Download this Paper Open PDF in Browser

Valuing Water Supply Reliability with Sensitivity Analysis

Prepared for Presentation at the Southern Agricultural Economics Association’s 2017 Annual Meeting, Mobile, AL, February 4-7, 2017

19 Pages Posted: 15 Mar 2017  

Steven Buck

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Mehdi Nemati

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: January 18, 2017

Abstract

The purpose of this paper is to calculate the expected reliability benefits of alternative water supplies that are less vulnerable to disruption than the current composition of supplies, especially those regions which rely on imported surface water. Expected reliability benefits are measured using estimates of welfare losses under various levels of supply disruption, the probability of each level disruption, and on consumption forecasts over the life of proposed alternative supplies. To consider uncertainty in reliability benefits, we run sensitivity analyses to value reliability under different discount rates, the elasticities of demand, water supply disruption levels, and corresponding probability distributions of disruption.

Suggested Citation

Buck, Steven and Nemati, Mehdi, Valuing Water Supply Reliability with Sensitivity Analysis (January 18, 2017). Prepared for Presentation at the Southern Agricultural Economics Association’s 2017 Annual Meeting, Mobile, AL, February 4-7, 2017. Available at SSRN: https://ssrn.com/abstract=2932346

Steven Buck

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Mehdi Nemati (Contact Author)

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Paper statistics

Downloads
10
Abstract Views
43