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Optimal water allocation based on satisfaction

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DOI: 10.1504/IJW.2013.056683

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Int. J. Water, Vol. 7, No. 4, 2013 363

Optimal water allocation model based on satisfaction

and economic benefits

Leena Divakar* and Mukand Singh Babel

Water Engineering and Management,
School of Engineering and Technology,
Asian Institute of Technology,
Klong Luang, Pathumthani 12120, Thailand
E-mail: leenadivakar@gmail.com
E-mail: msbabel@ait.asia
*Corresponding author

Sylvain R. Perret
CIRAD, UMR G-EAU,
Avenue Agropolis, 34398, Montpellier, France
E-mail: sylvain@ait.ac.th

Ashim Das Gupta

Water Engineering and Management,
School of Engineering and Technology,
Asian Institute of Technology,
Klong Luang, Pathumthani 12120, Thailand
E-mail: adasgupta.05@gmail.com

Abstract: The study develops an integrated model for allocation of limited

available water among competing user sectors. The model comprises a
reservoir operation model (ROM) and a water allocation model (WAM). ROM
determines the available water, which is used as an input to WAM. Two single
and one multi-objective functions are included in the water allocation model.
The first single objective function (OF1) maximises the satisfaction level in
meeting the sectoral water demands and the second single objective function
(OF2) maximises the net economic benefits from different use sectors. The
multi-objective function (OF12) is a combination of the first two objectives. An
equity concept with the fuzzy (minimum operator) approach is introduced to
distribute stress equally among the sectors. The developed model is applied to
the Chao Phraya basin in Thailand. The results indicate that the WAM can
improve satisfaction levels and net economic returns compared to the current
water allocation practices.

Keywords: hydro-economic model; water allocation; optimal water allocation;

maximisation of satisfaction; maximisation of economic benefit; net economic
return; NER; Chao Phraya River basin; Thailand.

Reference to this paper should be made as follows: Divakar, L., Babel, M.S.,
Perret, S.R. and Gupta, A.D. (2013) ‘Optimal water allocation model based on
satisfaction and economic benefits’, Int. J. Water, Vol. 7, No. 4, pp.363–381.

Copyright © 2013 Inderscience Enterprises Ltd.

364 L. Divakar et al.

Biographical notes: Leena Divakar graduated in May 2011with Doctoral in

Water Engineering and Management, AIT, Thailand. Her dissertation is based
on development of a water allocation model and its application to Chao Phraya
River basin in Thailand. She looks forward to publishing her work in peer
reviewed journals.

Mukand Singh Babel is Associate Professor and Coordinator of Water

Engineering Management programme in AIT, Thailand. He specialises in
hydrologic and water resources modelling as applied to integrated water
resources management. His interest areas are very much diverse and include
watershed modelling and management; water resources allocation and
management; water resources and socio-economic development; water supply
system and management; and climate change on hydrology and water
resources. Research related to groundwater resources management and drought
analysis, forecasting and management are also of interest.

Sylvain R. Perret is a Visiting Professor in the Water Engineering and

Management programme, AIT, Thailand. He is also associated with CIRAD,
UMR G-EAU, Montpellier, France. His research interests includes
water resource management, water institutions and governance, water
socioeconomics and economics, rural water uses, production and economics in
irrigation, sustainability in rural development, action-research, dynamic and
integrated modelling.

Ashim Das Gupta’s research involves water resources development and

management, in particular on topics related to integrated water resources
management, groundwater resources evaluation, modelling and management of
water resources systems and environmental impact assessment of water
resources projects. In addition to teaching and research, he has been actively
involved in different sponsored research projects dealing with hydrology and
water resources.

1 Introduction

Water scarcity, which gives rise to constant tension between competing users, is
worsened by population growth, urbanisation, increase in per-capita consumption and
climate change. These represent an additional burden on society. As demands for
freshwater grow, estimates of economic value of water are useful in the context of
optimal allocation of water between and among water-using purposes and sectors.
Sharing the limited supply of water among the different users is the major issue of water
management faced by the decision makers. The determination of how much, and on what
basis, water should be allocated to each sector requires optimisation of resources and
benefits.
Earlier attempts to link hydrology and economics for water allocation were to
determine the physical response to changes in the inflow, diversion and pumping and to
represent the responses to variations in supply and cost (Young and Bredehoeft, 1972). In
the following years a study, Daubert and Young (1981) has suggested the need for altered
water allocation policies to allocate water efficiently during periods of relatively low
flows by measuring the value of instream recreation. A water allocation model (WAM)
was developed for the Aral Sea basin in Central Asia to evaluate the efficiency and
 Optimal water allocation model based on satisfaction and economic benefits 365

