Exact and approximate solutions of affine reservoir models

We formulate an optimization model of a multiple reservoir water resource system that encompasses interbasin transfers among two or more river basins. Autocorrelated inflows are modeled with a linear autoregressive stochastic process. Benefits for each period are assumed to depend separably on storage levels and discharges with the dependence on discharges being linear. For the important special case of a single river basin, a myopic policy (hence, computed easily) is optimal. When the model includes the possibility of interbasin transfers, a myopic policy is optimal if the deterministic and stochastic portions of the inflow process are always nonnegative. Even if this assumption is not valid, myopic policies yield useful bounds.