise) are uncertain, and will be known only in the future, and (ii) adjustability - decisions implemented at later time stages need to adapt to the realized uncertainty values. We develop a new mathematical model addressing both, based on recent advances in integer robust optimization and we implement it on the example of the Rhine Estuary - Drechtsteden area in the Netherlands. Our approach shows, among others, that (i) considering 40% uncertainty about the sea level rise leads to solution with a less than 10% increase in the total cost (ii) solutions taking the uncertainty into account are cheaper in the long run if the 'bad scenarios' for the uncertainty materialize, even if the 'optimistic solutions' are allowed to be fixed later on (iii) the optimal here-and-now investment decisions change when uncertainty and adjustability are considered.

Keywords: robust optimization, flood protection, adjustability, adaptivity

JEL Classification: C61, Q54

Suggested Citation

Postek, Krzysztof and den Hertog, Dick and Kind, Jarl and Pustjens, Chris, Adjustable Robust Strategies for Flood Protection (September 21, 2016). CentER Discussion Paper Series No. 2016-038. Available at SSRN: https://ssrn.com/abstract=2842275 or http://dx.doi.org/10.2139/ssrn.2842275

Krzysztof Postek (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Dick Den Hertog

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands

Jarl Kind

Deltares

Rotterdamseweg
Delft
Netherlands

Chris Pustjens

ORTEC ( email )

Houtsingel 5
PO Box 75
Zoetermeer, 2700 AB
Netherlands

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