sustainability of water use and explore annual allocations of water in the Amudarya River
basin (McKinney and Cai, 1996).
In the past decade there has been further emphasis on integration, resorting to
advanced modelling or optimisation approaches, and with attempts towards direct support
to policy- and decision-making. An integrated economic-hydrologic river basin policy
simulation model, was applied to Brantas Basin in East Java, Indonesia which was
intended to assist water managers in designing and evaluating strategies to improve the
physical and economic productivity of water (Rodgers and Zaafrano, 2002). Another
model to reflect the interrelationships between essential hydrologic, agronomic, and
economic components and to explore both economic and environmental consequences of
various policy choices was applied to Syr Darya River basin in Central Asia (Cai et al.,
2003). Following which an aggregate, integrated economic-hydrologic model for the
Mekong River basin to analyse water allocation and use under alternate policy scenarios
(Ringler et al., 2004). A study was conducted by developing ten daily operating rules for
optimal operation of Hirakud reservoir on Mahanadi River in India (Umamahesh and
Chandramouli, 2004). The results however indicated that though the reliability of
meeting the demands of the reservoir and the resilience are low the overall performance
in terms of the level of satisfaction of attaining the goals of the reservoir is better. A
simple interactive and integrated WAM was developed (Babel et al., 2005) to assist the
planners and decision makers in optimal allocation of limited water from a reservoir to
different user sectors. Economic management concepts and performance indicators
combined with an engineering-level of understanding of a hydrologic system provides
results more directly relevant for water management decisions and policies (Heinz et al.,
2007).
The present study addresses the improved water management through efficient
allocation as a solution to combat the water crisis during the dry season. An optimal
WAM with objectives of maximising satisfaction level in meeting the demand and
maximising economic benefits along with fairness in allocation to different sectors is
developed. The study also reviews the existing water allocation practices and evaluates
the applicability of the model in the Chao Phraya River basin, Thailand.

2 Study area: the Chao Phraya River basin

The Chao Phraya River basin, often called the lifeline of Thailand, covers almost
one-third of country’s geographical area and is divided into upper, middle and lower
basin (delta) as shown in Figure 1. The basin has a catchment area of about 157,925 km2.
The main tributaries, Ping, Wang, Yom, and Nan tributaries unite at Nakhon Sawan
(junction C.2) to form the main Chao Phraya River. The Chao Phraya bifurcates to
become the Tha Chin River just north of Chainat province. A diversion dam, called the
Chao Phraya, also known as Chainat dam is constructed on the Chao Phraya River to
divert water to different uses. Sakae Krang a small sub basin on the north of Tha Chin
and Pasak on the southeastern part of Chao Phraya contributes its flow into the basin.
Bhumipol on the Ping river and Sirikit on the Nan river are the two largest dams
constructed in 1964 and 1974, with an effective storage capacity of 9,662 and
6,660 Mm3, respectively.
366 L. Divakar et al.

Figure 1 Location map of the Chao Phraya River basin (see online version for colours)

With the population of 24 millions in the whole basin, the per capita water availability in
2006 was only 1,378 m3, which is less than the average of 3,242.6 m3 (WRI, 2007) for
the whole country. Since the population is mainly concentrated in Bangkok and its
vicinity, the per capita water availability of the Chao Phraya main stream is only 145 m3.
These records clearly indicate that the Chao Phraya basin is a water scarce basin and the
limited available water (AW) must be managed efficiently for sustainable development.
The Royal Irrigation Department (RID) is responsible for irrigation development and
management in Thailand. The Electricity Generating Authority of Thailand (EGAT)
manages the hydropower generation at the two major hydropower plants with installed
capacity of 720.6 MW at Bhumipol and 500 MW at Sirikit. Since the water released from
the reservoir passes through the turbines, the hydropower sector is considered as a
non-competing sector in this study. The study considers the demand from the
Metropolitan Waterworks Authority (MWA) and the Provincial Waterworks Authority
(PWA), which are the two agencies that provide nationwide potable and industrial supply
of water. The water supply to the residences and to the government office buildings is
considered as the domestic water use in the study. The MWA engages in production and
distribution of potable water in the Bangkok metropolitan regions, consisting of three
provinces namely Bangkok metropolis, Nonthaburi and Samutprakan. The PWA on the
other hand is responsible for water source development, conveyance, pumping, treatment,
storage, and distribution facilities from all urban and rural communities in the provinces.
 Optimal water allocation model based on satisfaction and economic benefits 367

The Nakhon Sawan region and Saraburi region as classified by PWA are considered for
the study.
The saline intrusion from the Gulf of Thailand can extend up to 175 km upstream,
and there is a requirement of water to keep the seawater intrusion away in the
Chao Phraya main river. As per the norm set by the RID a minimum flow of 350 Mm3
in the dry season (January to June) is a requirement in the lower delta region of the
Chao Phraya river to repel saline intrusion (Molle et al., 2001). However, a total of
181 Mm3 per month is set as minimum standard amount to be released from the Chao
Phraya dam to the river mouth for flushing salinity, navigation and for pumping by
MWA.

