Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40

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Process Safety and Environmental Protection

journal homepage: www.elsevier.com/locate/psep

Bi-level fuzzy optimization approach for water exchange in

eco-industrial parks

Kathleen B. Aviso a,b , Raymond R. Tan b,∗ , Alvin B. Culaba b , Jose B. Cruz Jr. c
a Industrial Engineering Department, De La Salle University, 2401 Taft Avenue, 1004 Manila, Philippines
b Center for Engineering and Sustainable Development Research, De La Salle University, 2401 Taft Avenue, 1004 Manila, Philippines
c Department of Electrical and Computer Engineering, The Ohio State University, 205 Dreese Lab, 2015 Neil Ave., Columbus, OH,

43210-1272, USA

a b s t r a c t

In order to minimize the consumption of resources and the generation of waste, eco-industrial parks (EIPs) have
been designed to encourage the establishment of waste exchange networks between the plants contained within
them. Considering that the participating plants have their individual fuzzy cost goals and that the park authority has
the objective of minimizing total freshwater consumption in the EIP, this problem may be formulated as a bi-level
optimization problem, with the park authority as the upper-level decision-maker. A bi-level fuzzy optimization model
is developed to explore the effect of charging fees for the purchase of freshwater and the treatment of wastewater in
optimizing the water exchange network of plants in an EIP. The effect of subsidizing exchange of streams between
plants is also included in the model. Results show that it is not necessary to impose exorbitant fees, nor to completely
subsidize costs associated with recycling, in order to induce significant reduction of the consumption of freshwater
in the EIP.
© 2009 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.

Keywords: Bi-level optimization; Eco-industrial parks; Industrial ecology; Game theory

1. Introduction tiator or park authority (e.g. government, local entrepreneur’s

Growing environmental concerns require the development
and implementation of sustainable solutions. To establish
sustainability, recent trends are now focused on reducing pol-
lution at the source and thus promote cleaner production and
cleaner technologies. One approach is to adopt mechanisms
occurring in nature and apply them to industrial systems.
This is the concept behind the field of industrial ecology,
which was popularized by the seminal paper of Frosch and
Gallopoulos (1989). They proposed that resource consump-
tion and waste generation may be minimized by allowing the
waste materials from one industry to serve as raw material for
another. Referred to as industrial symbiosis (IS), it deals with
the physical exchange of materials, energy, waste and water
between several firms and is encouraged by geographical prox-
imity (Ehrenfeld and Chertow, 2002), such as co-locating firms
within an eco-industrial park (EIP) (Nemerow, 1995; Heeres et
al., 2004; Park et al., 2008). Furthermore, EIPs, through the ini-
associations) can provide assistance in coordinating transac-
tions and forging agreements between the firms to result in
symbiosis (Ehrenfeld and Chertow, 2002).
Mature EIPs such as the Kalundborg complex (Baldwin et
al., 2004; Jacobsen, 2006) feature exchange of a wide range of
streams among different industrial facilities. However, accord-
ing to Chertow (2007) the exchanges of common utilities such
as energy and water are often the precursors to the emergence
of full-blown eco-industrial integration, while Heeres et al.
(2004) and Ehrenfeld and Chertow (2002) highlight the signifi-
cance of cooperation among companies. This paper will focus
on the establishment of water exchange networks between
several plants in an eco-industrial park. Various methods
have been used to analyze, model and design eco-industrial
networking. Tan (2008) discussed the potential application
as well as shortcomings of process integration tools for EIP
design. Spriggs et al. (2004) and Foo (2008) used pinch anal-
ysis for identifying targets for establishing water exchange

