Using real options in the optimal design of water distribution networks

Journal of Water Resources Planning and Management

Volumn 141, Issue 2, 2015, Pages

  Marques, João ^a   Cunha, Maria ^a   Savić, Dragan ^b  

^a UNIVERSITY OF COIMBRA   (Portugal)

^b UNIVERSITY OF EXETER   (United Kingdom)

Author keywords

Flexible design; Real options; Simulated annealing; Uncertainty; Water distribution networks

Indexed keywords

SIMULATED ANNEALING; URBAN PLANNING; WATER SUPPLY;

ADAPTIVE APPROACH; COMPLEX INFRASTRUCTURES; FLEXIBLE DESIGNS; OBJECTIVE FUNCTIONS; REAL OPTIONS; UNCERTAINTY; WATER DISTRIBUTION NETWORKS; WATER SUPPLY INFRASTRUCTURES;

WATER DISTRIBUTION SYSTEMS;

DECISION MAKING; DESIGN; DISTRIBUTION SYSTEM; INFRASTRUCTURAL DEVELOPMENT; MODEL TEST; PLANNING METHOD; SIMULATED ANNEALING; STRATEGIC APPROACH; URBAN AREA; WATER SUPPLY;

EID: 84921452538     PISSN: 07339496     EISSN: 19435452     Source Type: Journal    
DOI: 10.1061/(ASCE)WR.1943-5452.0000448     Document Type: Article

References (28)

1. Aarts, E., and Korst, J. (1989). "Simulated annealing and Boltzmann machines: A stochastic approach to combinatorial optimization and neural computing". Wiley, New York.
2. Afonso, P. M., and Cunha, M. C. (2007). "Robust optimal design of activated sludge bioreactors". J. Environ. Eng. 44-52. 10.1061/(ASCE)0733-9372(2007)133:1(44).
3. Black, F., and Scholes, M. (1973). "The pricing of options and corporate liabilities". J. Political Econ., 81(3), 637-654.
4. Buurman, J., Zhang, S., and Babovic, V. (2009). "Reducing risk through real options in systems design: The case of architecting a maritime domain protection system". Risk Anal., 29(3), 366-379.
5. Costa, A., Cunha, M., Coelho, P., and Einstein, H. (2013). "Solving high-speed rail planning with the simulated annealing algorithm". J. Transp. Eng. 635-642. 10.1061/(ASCE)TE.1943-5436.0000542.
6. Cunha, M. C. (1999). "On solving aquifer management problems with simulated annealing algorithms". Water Resour. Manage., 13(3), 153-170.
7. Cunha, M. C., and Sousa, J. (1999). "Water distribution network design optimization: Simulated annealing approach". J. Water Resour. Plann. Manage. 215-221. 10.1061/(ASCE)0733-9496(1999)125:4(215).
8. Detroit Water and Sewerage Department (DWSD). (2004). "Comprehensive water master plan". Final Rep., Task C: Rehabilitation and Replacement Program, Contract No. CS-1278, Detroit, MI, 133.
9. Haimes, Y. Y. (1998). "Sustainable operation of threatened infrastructures". J. Infrastruct. Syst. 1-4. 10.1061/(ASCE)1076-0342(1998)4:1(1).
10. He, H., and Pindyck, R. S. (1992). "Investments in flexible production capacity". J. Econ. Dyn. Control, 16(3-4), 575-599.
11. Huang, D., Vairavamoorthy, K., and Tsegaye, S. (2010). "Flexible design of urban water distribution networks". World Environmental and Water Resources Congress, ASCE, Reston, VA, 4225-4236.
12. Merton, R. C. (1973). "Theory of rational option pricing". Bell J. Econ. Manage. Sci., 4(1), 141-183.
13. Metropolis, N., Rosenbluth, A. W., Rosenbluth, M. N., Teller, A. H., and Teller, E. (1953). "Equation of state calculations by fast computing machines". J. Chem. Phys., 21(6), 1087-1092.
14. Myers, S. C. (1977). "Determinants of corporate borrowing". J. Financ. Econ., 5(2), 147-175.
15. Nembhard, H. B., and Aktan, M., (2010). Real options in engineering design, operations, and management, CRC Press, 253.
16. Neufville, R., Scholtes, S., and Wang, T. (2006). "Real options by spreadsheet: Parking garage case example". J. Infrastruct. Syst. 107-111. 10.1061/(ASCE)1076-0342(2006)12:2(107).
17. Paddock, J. L., Siegel, D. R., and Smith, J. L. (1988). "Option valuation of claims on real assets: The case of offshore petroleum leases". Q. J. Econ., 103(3), 479-508.
18. Roberts, K., and Weitzman, M. L. (1981). "Funding criteria for research, development, and exploration projects". Econometrica, 49(5), 1261-1288.
19. Rossman, L. A. (2000). Epanet2 users manual, U.S. EPA, Cincinnati, OH.
20. Suttinon, P., and Nasu, S. (2010). "Real options for increasing value in industrial water infrastructure". Water Resour. Manage., 24(12), 2881-2892.
21. Taher, S. A., and Labadie, J. W. (1996). "Optimal design of water-distribution networks with GIS". J. Water Resour. Plann. Manage. 301-311. 10.1061/(ASCE)0733-9496(1996)122:4(301).
22. Tannous, G. F. (1996). "Capital budgeting for volume flexible equipment". Decis. Sciences, 27(2), 157-184.
23. Wang, T., and Neufville, R. D. (2004). "Building real options into physical systems with stochastic mixed-integer programming". 8th Annual Real Options Int. Conf., Montreal, Canada, 23-32.
24. Woodward, M., Gouldby, B., Kapelan, Z., Khu, S.-T., and Townend, I. (2011). "Real options in flood risk management decision making". J. Flood Risk Manage., 4(4), 339-349.
25. Wu, W., Simpson, A. R., and Maier, H. R. (2010). "Accounting for greenhouse gas emissions in multiobjective genetic algorithm optimization of water distribution systems". J. Water Resour. Plann. Manage. 146-155. 10.1061/(ASCE)WR.1943-5452.0000020.
26. Zeferino, J. A., Cunha, M. C., and Antunes, A. P. (2012). "Robust optimization approach to regional wastewater system planning". J. Environ. Manage., 109, 113-122.
27. Zhang, S. X., and Babovic, V. (2011). "An evolutionary real options framework for the design and management of projects and systems with complex real options and exercising conditions". Decis. Support Syst., 51(1), 119-129.
28. Zhang, S. X., and Babovic, V. (2012). "A real options approach to the design and architecture of water supply systems using innovative water technologies under uncertainty". J. Hydroinf., 14(1), 13-29.