3 Water allocation model

An integration of reservoir operation model (ROM) and a WAM comprise the developed
WAM [adapted from Babel et al. (2005)] and is represented in Figure 2. HEC-ResSim,
developed by USACE (2003), is used as the ROM to determine the AW which is used as
input to the WAM. The methodology mainly deals with allocation of water based on the
defined objective function (OF). The WAM considers two single OFs and one multi-OF.
The first single objective function (OF1) allocates water to maximise the satisfaction level
comprising equity among the sectors and the second single objective function (OF2)
allocates water to maximise the net economic returns (NERs) of water use by different
sectors. The multi-objective function (OF12) considers both OF1 and OF2. The normal
water demand (Dnor) is the demand of a sector, which may or may not be met whereas the
minimum demand (Dmin) is the minimum amount of water required by a sector. The
normal demand is used as an input in the ROM and to calculate the NERs from individual
sectors.
The integrated WAM distributes water to the competing sectors depending on the
availability of water and the objective considered. If the AW is less than the total
minimum demand, then the allocation is made either based on equal supply (equity) or
priority-based supply or stressed supply. If the AW is greater than the total minimum
demand but less than the normal demand, the model allocates water according to the
either one of the two single OFs, OF1 and OF2 or multi-OF, OF12. The optimisation of
water allocation is based on linear programming and in case of multi-OF, the model
considers two optimisation techniques: simultaneous compromise constraint (SICCON)
technique (ST) and weighting technique as detailed in Babel et al. (2005).

3.1 Model components

The model consists of three components: the hydrologic component which deals with the
water balance in the river system; the equity component which deals with the fairness in
allocation by distributing the stress equally to different users; and the economic
component which includes the estimation of net economic benefits from different water
uses.
368 L. Divakar et al.

Figure 2 Schematic of WAM

Source: Adapted from Babel et al. (2005)

3.2 Concept of weights

In practice, determination of weights is usually done by a group of decision makers
and/or experts. In this context, a ranking technique is used to determine the weights given
to each objective. Each decision maker is asked to place numerical value next to each
objective, indicating by 1.0 the most valuable, by 2.0 the next most valuable and so on.
The ranks are then converted into scores. For k objectives, rank 1 becomes (k – 1), rank 2
becomes (k – 2) and so on until the rank is 0. Accordingly, the highest rank objective gets
the highest score and the lowest rank objective gets the least score in the analysis. These
scores are then converted to weights by the following relationship:
nd

∑e
j =1
mj

wm = k nd
(1)
∑∑ e
m =1 j =1
mj
 Optimal water allocation model based on satisfaction and economic benefits 369

for m = 1, 2, 3,………,k, where

emj the converted scores of the mth objective given by the jth judge
nd the number of judges in the group.

3.3 Objective function

As stated earlier, WAM considers two single OFs (OF1 and OF2) and a multi-OF (OF12).
These OFs are discussed as below:

3.3.1 Maximisation of the minimum satisfaction level (OF1)

The concept of fuzzy minimum operator in the linear programming introduces the
potential to incorporate the uncertainty involved in the objective and variable demands
and is developed to maximise the satisfaction of water allocated to different sectors. It
considers equitable distribution of stress and is fairly easy to explain and comprehend. A
minimum value of the satisfaction level of a sector, which is a function of the water
supplied (Si) and the normal water demand (Dnor) is determined. The OF is the
maximisation of the minimum satisfaction level μ.

OF1 = μi where i = 1, 2, 3,… , n (2)

and

μi = Min ( Si Dnor i )

where
OF1 first OF (maximisation of satisfaction level)
Si water allocated to sector i (m3)
Dnor I normal or calculated water demand of sector i (m3)
n number of water demand sectors.
The value of OF1 lies in between 0 to 1.

3.3.2 Maximisation of net economic benefit (OF2)

Maximisation of net economic benefit is defined as the ratio of the total economic value
(summation of the product of water allocated and the economic return of each sector) to
the maximum achievable total economic value (product of total AW and the maximum
NER from the sectors considered). The OF is represented as,

⎡ n
⎤
⎢ ∑ Si * Pi ⎥
OF2 = ⎢⎢ i =1 ⎥
⎥ (3)
⎣ AW(total ) * Pmax ⎦
370 L. Divakar et al.

where
OF2 second OF (maximisation of NER)
Pi NER per unit volume of water from sector i (US$/m3)
AW available water (m3)
Pmax maximum NER among the sectors considered (US$/m3).

3.3.3 Maximisation of the minimum satisfaction level and net economic benefit
(OF12)
This OF involves maximisation of the above two single objectives which are combined
(each of which are multiplied by a weight to reflect their importance) and a sum of
deviational variables are deducted to form a multi-OF as,
⎡ n
⎤
⎡ ⎛ S ⎞⎤
⎢ ∑
⎢ i =1
Si * Pi ⎥
⎥
OF12 = w1 * ⎢ Min ⎜ i ⎟ ⎥ + w2 * ⎢ AW ⎥ − ⎣⎡σ12 + σ12 ⎦⎤
− +
(4)
⎣ ⎝ Dnor i ⎠⎦ ⎣ ( total ) * Pmax ⎦
where
OF12 maximisation of satisfaction and NER together
w1 weight given to the first objective (0 < w1 < 1)
w2 weight given to the second objective (0 < w2 < 1)
+
σ12 positive deviation from the supposed to be ‘zero value’ of the compromise
constraint developed between objectives OF1 and OF2
−
σ12 negative deviation from the supposed to be ‘zero value’ of the compromise
constraint developed between objectives OF1 and OF2.

