An optimal timing model of water reallocation and reservoir construction

Growth of the users base often reduces the efficiency of existing water allocation policies and causes new water supplies to cost more than the value of water in existing use. Historically, water management authorities have shown a bias toward undertaking of new supply projects and delay of necessary reallocations. This study provides an analysis of the timing and adjustments associated with construction of new reservoirs and reallocation of existing supplies. A dynamic model yields simultaneously the optimal construction timing of new projects and guidelines for reallocation of existing supplies. A number of sensitivity results provide additional insights