资源环境科技发展态势分析平台

As the costs and regulatory barriers to new water supply development continue to rise, drought management strategies have begun to rely more heavily on temporary conservation measures. While these measures are effective, they often lead to intermittent and unpredictable reductions in revenues that are financially disruptive to water utilities, raising concerns over lower credit ratings and higher rates of borrowing for this capital intensive sector. Consequently, there is growing interest in financial risk management strategies that reduce utility vulnerabilities. This research explores the development of financial index insurance designed to compensate a utility for drought-related losses. The focus is on analyzing candidate hydrologic indices that have the potential to be used by utilities across the US, increasing the potential for risk pooling, which would offer the possibility of both lower risk management costs and more widespread implementation. This work first analyzes drought-related financial risks for 315 publicly operated water utilities across the country and examines the effectiveness of financial contracts based on several indices both in terms of their correlation with utility revenues and their spatial autocorrelation across locations. Hydrologic-based index insurance contracts are then developed and tested over a 120 year period. Results indicate that risk pooling, even under conditions in which droughts are subject to some level of spatial autocorrelation, has the potential to significantly reduce the cost of managing financial risk.

Plain Language Summary As vulnerability to drought increases in many locations across the United States, drought management strategies are becoming more important. Drought management strategies are increasingly focused on conservation measures, which are often financially disruptive to water utilities. Therefore, there is growing interest in developing new strategies to reduce these disruptions. This work develops a new strategy in the form of index-based insurance contracts that can be pooled across a broad set of water utilities across the United States. Results indicate that this new strategy has the potential to significantly reduce the cost of effectively managing financial disruptions. This work is important for water utilities, financial institutions, community planners, and other groups seeking to improve water supply management for urban utilities.