3.3.4 Constraints
The first four constraints [equations (4) to (7)] are developed for all three OFs.
A fifth [equation (8)] additional compromise constraint developed between the
first two objective functions is introduced for solving the multi-OF by ST. A
compromise-constraint forces the objectives to be an equal weighted difference from the
individual optimal solution and is added to find a compromise solution for any two
objectives. The different constraints for the optimisation are presented below.
1 water availability constraint:
n

∑S
i =1
i ≤ AW (5)

2 water demand constraint:

Dnor i ≥ Si ≥ Dmin i (6)
 Optimal water allocation model based on satisfaction and economic benefits 371

where
Dnor i normal or estimated water demand by sector i
Dmin i minimum demand by sector i
3 water supply constraint:
n n

∑S ≤ ∑D
i =1
i
i =1
nor i (7)

4 non-negativity constraints:
Si ≥ 0, Dnor i ≥ 0, Dmin i ≥ 0 (8)

5 compromise constraint:
⎡ n
⎤
⎡ ⎛ S ⎞⎤
⎢ ∑ Si * Pi ⎥
w1 * ⎢ Min ⎜ i − OF1 ⎟ ⎥ − w2 * ⎢⎢ i =1 − OF2 ⎥⎥ + ⎣⎡σ12
−
− σ12
+
⎦⎤ = 0. (9)
⎣ ⎝ Dnor i ⎠⎦ ⎣ AW(total ) * Pmax ⎦

4 NER to different water uses

4.1 NER to water use in agriculture sector

The net return to irrigation water in agriculture sector is computed by residual imputation
method. The total cost of production is subtracted from the total benefit from the crop
production and then divided by the monthly water use. This is then multiplied by the ratio
of monthly water use to the total annual water use, in order to obtain the monthly NER
per volume of water. This is expressed in equation (9).
NERagr =
⎡ ⎧ ( A * Y * P)agdm, cp ⎫ ⎤
⎢⎪ ⎪ ⎥
⎢ ⎪ − A * ( F + M + L + O)agdm, cp ⎪ ⎥
⎢⎪ m ⎪⎪ m ⎥ (10)
n
⎢ ⎪⎨ − ws * ∑ MW (agdm, m) ⎬ ∑ MW (m, cp ) ⎥
⎢⎪ ⎥
∑ ⎢⎪
1
m
⎪*
⎪
1
n ⎥
1 ⎢⎪
⎢⎪ ∑ MW (agdm, m) ⎪
⎭⎪
∑ MW (m, cp ) ⎥
⎥
⎣⎩ 1 1 ⎦
where
NERagr net benefit from agriculture (US$/m3)
cp crop
agdm agriculture demand site
A(agdm, cp) area under agriculture for the crop across demand sites (ha)
Yactual(agdm, cp) actual yield from agriculture for the specific crop (mt/ha)
372 L. Divakar et al.

F(agdm, cp fertiliser input cost by demand site and crop (US$/ha)

M(agdm, cp) machinery cost by demand site and crop (US$/ha)
L(agdm, cp) labour cost by demand site and crop (US$/ha)
O(agdm, cp) other production cost by demand site and crop (US$/ha)
P(cp) crop price (US$/mt)
Ws price of water for agriculture (US$/m3)
MW(agdm, m) monthly withdrawal for irrigation at off-take level (Mm3)
n number of crops
m number of months.

4.2 NER to water use in domestic sector

NER to water use in domestic sector can be established using the demand function. Many
empirical studies [as reported by Griffin (2006) and Diaz et al. (2000)] about industrial
and residential water demand suggest a downward sloping demand curve concave to the
origin. Power and exponential functions are options for portraying such a shape. The
analytical form of the NER to water use in domestic sector used here follows an
exponential decaying model
MNB = a.exp Q / −b (11)

where
MNB marginal net benefit (related to supply) or price (related to demand)
Q quantity of water supplied or demanded
a maximum price or MNB when Q = 0.
The exponential demand function can be estimated by knowing only two points along the
demand curve, one point being the current price of the piped water supply and the other
being the maximum willingness to pay (WTP) for the next best alternative as discussed
above. As indicated in equation (10), at maximum MNB (or WTP), quantity demanded
(or supplied) falls to zero. WTP forms the price P1, where quantity Q1 used tends to be
zero. Another point is considered at existing price P2 where the quantity used is Q2. The
exponential reverse demand function or log demand function is drawn from equation (10)
and shows as:
Q = b [ ln a − ln P2 ] (12)

where a = P1 and b = Q2 / ln (P1 / P2).

In this study the supply of water to residence and to government office buildings by
the MWA is considered as the domestic sector for NER estimation. The value of bottled
water is considered the next best alternative where the quantity demanded falls to zero.
The demand for the domestic sector intersects the price axis at a very high price, of
139 US$/m3 of that of the bottled water. In 2004, the consumers paid 0.25 US$/m3 and
 Optimal water allocation model based on satisfaction and economic benefits 373

consumed an amount of 536.95 million m3. Computing equation (11) with these data
affords access to a and b parameter, as follows:
a = P1 = 139
b = Q2 / ln ( P1 / Pl ) = 85,160,554.