∗
Corresponding author.
E-mail addresses: kathleen.aviso@dlsu.edu.ph, kaye aviso@yahoo.com (K.B. Aviso), raymond.tan@dlsu.edu.ph,
natdnomyar@yahoo.com (R.R. Tan), alvin.culaba@dlsu.edu.ph (A.B. Culaba), cruz@ece.osu.edu (J.B. Cruz Jr.).
Received 27 April 2009; Received in revised form 6 November 2009; Accepted 7 November 2009
0957-5820/$ – see front matter © 2009 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.
doi:10.1016/j.psep.2009.11.003
32 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40
networks. Liao et al. (2007) and Lovelady and El-Halwagi (2009)
used mathematical programming to design water networks
between several plants. Chew et al. (2008) utilized the concept
of a centralized hub topology for collecting and redistributing
water. Lovelady et al. (2009) used a property-based approach
for designing EIPs. The design of the network is affected by
technical and economic feasibility. These studies formulate
EIP design as a single level optimization problem, a simplifica-
tion that ignores the presence of a multiple decision-makers.
Recognizing further that the main stumbling block of forging
these networks is due to potentially conflicting interests of
participating companies (Tan, 2008), a few studies on incorpo-
rating individual plant objectives in the EIP design model have
been conducted. Kim and Lee (2007) for example, designed
Pareto optimal networks based on the context of benefit
sharing among the participants. Lou et al. (2004) used game
theoretic emergy based analysis to assess the environmental
and economical sustainability of strategies of the participants
under uncertainty while Chew et al. (2009) and Thillairvarrna
et al. (2008) assessed payoffs based on different water net-
work designs. Final implementation of the networks however,
requires mutual consent of the stakeholders and the par-
ticipation of higher-level decision-makers such as the park
authority or initiator. Aviso et al. (2009) considered the simul-
taneous satisfaction of the individual goals of the participants
using fuzzy optimization to design the network. This how-
ever, considers the participants to belong in the same decision
level. Singh and Lou (2006) on the other hand, used bi-level
optimization as a basis for developing a hierarchical Pareto
optimization approach for EIP design in the presence of mul-
tiple cooperating decision-makers and conflicting objectives.
The optimal solution is found by initially identifying Pareto
optimal solutions by varying weights of the objective func-
tions for each subsystem and then finding the best solution
from this identified set of optimal solutions through multi-
criteria analysis. However, they did not attempt to rigorously
model the influence of the park initiator or authority in the
implementation of the inter-plant water networks.
Conflicts may further arise between the objectives of the
park initiator and its tenants. The initiator of EIPs may have
Fig. 1 – Decision-making hierarchy (adapted from Takama and Umeda, 1980).
the objective of improving the overall economic or environ-
mental performance of all of the participating industries
(Heeres et al., 2004) while individual industries focus only
on their individual goals. For the park initiator, the chal-
lenge is how to encourage its tenant companies to achieve
its desired objective through policies, regulations or economic
incentives, implicitly recognizing that each plant selfishly
seeks to optimize its own economic or environmental per-
formance. The tenant companies would then optimize based
on given policies and regulations. This situation may be mod-
eled as a bi-level decision-making optimization problem (Wen
and Hsu, 1991; Bialas and Karwan, 1984), which is based
on a static Stackelberg game with leader-follower strategy
(Stackelberg, 1952; Simaan and Cruz, 1973). The upper-level
decision-maker (leader) is the EIP initiator or park authority
and the tenant companies are the lower-level decision-makers
(followers). The basic principle of bi-level optimization is to
have the leader optimize his objective while recognizing that
the followers independently optimize their own objectives.
The leader thus tries to influence the followers through incen-
tives (or disincentives) so that their actions tend to optimize
his objective. Deterministic algorithms have been developed
to solve both linear (Bard, 1983; Ben-Ayed and Blair, 1990)
and non-linear bi-level optimization problems (Bard, 1988;
Edmunds and Bard, 1991).
Bi-level optimization has also been previously used for
related applications in process systems engineering, like sup-
ply chain planning (Ryu et al., 2004) and design of reliable
process networks (Takama and Umeda, 1980). Oftentimes, for
such problems, the leader’s and follower’s objectives are con-
flicting. At the same time uncertainties in their objectives
and constraints exist. However, a satisfactory (near-optimal or
“satisficing”) solution can be reached by providing tolerances
in the objective functions and constraints, and by defining
corresponding degrees of satisfaction through membership
functions to indicate the preference of the decision-makers
as is typical of decision-making in a fuzzy environment
(Bellman and Zadeh, 1970). For example, Shih et al. (1996),
Sinha (2003) and Arora and Gupta (2009) developed interactive
fuzzy mathematical programming to obtain the best compro-
 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40
Table 1 – Characteristics of water flows.
Plant i Water required (t/day) Quality of water (mg/l)
1 100 10
2 20 100
3 80 20
4 60 50
mise solution, which simultaneously satisfies the upper- and
lower-level objectives and constraints. All these techniques
