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Financial And Economic Appraisal Of Water Supply Desalination Technologies And Reuse Initiatives:Integrating Modern Portfolio Theory Into Strategic Water Resource Allocation

Author

Listed:
  • Mikhail Miklyaev

    (Cambridge Resource International Inc.)

  • Alan S. Wyatt

    (Cambridge Resources International Inc.)

  • Ridha Drebika

    (Cambridge Resources International Inc.)

  • Owotomiwa (Christiana) Olubamiro

    (Cambridge Resources International Inc.)

  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Ontario, Canada, CARBET, Cyprus International University, Nicosia, North Cyprus, and Cambridge Resource International Inc.)

Abstract

The study delves into the economic valuation of water supply projects, assessing not just traditional cost components but also the broader implications of non-market externalities. By employing contingent valuation, it gauges the public's willingness to pay for investment in the reliability and quality of water services. Furthermore, the approach includes a detailed examination of water supply variability, using statistical methods to model and predict the stability of different water sources. An application of the analytical framework is carried out for Morocco. In this study Modern Portfolio Theory (MPT) is applied to water resource management. It forges a nuanced balance between ensuring a reliable water supply and maintaining economic efficiency in water projects. At a time when water scarcity and climate uncertainty pose complex challenges, the use of the Simulation and Portfolio Optimization Tool (SPOT) developed in this study provides a sophisticated framework for the evaluation and selection of water source portfolios. SPOT equips policymakers with a robust tool for developing water management strategies that are both adaptable to changing environmental conditions and grounded in economic reality. The insights provided by this research contribute to the strategic planning and economic efficiency in the design of water systems, highlighting the critical intersections of cost, reliability, and supply variability. It marks a pragmatic progression in resource management, aiming to align the stewardship of water resources with both environmental sustainability and economic efficiency.

Suggested Citation

  • Mikhail Miklyaev & Alan S. Wyatt & Ridha Drebika & Owotomiwa (Christiana) Olubamiro & Glenn P. Jenkins, 2024. "Financial And Economic Appraisal Of Water Supply Desalination Technologies And Reuse Initiatives:Integrating Modern Portfolio Theory Into Strategic Water Resource Allocation," Development Discussion Papers 2024-02 Jel Classificatio, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4614
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    References listed on IDEAS

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    1. Perez-Pineda, Felipe & Quintanilla-Armijo, Carlos, 2013. "Estimating willingness-to-pay and financial feasibility in small water projects in El Salvador," Journal of Business Research, Elsevier, vol. 66(10), pages 1750-1758.
    2. Durba Biswas & L. Venkatachalam, 2015. "Farmers' Willingness to Pay for Improved Irrigation Water — A Case Study of Malaprabha Irrigation Project in Karnataka, India," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-24.
    3. Whittington, Dale & Briscoe, John & Mu, Xinming & Barron, William, 1990. "Estimating the Willingness to Pay for Water Services in Developing Countries: A Case Study of the Use of Contingent Valuation Surveys in Southern Haiti," Economic Development and Cultural Change, University of Chicago Press, vol. 38(2), pages 293-311, January.
    4. Jessoe, Katrina, 2013. "Improved source, improved quality? Demand for drinking water quality in rural India," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 460-475.
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