4.3 NER to water use in industrial (business) sector

NER to water use in industrial (business) sector has been established using the similar
approach followed in the domestic sector. In this study the supply of water to the industry
by the MWA is considered for estimation of NER. The industrial sector only uses 4.1%
of the water supplied by MWA, the largest portion for industrial purpose is used from
groundwater and the artesian wells owned by the industries’ as reported by Kumar and
Young (1996).
The treated water is considered as the next best alternative to the given choice and is
used as the maximum WTP where the quantity demanded falls to zero. The demand for
the industrial sector intersects the price axis at a price of 0.86 US$/m3 of that of the
treated water and this truncates the demand curve at an estimate where Q1 is zero. In
2004 the consumers paid 0.39 US$/m3 and consumed an amount of 13.17 million m3.
Computing equation (11) with these data affords access to a and b parameters, as follows:
a = P1 = 0.86
b = Q2 / ln ( P1 / P2 ) = 16, 616,152.68.

4.4 NER to water use in hydropower generation

The hydropower net benefit function is calculated by multiplying the power production
by the difference between the power selling price and power cost. This, when divided by
the water passing through the power plants, give the net benefit per unit volume of water.
NER( pow) = Power ( pwst ) * [ Pprice ( pwst ) − Pcos t ( pwst ) ] Qtotal (13)

where
NER(pow) net profit from power production (US$/m3)
Power(pwst) power production at the production site (KWh)
Pprice(pwst) average power selling price (US$/KWh)
Pcost(pwst) average power production cost(US$/KWh)
Qtotal total discharge from the plant (m3).

4.5 NER derived from environment (salinity control)

In the present study, the net benefit derived from salinity control is estimated by using
the replacement cost method. Although it does not provide the best measure of
environmental economic value, yet it assumes the costs of avoiding damages or replacing
services and constitutes a good proxy. The assumption here is that the desalinisation cost
is taken as a proxy to measure the benefit of preventing salt water intrusion.
374 L. Divakar et al.

5 Results and discussion

5.1 Net economic returns

The NER per unit volume of water from agriculture, domestic, industrial and hydropower
generation estimated using equations (1), (2), (3) and (4) respectively are presented in
Table 1. The yield and the quantity of water are considered as a constant over a period for
the dry season due to the limitations in data availability. When applied to the dry season
of the Chao Phraya basin the estimated NER to irrigation water in agriculture sector
during the dry season is 50 US$/1,000 m3.
Table 1 Analysis of current allocation practices based on the actual releases in the
Chao Phraya River basin
Total
January February March April May June
(average)
NER (US$/1,000 m3) 50 50 50 50 50 50 (50)
Actual withdrawal (Mm3) 952 1,097 1,260 1,122 544 133 5,107
Agriculture demand (Mm3) 2,209 2,376 2,422 1,728 706 1,429 10,870
Satisfaction (%) 43 46 52 65 77 5 (47)
Total benefit (US$ × 106) 48 55 63 56 27 7 255

NER (US$/1,000 m3) 21,738 21,738 21,738 21,738 21,738 21,738 (21,738)
Actual withdrawal (Mm3) 65 65 63 68 70 70 401
Domestic demand (Mm3) 70 71 69 74 75 75 434
Satisfaction (%) 92 92 92 93 93 93 (92)
Total benefit (US$ × 106) 1,406 1,415 1,374 1,488 1,517 1,514 8,714

NER (US$/1,000 m3) (SC*) 10 10 10 10 10 10 (10)

Actual withdrawal SC* 58 58 58 58 58 58 350
Environment (salinity) 50 50 50 50 50 50 300
and navigation (Mm3)
Navigation demand (Mm3) 123 124 125 119 123 123 736
Satisfaction (%) 88 88 86 91 88 88 (88)
Total benefit (US$ × 106) from SC* 1 1 1 1 1 1 4

NER (US$/1,000 m3) 205 205 205 205 205 205 (205)
Actual withdrawal (Mm3) 52 52 51 55 54 56 319
Industry demand (Mm3) 58 58 56 61 60 62 355
Satisfaction (%) 89 90 90 90 90 91 (90)
Total benefit (US$ × 106) 11 11 10 11 11 12 66

NER (US$/1,000 m3) 3 3 3 3 3 3 (3)

Actual withdrawal (Mm3) 1,188 1,334 1,493 1,361 783 317 6,477
Hydropower demand (Mm3) 1,188 1,334 1,493 1,361 783 317 6,477
Satisfaction (%) 100 100 100 100 100 100 (100)
Total benefit (US$ × 106) 4 4 5 4 2 1 20

Total monthly economic return 1,469 1,486 1,453 1,560 1,558 1,533 9,059
(US$ × 106)
Notes: The actual release data corresponds to year 2004; *Salinity control;
1 US$ = 40 THB.
 Optimal water allocation model based on satisfaction and economic benefits 375