are based on the upper-level decision-maker specifying tol-
erances for his objective and variables, and then allowing the
lower-level decision-makers to optimize their objective func-
tions, provided that these tolerances are met. The followers
then communicate their results to the leader, who modifies
his goals and control variables if the original tolerances are not
met. The process continues iteratively until a solution which
satisfies the goals of both leader and follower is reached. For
the application considered in this paper the decision hierarchy
is illustrated in Fig. 1 with the EIP authority as the upper-level
decision-maker having the objective of minimizing freshwater
consumption and the park tenants as the lower-level decision-
makers having individual objectives of minimizing cost.
The rest of this paper is organized as follows. Section
2 provides a brief description of the nature of the problem
to be addressed. Section 3 discusses the development and
application of a bi-level fuzzy optimization model through
a motivating example given two different scenarios. These
cases are then solved using the software Lingo 11.0 with global
optimizer for non-linear problems. Finally, conclusions as well
as potential extensions to the presented methodology are dis-
cussed in Section 4.
2. Problem statement
This paper considers the design of water exchange network
between plants which are co-located in the same industrial
park and are governed by regulations being implemented in
the park. Each plant requires water of certain flowrate and
quality to operate, and also discharges wastewater of known
flowrate and quality after operations. This is similar to the
generalized source–sink model used in the process integration
literature (El-Halwagi et al., 2003; Foo, 2008, 2009). However, no
attempt is made to analyze the internal water network within
each plant because it is assumed that the participating plants
have already optimized their individual networks. The partic-
ipating plants are treated as source and sink in the manner
of Keckler and Allen (1999). Furthermore, it is assumed that
the park authority intends to minimize the consumption of
freshwater in the industrial park by encouraging the recycling
or reuse of wastewater streams, while the participating plants
intend to meet their individual cost goals. The park authority
can influence the plants by charging fees for freshwater con-
sumption and wastewater discharge, or by subsidizing water
recycle and reuse since there are also associated costs for
recycling (including pumping and annualized capital cost for
constructing the network). The problem is considered as a bi-
level optimization problem wherein the park authority is the
upper-level decision-maker and the plants act in unison as the
lower-level decision-makers. It is assumed here that there is
perfect exchange of information between all the participants
such that the objectives and constraints are known.
33
Wastewater discharged (t/day) Quality of wastewater (mg/l)
100 100
20 250
50 80
100 200
3. A motivating example
In an eco-industrial park which contains several plants, it is
the objective of the EIP authority (upper-level decision-maker)
to minimize the freshwater consumption of its tenants. This
can be achieved by optimizing the design of water use and
reuse between the participating plants, which are assumed
to cooperate among themselves and thus act in unison as
a lower-level decision-maker. Note that industrial symbiosis
implicitly requires cooperative behavior of the participants
(Singh and Lou, 2006; Lim and Park, 2008). The author-
ity can influence the tenants by imposing disincentives in
the form of charges per unit of freshwater consumed and
for treatment of each unit of wastewater discharged, or
subsidies for water recycling efforts. The plants contained
within the eco-industrial park operate independently of each
other.
Each plant will then have its own fuzzy goal, which in
this case is the total cost incurred in consuming freshwater,
discharging wastewater and recycling water. The level of sat-
isfaction of each plant is dependent on exogenously defined
fuzzy goals or limits set by the plant management. The level
of satisfaction is characterized by a linear membership func-
tion consisting of upper and lower limits which correspond to
the least satisfactory and fully satisfactory levels, respectively.
These fuzzy goals may be set arbitrarily based on subjective
preferences (Zimmermann, 1978; Aviso et al., 2009) or deter-
mined through systematic techniques such as pinch analysis
(Foo, 2009). The exact manner of defining these limits is case-
specific, depending on the level of technical expertise available
in the companies involved.
Consider four plants in a hypothetical EIP, with the stream
characteristics consisting of (1) the required flowrate of water,
(2) required quality of water, (3) flowrate of wastewater gen-
erated and (4) quality of wastewater for each plant given in
Table 1. In order to minimize the consumption of freshwa-
ter, the wastewater generated from one plant can be reused
directly for other plants as long as quality requirements are
met. When water is reused between two different plants, there
is an associated lumped cost per ton of recycled water, which
includes pumping and annualized capital for constructing
the network. These costs are shown in Table 2. Furthermore,
each plant has fuzzy cost goals, which have been exogenously
Table 2 – Lumped cost for recycle streams between
plants.
Unit cost for Sink (j)
links ($/t) mij
1 2 3 4
1 0 1.00 2.00 1.50
2 1.00 0 1.00 5.00
Source (i)
3 2.00 1.00 0 1.00
4 1.50 5.00 1.00 0
34 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40

