• DOI:10.1061/(ASCE)WR.1943-5452.0000448
• Corpus ID: 111013099

Using Real Options in the Optimal Design of Water Distribution Networks

@article{Marques2015UsingRO,
  title={Using Real Options in the Optimal Design of Water Distribution Networks},
  author={Jo{\~a}o Carlos Marques and Maria da Conceiç{\~a}o Cunha and Dragan A. Savi{\'c}},
  journal={Journal of Water Resources Planning and Management},
  year={2015},
  volume={141},
  pages={04014052}
}

• J. Marques, M. Cunha, D. Savić
• Published 1 February 2015
• Engineering
• Journal of Water Resources Planning and Management

AbstractWater supply systems have to satisfy water needs in terms of quantity and quality. The constant changes in urban areas require the regular adaptation of the water supply infrastructure to meet new circumstances. However, decisions to design and operate water networks have to be taken under uncertainty. Flexibility is thus the key to more robust and confident decisions. An approach called real options (ROs) can be used in these situations. This approach makes it possible to use adaptive strategies in the decision process. Some decisions can be delayed pending future conditions. Water distribution systems are very costly and complex infrastructures. Once built, their operating structure cannot be changed significantly. This work presents an innovative ROs approach to define an objective function to cope with some future scenarios in a specific case study. The objective of our proposed model is to find a minimum cost solution for the first period of a planning horizon, while considering various possi...