The NER to water use in domestic sector is estimated to be 21,738 US$/1,000 m3. The
very high value of NER is due to the prevailing price of bottled water in Bangkok
compared to the relatively much lower price the consumers pay for the domestic water
supply by MWA. The allocation of water to all the non-domestic sectors by the MWA is
collectively done with respect to the economic return per unit volume of water from the
industrial sector due to the lack of detailed information. Although the industries in the
study area use both surface and groundwater, the present study considered only the
surface water use by the industry based on the data obtained from MWA and PWA. The
NER to water use in industrial sector is 205 US$/1,000 m3. The NER to water use in
hydropower generation is estimated as 3 US$/1,000 m3. The cost of production and the
selling price are assumed to be constant for a period of six months for the aggregate
amount of Q passing through the turbines.
The NER for salinity control was estimated by carrying out two allocations. In the
first allocation the demand of other sectors considered negligible compared to the
agricultural sector and in doing so the agricultural sector is allocated an additional
amount of water. This additional allocation is considered to be desalinated, to be used for
agriculture. Desalinisation of water for agricultural use, though not a common practice, is
assumed in this study to determine how much has to be spent to upgrade the quality of
water so that it becomes suitable for agricultural purposes or, in other words, how
beneficial it will be to allocate this water to the environmental sector (for salinity control)
rather than diverting it to the agricultural sector. The cost of desalinisation of water to be
used in the agricultural sector is calculated as 0.5 US$/m3. The NER of water to
environmental sector (salinity control) is estimated as 10 US$/1,000 m3.

5.2 Analysis of current allocation

The analysis results of current allocation practices in terms of level of satisfaction of
demand sectors (defined as the ratio of the water allocation to normal demand) and total
economic benefits based on the NER estimated are presented in Table 1. With the first
priority given to domestic sector, the average satisfaction in meeting the domestic
demand is highest (92%) followed by industrial (business) sector (90%), salinity control
and navigation (88%) and the lowest (47%) in meeting the irrigation demand. Total
economic benefit of about 9,059 million US$ is achieved to which the domestic sector is
the main contributor followed by agriculture, industrial, hydropower and salinity control
sectors with a value of US$ 8,714, 255, 66, 20 and 4 million, respectively.
The allocation in environmental (salinity control) and navigation is carried out
separately but the NER to water use is only estimated for salinity control, hence the
economic benefit only correspond to allocation for salinity control. Neglecting the losses
incurred hydropower is considered as a non-consumable and non-competing sector in this
study and its water use is therefore equal to the total reservoir release in the dry season.

5.3 Model applications

The developed WAM is applied to the Chao Phraya River basin in Thailand, and five
competing sectors are considered. The input data to ROM includes the physical,
operational characteristics of the reservoirs, the power plant-related data, inflow to the
reservoir, the losses from the reservoir, the downstream demand, channel characteristics
and local flow along the reaches that were collected from the relevant government
376 L. Divakar et al.

agencies. HEC-ResSim (ROM) was run on a daily basis and the simulation was carried
out from 01 May 1985 to 31 April 2005. Figure 3 shows the reservoir network module of
the Chao Phraya River basin. Simulation results matching well with the observed flow at
junction C.2 (downstream of the two reservoirs, where the Ping and the Nan rivers join to
form the Chao Phraya River), junction C.13 and junction C.7 also shown in the figure
indicates the performance of ROM as satisfactory.

Figure 3 Network module of the Chao Phraya River basin and comparison of the observed and
the ROM simulated data (see online version for colours)

180.0

160.0

140.0

120.0

Volume (Mm3)
100.0

80.0

60.0

40.0
120.00
20.0

100.00 0.0
Jun-85 Jun-87 Jun-89 Jun-91 Jun-93 Jun-95 Jun-97 Jun-99 Jun-01 Jun-03
80.00 Simulated
Month
Volume (Mm3)

Observed
60.00

40.00 500.0
450.0
20.00
400.0

0.00 350.0
Volume (Mm3)

Jun-85 Jun-87 Jun-89 Jun-91 Jun-93 Jun-95 Jun-97 Jun-99 Jun-01 Jun-03 300.0
Month Simulated 250.0
Observed C.2
200.0
150.0
100.0
50.0
500.0 0.0
450.0 Jun-85 Jun-87 Jun-89 Jun-91 Jun-93 Jun-95 Jun-97 Jun-99 Jun-01 Jun-03
400.0 Month Simulated
350.0 Observed
Volume (Mm3)

300.0
250.0
200.0 500.0
150.0 450.0
100.0
C.13 400.0
C.7
50.0 350.0
Volume (Mm3)

0.0 300.0
Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- 250.0
85 87 89 91 93 95 97 99 01 03 200.0
Simulated 150.0
Month Observed
100.0
50.0
0.0
Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun- Jun-
85 87 89 91 93 95 97 99 01 03
Month Simulated
Observed