defined, expressed as maximum acceptable cost and desired

cost incurred per day.

3.1. The optimization model

3.1.1. Nomenclature

Constant parameters
Si is the available water flowrate in plant i
Dj is the required water flowrate in plant j
ci,out is the contaminant concentration exiting plant i Fig. 2 – Level of satisfaction based on fuzzy goals.
cj,in is the maximum allowable contaminant concentra-
tion entering plant j ing, etc. Furthermore, the EIP authority may provide some
bUi
maximum acceptable cost of plant i form of subsidy to encourage water recycling. The transport
bLi target cost plant i cost associated with the recycle streams is assumed to be
mij unit cost for recycling water from plant i to receiving shared equally between the supplying and receiving plants.
plant j Each plant intends to maximize the degree of satisfaction of
FWL lower limit for total freshwater consumed its fuzzy cost goal, defined by bLi and bU i
. If the cost incurred
FWU upper limit for total freshwater consumed by a plant is greater than its set maximum acceptable cost
PLW lower limit for unit cost of treating wastewater (bU
i
) then the degree of satisfaction is zero. Conversely, if the
PUW upper limit for unit cost of treating wastewater cost is lower than the desired cost (bLi ) identified, the plant has
PLF lower limit for unit cost of freshwater achieved its goal completely or a satisfaction of 1. However, if
PUF upper limit for unit cost of freshwater the cost falls between bLi and bU i
, the degree of satisfaction (i )
kL lower limit for subsidy rate will range from 0 to 1 and is increasing linearly as the cost
kU maximum acceptable subsidy rate approaches bLi . This behavior is shown in Fig. 2, and is given
by Eq. (6). Each plant will have an associated degree of satis-
Leader’s control variables faction, which have to be maximized simultaneously. The best
PW unit cost for treating wastewater compromise solution is obtained by maximizing the satisfac-
PF unit cost of freshwater tion level of the least satisfied participant, which is known as
k subsidy rate for recycle/reuse max–min aggregation (Zimmermann, 1978, 1983; Czogala and
FW leader’s degree of satisfaction for freshwater con- Zimmermann, 1986). This overall objective is given by Eq. (5),
sumption and it is subject to the follower’s constraints that are given in
k leader’s degree of satisfaction for subsidy rate Eqs. (6)–(11). Eq. (6) relates to the fuzzy cost goal constraints
identified by each plant while Eq. (7) ensures that the satisfac-
Follower’s control variables tion of the least satisfied participant is maximized. Finding the
rij is the flowrate of water coming from plant i going to optimal solution is also subject to water balance constraints
plant j (Eqs. (8) and (9)); water quality constraints, which ensure that
Fj freshwater flowrate entering plant j the quality of water entering a plant meets the purity require-
Wi volume of wastewater generated from plant i ment assuming that the freshwater used is “pure” or does not
i degree of satisfaction of plant i contain any significant amount of contaminant (Eq. (10)); and
DCj cost incurred by receiving plant j a topological constraint (Eq. (11)) which disallows the reuse
SCi cost incurred by source plant i of wastewater into the same plant. This final constraint is
TCi total cost incurred by plant i functioning as source imposed because each plant is already assumed to have pre-
and receiver viously optimized its internal water network. Note that the
model is non-linear due to the presence of bilinear terms. Fur-
The problem is formulated as a bi-level optimization prob- thermore, the basic model can be extended by adding ad hoc
lem with the EIP authority as the upper-level decision-maker or case-specific constraints.
(leader). The leader has the overall objective of minimizing A given plant may serve as source or receiver of recycled
freshwater consumption in the park (Eq. (1)), subject to the water. Note that the water inputs and outputs in each plant
follower’s objective of achieving their fuzzy cost goals (Eq. (5)). do not necessarily have to be equal. The wastewater gener-
The EIP authority can influence its tenants by controlling the ated can be less than the amount of water entering the plant
unit cost for purchasing freshwater (PF ), unit cost for treat- due to evaporative water losses and if water ends up as part of
ing wastewater (PW ) and by subsidizing a fraction of the costs the product being produced. Conversely, for industries which
incurred for recycling (k). These are allowed to vary between generate water due to certain chemical processes, the exiting
feasible lower and upper limits as given in Eqs. (2)–(4). It is wastewater streams will be more than the amount of water
interesting to note that the leader’s control variables do not which entered it. It must be noted that the cost incurred
appear in his objective function. for recycling is divided equally between the source and the
The cost incurred by each plant, given in Eqs. (12)–(14), con- receiver of the recycle stream. As source, the costs incurred by
sists of three components: (1) the cost of freshwater used by a plant is given in Eq. (12) and consists of the cost associated
the plant, (2) the cost for treating wastewater generated by the with the discharge of wastewater and half of the cost incurred
plant and (3) the lumped cost for transporting/receiving recy- for recycling water to another plant. On the other hand, as
cled water. Note that this lumped cost includes annualized receiver, the incurred cost consists of the cost for purchasing
capital for the pipeline and other fluid handling equipment freshwater and half of the cost associated with receiving the
(i.e., pumps, valves and flowmeters), energy costs for pump- recycled water (Eq. (13)). The total cost incurred by each plant
 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40 35

Table 3 – Results when leader’s objective function is optimized.

