Water network design using a multiobjective real options framework

Abstract

Water distribution networks (WDNs) are an essential element of urban infrastructure. To achieve a good level of performance, the traditional design of WDNs based on expected future conditions should be replaced by a flexible design, using real options (ROs), that accounts for uncertainty by taking a broader view of possible future options. This work proposes a multiobjective ROs framework that sets out to reduce costs, minimize hydraulic pressure deficiency, and a third objective for minimizing carbon emissions. A multiobjective simulated annealing algorithm is used to identify the Pareto-optimal solutions, thus enabling a tradeoff analysis between solutions. These trade-offs show that a low pressure deficit solution is achieved by increasing investment at a much faster rate after a certain pressure deficit threshold (60 m). Also, the pressure deficits can only be reduced by increasing carbon emissions. Finally, this work also emphasizes the importance of including carbon emissions as a specific objective by comparing the results of the proposed model and another one that did not cover the environmental objective. The results show that it is possible to reduce CO2 for the same level of capital expenditure or the same level of network pressure deficits if carbon emissions are minimized in the optimization process.