The simulated releases from the Bhumibol and Sirikit reservoirs are taken to be the
amount of AW, which is an input in WAM. The AW in the dry season is less than that of
the total water required to satisfy the demand from five sectors. The demands from
different demand sites were pooled sector-wise and considered for water allocation. To
test the applicability of the model the limited AW of 1,190, 1,138, 1,500, 1,365, 770 and
315 million m3 in the dry season (January to June, 2004) is allocated for a monthly
normal demand of 2,460, 2,628, 2,672, 1,982, 963, and 1,689 million m3 respectively in
the most optimum way satisfying the user and also considering the benefits from its use.
Water required for navigation is taken together with the flow needed to flush the salt
water into the sea. However, the amount of water allocated only for salinity control is
considered in the estimation of total economic return to water use in environmental
(salinity control) and navigation sector. The actual withdrawals under the existing
allocation practices are used for comparison. In the existing situation, about 88% of the
total demand is from agriculture sector and only 79% of the total water withdrawal is
 Optimal water allocation model based on satisfaction and economic benefits 377

used for agriculture (Table 1). The satisfaction value is an indication of the % of water
demand fulfilled, the remainder of which denotes the stress level.
The WAM is applied to allocate water on monthly basis for the dry season (January
to June) of 2004 as for this year the AW was less than the normal demand of water from
the different sectors. No specific minimum demand of any of the sectors is considered,
i.e., the minimum demand is taken as zero percentage of the normal demand in the
WAM. However, different flexible scenarios can be developed (with varying minimum
demand (Dm) and by giving priority to single and multiple sectors in order to analyse the
application of the allocation model and to bring about the vital importance in all the
aspects of decision analysis) for improving the water allocation in different sectors. The
analysis is carried out for OF1, OF2 and OF12. In OF1, the minimum operator tries to
distribute the stress equally among different sectors; agriculture with high demand gets
more water with the share being lowered from other sectors with high supply to demand
ratio, thereby helping to distribute the stress equally by maximising the minimum of the
supply to demand ratio. Equal weights (w1 = w2 = 0.5) were given to two objectives in
OF12 and ST is used for the multi-objective optimisation.

5.3.1 Maximisation of the minimum satisfaction level (OF1)

The quantities of water allocated to different sectors, the level of satisfaction achieved in
meeting the demand and the economic benefits with WAM for OF1 in the dry season of
2004 is given in Table 2.
Table 2 Comparison of current allocation practices and WAM results with OF1

Current allocation practices WAM

Normal Total Total
Sectors demand Allocated Level of economic Allocated Level of economic
(Mm3) water satisfaction benefit water satisfaction benefit
(Mm3) (%) (× 106) (Mm3) (%) (× 106)
US$ US$
Agriculture 10,870 5,107 47 255 5,330 49 267
Domestic 434 401 92 8,714 318 73 6,907
Environment 736 650 88 4 637 87 4*
(SC and Nav)
Industry 355 319 90 66 193 54 40
Hydropower 6,478 6,477 100 20 6,478 100 21
Total 12,395 6,477 9,059 6,478 7,239
Notes: SC = salinity control; Nav = navigation; *only for salinity control
When OF is OF1, the model first satisfies the sectors in the increasing order of demand
and hence industrial sector gets satisfied first followed by domestic, salinity control along
with navigation and finally the remaining water is allocated to agriculture. The equity
component however takes care of the fact that there is no zero allocation to any of the
sectors as the allocation is based on the maximisation of the minimum value of the
satisfaction, i.e., supply to demand ratio for a particular sector.
As presented in Table 2, the quantity of water allocated to agricultural sector is
increased from 5,107 Mm3 in the existing case to 5,330 Mm3 in WAM with an increase
of 223 Mm3. With WAM, all other sectors are supplied with quantities less than those in
378 L. Divakar et al.

the existing case as more water is supplied to the irrigation sector, which has highest
demand among the sectors. The satisfaction levels of low water demanding sectors are
higher compared to that of the high water demanding sectors. The optimised average
satisfaction level with OF1 for the agriculture sector is 2% higher than the average
satisfaction achieved with the actual releases under the current allocation.
The economic benefit is higher from the domestic sector followed by the agriculture,
industry, hydropower and environment sectors. The total economic benefits under OF1 is
about 1,820 million US$ less than the existing case as more water is allocated to the
irrigation sector which has a low NER per unit volume of water.

5.3.2 Maximisation of net economic benefit (OF2)

The results of WAM for OF2 with respect to amounts of water allocated to different
sectors, the level of satisfaction attained in meeting the demand and the economic
benefits are presented in Table 3. The table also presents the results for the existing case
for comparison.
Table 3 Comparison of current allocation practices and WAM results with OF2

Current allocation practices WAM

Normal Total Total
Sectors demand Allocated Level of economic Allocated Level of economic
(Mm3) water satisfaction benefit water satisfaction benefit
(Mm3) (%) (× 106) (Mm3) (%) (× 106)
US$ US$
Agriculture 10,870 5,107 47 255 5,690 52 285
Domestic 434 401 92 8,714 434 100 9,434
Environment 736 650 88 4 0 0 0*
(SC and Nav)
Industry 355 319 90 66 355 100 73
Hydropower 6,478 6,477 100 20 6,478 100 21
Total 12,395 6,477 9,059 6,478 9,814
Notes: SC = salinity control, Nav = navigation; *only for salinity control
In case of OF2 the model first satisfies the domestic sector (highest economic return)
followed by industrial and agriculture sectors. If there is remaining water after satisfying
the high demand of agriculture the model finally allocates water for salinity and
navigation. The domestic sector with highest NER gets the first priority in allocation
followed by the industrial sector. The quantities of water supplied with OF2 when
compared to the actual releases under the current allocation show an increase of 583, 33
and 36 Mm3 to the agriculture, domestic and industrial sectors respectively. The model
however does not allocate any water to the environmental sector due to lowest NER from
this sector and hence suffers the maximum stress compared to the existing case. The
average satisfaction level is higher in water demanding sectors with high NER than
compared to the sectors with low NER.
Again, as in OF1, the total economic returns are higher from the domestic sector
followed by agriculture, industrial and hydropower sectors. An increase in economic
benefits of about 755 million US$ with OF2 compared to the existing case is due to full
satisfaction of the sector (domestic), which has highest NER.
 Optimal water allocation model based on satisfaction and economic benefits 379