Plant (i) Original freshwater flowrate (t/day) Optimized freshwater flowrate (t/day) % Reduction in freshwater
consumed

1 100.00 87.50 12.50

2 20.00 0.00 100.00
3 80.00 64.00 20.00
4 60.00 22.50 62.50

Total 260.00 174.00 33.08


as both source and receiver is given by Eq. (14). DCj = Fj PF + 0.5(1 − k) rij mij ∀j (13)
Leader’s objective:
i

min Fj (1)
TCi = SCi + DCj ∀i = j (14)
j

Subject to: For this case study, if no recycling is done, the entire system
consumes a total of 260.00 t/day of freshwater and generates
PLW ≤ PW ≤ PU
W (2) 270.00 t/day of wastewater. If the leader were in full control of
the water reuse or recycle decisions of the four plants, a deci-
PLF ≤ PF ≤ PU (3) sion can be imposed such that the entire system can reduce
F
its freshwater requirement to 174.00 t/day, which is equiva-
kL ≤ k ≤ kU (4) lent to a reduction of 33.00%. This optimal solution can be
found by solving the conventional linear programming model
Followers’ objective: for source–sink water allocation problems (El-Halwagi et al.,
2003). The result is shown in Table 3 and the corresponding
optimized network is illustrated in Fig. 3. In this network,
max  (5)
water is recycled from Plant 1 to Plants 2 and 3, and from
Plant 3 to Plants 1 and 4. Furthermore, the water requirement
Subject to:
of Plant 2 is completely supplied by Plant 1. In the optimized
Satisfaction of each plant:
network, Plant 2 achieves the highest percentage reduction in
⎧ flowrate of freshwater consumed while Plant 1 has the lowest
⎪ 0 if TCi > bU
⎪
⎨
i reduction corresponding to 12.50%. However, the participat-
TCi − bLi ing plants may have other concerns in addition to reducing
i = 1− if bLi ≤ TCi ≤ bU (6)
⎪
⎪ bU − bLi i
the consumption of freshwater, and they may not necessarily
⎩ i
1 if TCi < bLi agree with the solution desired by the leader. In practice, the
plants may be more concerned with cost savings. Here it is
 ≤ i ∀i (7) assumed that fuzzy cost reduction goals are specified by the
management of each industrial plant. In this case, the park
Water balance at source: authority can only encourage recycling, by charging fees for
freshwater consumption and wastewater generation and/or

rij + Wi = Si ∀i (8) providing subsidies for charges incurred from recycling. It is
j then of interest to explore the effect of varying the freshwater
and wastewater treatment costs (Scenario 1) and the effect
Water balance at sink: of subsidies for costs incurred on recycling (Scenario 2) on
the flowrate of the total amount of freshwater consumed by

rij + Fj = Dj ∀j (9) the system while the participants are allowed to maximize
i
their satisfaction. The non-linear optimization model is solved
using Lingo 11.0 with global solver.
Quality constraints at sink (assuming that freshwater is free
of any contaminant):


rij ci,out ≤ Dj cj,in ∀j (10)
i

Topological constraint:

rij = 0 ∀i = j (11)

Cost for each plant:


SCi = Wi PW + 0.5(1 − k) rij mij ∀i (12) Fig. 3 – Optimal network for minimum total freshwater
j consumption (indicated flows in t/day).
36 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40

Table 4 – Fuzzy cost goals of individual plants for

Scenario 1.
Plants i Fuzzy cost goals in $/day

Desired cost (bLi ) Maximum acceptable

cost (bU
i
)

1 40 800
2 200 500
3 200 800
4 100 900
Fig. 5 – Optimized network with freshwater cost at $1.00/t
and no fees for wastewater treatment (indicated flows in
t/day).
3.2. Scenario 1

Scenario 1 considers the effect of varying the freshwater and

wastewater treatment costs on total freshwater consumption.
Both costs are varied between 0 and $2.00/t. No subsidies are
given for costs incurred in recycling streams, which is equiva-
lent to fixing k to zero. The fuzzy cost goals of each plant are as
indicated in Table 4. This scenario can be solved by using a grid
of different values of PW and PF and solving the lower-level LP
repeatedly at different combinations of fees. The results are
illustrated in Fig. 4.
When no costs are associated with freshwater consump-
tion and wastewater treatment and the tenants are allowed
to maximize their individual goals, the flowrate of freshwater
consumed by the system is 260.00 t/day and the wastewa-
ter generated is 270.00 t/day. This indicates that no form of
recycling was done between the participants and this does
not at all address the objective of the park authority (leader).
Furthermore, it does not provide the plants with any incen-
tive for resource conservation. If only freshwater costs were
increased, the results show that the flowrate of freshwater
consumed does not monotonically decrease. At a freshwater
cost of $1.00/t with no costs associated to wastewater treat-
ment, the freshwater consumed by the system was reduced
by 25.77% to 193.00 t/day. Plants 2 and 3 were able to achieve
their cost targets completely, while Plants 1 and 4 had a level of
satisfaction of 0.92. The result is summarized in Table 5 while
the optimized network is illustrated in Fig. 5. For this network
Fig. 6 – Optimized network with freshwater cost at $1.60/t
and no fees for wastewater treatment (indicated flows in
t/day).
wastewater from Plant 1 was not recycled, wastewater from
Plant 3 was completely recycled while those from Plants 2 and
4 were partially recycled. However, when freshwater cost was
increased between $1.60 and $2.00/t, the freshwater consump-
tion actually increased to 209.10 t/day. This network is shown
in Fig. 6, which shows that wastewater from Plant 1 is not
recycled while those generated from Plants 2 to 4 were par-
tially reused. The water requirement for Plant 2 is satisfied
by recycling streams from Plants 3 and 4. Similarly, increas-
ing the treatment cost of water while maintaining freshwater
cost at $0/t does not monotonically decrease the freshwater
consumed by the system. Increasing the wastewater treat-
ment cost to $1.50/t reduces the freshwater to 190.00 t/day
but increasing it again to $2.00/t increases the freshwater

Fig. 4 – Effect of freshwater consumption and wastewater treatment cost on total freshwater consumed in EIP.
 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40 37

Table 5 – Results for freshwater cost of $1.00/t and wastewater treatment cost of $0/t.
Plant (i) Optimized cost Level of Original freshwater Optimized freshwater % Reduction in
($/day) satisfaction (i ) flowrate (t/day) flowrate (t/day) freshwater
consumption

1 98.00 0.92 100.00 96.00 4.00

2 23.25 1.00 20.00 2.50 87.50
3 101.00 1.00 80.00 72.00 10.00
4 57.75 0.92 60.00 22.50 62.50

Overall 280.00 260.00 193.00 25.77

Table 6 – Results for freshwater cost of $0.60 and wastewater treatment cost of $0.50.
Plant (i) Cost based on Original freshwater Optimized % Reduction in
optimization flowrate (t/day) freshwater freshwater
($/day) flowrate (t/day) consumption

1 109.60 0.91 100.00 96.00 4.00

2 25.00 1.00 20.00 0.00 100.00
3 72.20 1.00 80.00 72.00 10.00
4 87.25 1.00 60.00 22.50 62.50

Overall 294.05 260.00 190.50 26.73

and 3 were able to achieve their cost goals (i = 1.00), Plant 4
achieves a level of satisfaction of 0.92 and Plant 1 a satisfaction
of 0.78. The result is summarized in Table 7 and the optimized
network for this combination is illustrated in Fig. 8. Increasing
both costs further no longer has an effect on the total amount
of freshwater consumed by the system. It is interesting to note
that the increase in freshwater cost or wastewater cost does
not necessarily result in a monotonic reduction of freshwater
consumption of the system as is evident in Fig. 4. Further-
more, it is then possible to identify the appropriate fees in
Fig. 7 – Optimized network for freshwater cost of $0.60/t
order to achieve the goals of the park authority and its tenants
and wastewater treatment cost of $0.50/t (indicated flows in
simultaneously.
t/day).