5.3.3 Maximisation of the minimum satisfaction level and net economic benefit
(OF12)
The model, when applied for OF12, shows a compromise between two individual
objectives and hence the value of OF12 lies between OF1 and OF2. The model allocates
water first to sectors with low demand and high economic returns depending on the
weights assigned. The objectives of maximisation of satisfaction and net economic
benefit are given equal weightage (w1 = 0.5, w2 = 0.5) for the analysis and the ST is used
for optimisation. The equity concept in the first OF however tries to optimise the
allocation with least bias in allocating water to any of the sectors thereby equalising the
stress distribution.
The results of water allocation with OF12 along with the existing case are presented in
Table 4. The results show a slight decrease (53 Mm3 in agriculture sector and a decrease
of 14 Mm3 in the environmental sector) in two sectors together with full supply to the
domestic and industrial sectors. When compared to the existing situation, it shows almost
the same level of satisfaction in the agriculture sector with an increase of 8 and 10%
respectively for the domestic and industrial sector and a fall of 2% in the environmental
sector. This is because of the compromising constraint in the ST, which allocates water to
equally reduce the water stress level in different sectors, and at the same time
compromises between the satisfactions in meeting the demand and to achieve higher
economic benefits.
Table 4 Comparison of current allocation practices and WAM results with OF12

Current allocation practices WAM

Normal Total Total
Sectors demand Allocated Level of economic Allocated Level of economic
(Mm3) water satisfaction benefit water satisfaction benefit
(Mm3) (%) (× 106) (Mm3) (%) (× 106)
US$ US$
Agriculture 10,870 5,107 47 255 5,054 46.5 253
Domestic 434 401 92 8,714 434 100 9,429
Environment 736 650 88 4 636 86 4*
(SC and Nav)
Industry 355 319 90 66 355 100 73
Hydropower 6,478 6,477 100 20 6,478 100 21
Total 12,395 6,477 9,059 6,478 9,780
Notes: SC = salinity control, Nav = navigation; *only for salinity control
Like the above discussed OFs, the domestic sector has the maximum economic benefit.
The total economic benefit is 9,780 million US$ and lies between the economic benefits
from OF1 and OF2. When compared to the existing allocation practice it shows an
increase of 721 million US$.

6 Summary and conclusions

The study develops an integrated WAM which consists of a ROM and a WAM. The
ROM determines the AW and is used as an input to the WAM which considers two single
380 L. Divakar et al.

and one multi-OF. The OF1 maximises the satisfaction level in meeting the water
demands of different water use sectors and the OF2 maximises the net economic benefits
from different use sectors. The OF12 is a combination of the first two objectives. An
equity concept with the fuzzy (minimum operator) approach is introduced to distribute
stress equally among the sectors.
Different techniques have been used to estimate the NER of 50, 21,738, 205, 3 and
10 US$/1,000 m3 to water use in agriculture, domestic, industry, hydropower, and salinity
control sectors. The analysis of the current allocation practices in the Chao Phraya River
basin indicates that the actual releases for irrigation are more than the planned releases as
the actual areas under irrigation are higher than the planned irrigation coverage. Total
economic benefits of about 9,059 million US$ is achieved to which the domestic sector is
the main contributor.
When OF1 is considered, the model first allocates water to a sector with the lowest
normal demand and then to the sector with next higher normal demand whereas in
OF2 the model first allocates water to the sector with highest NER, followed by the
next higher one. OF12 with maximisation of minimum level of satisfaction and net
economic benefit using ST is considered as a compromised allocation between the two
objectives, with possible equal distribution of stress and higher economic benefit of about
721 million USD when compared to that of the actual release in the Chao Phraya River
basin. The inference of the model results thus lies in the flexibility in allocating water to
different sectors with satisfaction and NERs maximisation to an optimum level with the
limited AW.
There are limitations of the model that need to be addressed. Firstly, the NER to
water use for salinity control and navigation is to be determined instead of the
replacement cost method used in the present study. Secondly, the model can be made
more economically efficient by estimating the marginal net benefits for monthly or
varying quantity of water demanded by each water use sectors, instead of a constant
marginal benefit used in the present study. The concept of water allocation based on
benefit sharing can be applied to different sectors in a transboundary river basin. This
would require further improvement and adaptation of the proposed WAM.

Acknowledgements

The study was carried out in Asian Institute of Technology as a part of the doctoral study
and was funded by DANIDA. The authors would like to thank AIT and DANIDA for
their support.
 Optimal water allocation model based on satisfaction and economic benefits 381

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