3.3. Scenario 2
consumption to 198.42 t/day. Furthermore, it is interesting to
note the presence of “pockets” or depressions occurring at
This scenario considers a third intervention by the EIP leader.
certain combinations of charging fees as seen in Fig. 4. One
As with Scenario 1, the leader’s objective is to minimize the
such point occurs when the freshwater cost is $0.60/t and
total freshwater consumption in the EIP and the objective of its
the wastewater treatment cost is $0.50/t. For this combina-
followers is to meet identified fuzzy cost targets. However, in
tion, the optimum results in the consumption of 190.50 t/day
addition to freshwater and wastewater treatment charges, the
of freshwater and the generation of 200.50 t/day of wastew-
second scenario considers that the EIP authority is willing to
ater; however, deviation away from this combination of fees
subsidize a fraction (k) of the costs incurred for recycling water.
will result in much higher water consumption and waste gen-
It is assumed that this subsidy applies uniformly to all recy-
eration. All wastewater streams are recycled either partially
cling activities within the EIP. The EIP authority also defines its
or completely. Wastewater coming from Plant 3 for example
tolerances for subsidy given by kU (maximum acceptable sub-
is completely utilized to satisfy the water requirements for
sidy fraction) and kL (minimum subsidy fraction). Obviously,
Plants 2 and 4. All plants were able to reduce their freshwater
it is in the EIP authority’s interest to keep this subsidy at a
requirement by using recycle water. The water requirement of
minimum. The leader also provides tolerances for acceptable
Plant 2 is completely satisfied by recycle water coming from
Plants 3 and 4. Furthermore, Plants 2–4 were able to achieve
full satisfaction of their cost goals while Plant 1 has a level of
satisfaction of 0.91. The results are summarized in Table 6 and
the network illustrated in Fig. 7.
For the different combinations of freshwater and wastew-
ater treatment cost, the minimum amount of freshwater
obtained was 181.50 t/day which can be achieved if the fresh-
water cost is $1.30/t while the waste treatment cost is $1.00/t.
This corresponds to 30.19% reduction in freshwater consump-
tion. Wastewater from Plant 1 is recycled to Plants 2–4, while
wastewater from Plant 3 is recycled to Plant 1. The water Fig. 8 – Optimized network for freshwater cost of $1.30/t
requirement of Plant 2 is satisfied by recycle stream from Plant and wastewater treatment cost of $1.00/t (indicated flows in
1 and thus no longer needs freshwater. Furthermore, Plants 2 t/day).
38 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40

Table 7 – Results for freshwater cost of $1.30/t and wastewater treatment cost of $1.00/t.
Plant (i) Cost based on Level of Original Optimized % Reduction in
optimization satisfaction (␭i ) freshwater freshwater freshwater
($/day) flowrate (t/day) flowrate (t/day) consumption

1 208.75 0.78 100.00 87.50 12.50

2 30.00 1.00 20.00 0.00 100.00
3 149.20 1.00 80.00 64.00 20.00
4 161.50 0.92 60.00 30.00 50.00

Overall 549.45 260.00 181.50 30.19

values of its objective function given by FWU (upper limit) and leader with respect to its objective function. Eq. (16) refers to
FWL (lower limit). the satisfaction of minimizing freshwater consumption. Eq.
In order to find a solution to a bi-level problem such as this, (17) pertains to the acceptability of subsidy rates as defined by
it is essential that some form of coordination is conducted the EIP authority while Eqs. (18) and (19) maximizes the level of
between the two levels to reach a compromise solution. The satisfaction of the leader in its objective function and control
EIP tenants are subject to the EIP authority’s regulations. Thus, variable (k), respectively.
it is reasonable that the lower-level decision-maker consid-
ers the objective of the upper-level decision-maker in finding
a solution. Otherwise the lower-level proposed solution will
not be accepted by the upper-level decision-maker (Shih et Additional constraints:
al., 1996). The follower will then have to maximize his objec-
tive function subject to the tolerances set by the leader. If the 
leader is not satisfied with the solution identified by the fol- FWL ≤ Fj ≤ FWU (15)
lower, the leader must provide new tolerances for its objective j
function and control variables in order to attain a compromise
solution. These adjustments can be made interactively until
a “satisficing” solution is reached (Shih et al., 1996). The opti-
⎧ 
⎪
⎪ 0 if Fj > FWU
mal solution is found when the levels of satisfaction of both ⎪
⎪
⎪
⎪ j
leader and follower are maximized (Shih et al., 1996; Sinha, ⎪
⎪ 
⎨ F − FWL
j j

2003; Arora and Gupta, 2009). Fig. 9 presents the procedure for 1− if FWL ≤ Fj ≤ FWU
FW = U L (16)
identifying the optimal solution. The objective function for ⎪
⎪ FW − FW
⎪
⎪ 
j
Scenario 2 is similar to that given by Eq. (5) with additional ⎪
⎪
⎪
⎪ Fj < FWL
constraints (Eqs. (15)–(19)) to account for the tolerances iden- ⎩1 if
tified by the leader. Eq. (15) refers to the tolerances set by the j

Fig. 9 – Procedure for identifying optimal solution in bi-level optimization problem (adapted from Shih et al., 1996).
 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40 39

subsidize 14.80% of costs incurred for recycling water. Further-

Table 8 – Fuzzy goals for Scenario 2.
more, the optimum results in the consumption of 192.09 t/day
Parameter Lower Upper of freshwater for the entire system (FW = 0.30). On the other
bound bound
hand, Plant 2 was able to achieve a level of satisfaction of 1
Leader Total freshwater 174.00 200.00 as the costs incurred are actually below the lower limit of its
flowrate (t/day) cost target while Plants 1, 3 and 4 achieved satisfaction levels
Freshwater cost ($/t) 0.50 2.00 of 0.63, 0.32 and 0.26, respectively. The results are summa-
Wastewater treatment 0.50 2.00
rized in Table 9. Furthermore, the optimum solution gives the
cost ($/t)
Subsidy fraction 0.00 0.20
network shown in Fig. 10. The figure shows that the freshwa-
ter requirements of the plants have been reduced and that
Plant 1 40.00 200.00
all the plants are participating in recycling. The wastewater
Plant 2 100.00 400.00
Cost goal ($/day) generated by Plant 3 is completely utilized by Plants 2 and 4,
Plant 3 20.00 80.00
Plant 4 10.00 100.00 eliminating the discharge of wastewater for treatment. The
result obtained lies within the tolerances identified by both
the leader and the follower.
Table 9 – Results for Scenario 2.
Parameter Result  4. Conclusions
Leader Total freshwater flowrate (t/day) 192.09 0.30
Freshwater cost ($/t) 0.50 N/A The establishment of water exchange networks between
Wastewater treatment cost ($/t) 0.50 N/A plants in an eco-industrial park requires the cooperation
Subsidy fraction 0.15 0.26 of several decision-makers (e.g. participating plants, park
Plant 1 99.27 0.63 authority) who may have conflicting objectives. Moreover,
Plant 2 18.34 1.00 some decision-makers may exhibit dominance in terms of
Cost ($/day)
Plant 3 60.71 0.32 being able to influence the objectives and choices of other
Plant 4 76.63 0.26 decision-makers, a case which is not considered in conven-
tional single level optimization models. Thus this scenario
⎧ may be modeled as a bi-level optimization problem, wherein
⎪
⎪ 0 if k > kU
⎨ the EIP authority is the upper-level decision-maker and the
k − kL
k = 1− if kL ≤ k ≤ kU (17) tenant companies are the lower-level decision-makers. A bi-
⎪
⎪ kU − kL
⎩ level fuzzy optimization model has been developed in order
1 if k < kL
to explore the effect of decentralized decision-making in opti-
mizing the water exchange networks in an eco-industrial
 ≤ FW (18)
park. The park authority is considered as the upper-level
decision-maker with the objective of minimizing total fresh-
 ≤ k (19)
water consumption and wastewater generation, and the EIP
tenant companies are the lower-level decision-makers who
As in the previous scenario, if the leader were in full control,
optimize among themselves by maximizing their levels of sat-
the overall system can reduce the total water consumption
isfaction of their predefined fuzzy cost goals. The authority
from 260.00 to 174.00 t/day. However, in consideration of the
influences the plants through incentives, such as fresh water
individual goals of its tenants, suppose that the EIP author-
and wastewater fees or subsidies for reuse or recycling. Two
ity is willing to facilitate a recycle network which will result
hypothetical case studies are used to explore the effects of
in freshwater consumption between 174.00 and 200.00 t/day.
these incentives on total system water requirements. Results
To achieve this, the EIP authority is considering charging
show that increasing the water supply or waste treatment
fees for freshwater consumption and wastewater treatment
fees does not necessarily result in the monotonic reduction
between $0.50 and $2.00/t, and subsidizing up to 20.00% of
of freshwater consumption. It is possible to identify the right
costs incurred for recycling water. The plants on the other
proportion of water supply and sewage treatment fees in
hand have identified their cost targets. The fuzzy goals iden-
order to achieve the goals of the park authority and its ten-
tified for different parameters are indicated in Table 8.
ants simultaneously, without necessarily imposing exorbitant
Optimization results in the lowest level of satisfaction of
rates. Furthermore, it is not necessary to completely subsidize
0.26, corresponding to the parameter on subsidy rate (k ) and
costs incurred for recycling to minimize freshwater consump-
the cost associated with Plant 4 (4 ). The EIP authority must
tion.
This approach can further be used for the development of
exchange networks for other by-products such as hydrogen
in petrochemical complexes and waste heat. System bound-
aries may also be extended to consider the conservation of
resources across supply chains. Furthermore, extensions for
handling uncertainties such as changes in policies, number of
participating plants and changes in stream characteristics can
also be explored.

Acknowledgment

Fig. 10 – Optimized network for Scenario 2 (indicated flows The authors are grateful for financial support through the
in t/day). Graduate Fellowship Program of De La Salle University.
40 Process Safety and Environmental Protection 8 8 ( 2 0 1 0 ) 31–40

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