Option contracts for allocating water in inter-basin transfers: the case of the Tagus-Segura Basin in Spain

Users in the Mediterranean region face significant water supply risks. Water markets mechanisms can provide flexibility to water systems run in tight situations. The largest water infrastructure in the Iberian Peninsula connects the Segura and Tagus Basins. Stakeholders and politicians in the Tagus Basin have asked that water transfers between the two basins be eventually phased out. The need to increase the statutory minimum environmental flow in the middle Tagus and to meet new urban demands is going to result in a redefinition of the Transfer?s management rules, leading to a reduction in the transferable volumes. To minimise the consequences of such restrictions to irrigators in the Segura Basin who depend on the transferred volumes, we propose the establishment of water option contracts between both basins that represents an institutional innovation with respect to previous inter-basin spot market experiences. Based on the draft of the new Tagus Basin Plan, we propose both a modification of the Transfer?s management rule and an innovative inter-basin option contract. The main goal of the paper is to define this contract and evaluate it with respect to non-market scenarios. We also assess the resulting impact on environmental flows in the Tagus River and water availability for users in the Segura Basin, together with the economic impacts of such contract on both basins. Our results show that the proposed option contract would reduce the impact of a change in the transfer?s management rule, and reduce the supply risks of the recipient area.

Design and implementation of a modular interface to integrate CLP and tabled execution

Logic programming (LP) is a family of high-level programming languages which provides high expressive power. With LP, the programmer writes the properties of the result and / or executable specifications instead of detailed computation steps. Logic programming systems which feature tabled execution and constraint logic programming have been shown to increase the declarativeness and efficiency of Prolog, while at the same time making it possible to write very expressive programs. Tabled execution avoids infinite failure in some cases, while improving efficiency in programs which repeat computations. CLP reduces the search tree and brings the power of solving (in)equations over arbitrary domains. Similarly to the LP case, CLP systems can also benefit from the power of tabling. Previous implementations which take ful advantage of the ideas behind tabling (e.g., forcing suspension, answer subsumption, etc. wherever it is necessary to avoid recomputation and terminate whenever possible) did not offer a simple, well-documented, easy-to-understand interface. This would be necessary to make the integratation of arbitrary CLP solvers into existing tabling systems possible. This clearly hinders a more widespread usage of the combination of both facilities. In this thesis we examine the requirements that a constraint solver must fulfill in order to be interfaced with a tabling system. We propose and implement a framework, which we have called Mod TCLP, with a minimal set of operations (e.g., entailment checking and projection) which the constraint solver has to provide to the tabling engine. We validate the design of Mod TCLP by a series of use cases: we re-engineer a previously existing tabled constrain domain (difference constraints) which was connected in an ad-hoc manner with the tabling engine in Ciao Prolog; we integrateHolzbauer’s CLP(Q) implementationwith Ciao Prolog’s tabling engine; and we implement a constraint solver over (finite) lattices. We evaluate its performance with several benchmarks that implement a simple abstract interpreter whose fixpoint is reached by means of tabled execution, and whose domain operations are handled by the constraint over (finite) lattices, where TCLP avoids recomputing subsumed abstractions.---ABSTRACT---La programación lógica con restricciones (CLP) y la tabulación son extensiones de la programación lógica que incrementan la declaratividad y eficiencia de Prolog, al mismo tiempo que hacen posible escribir programasmás expresivos. Las implementaciones anteriores que integran completamente ambas extensiones, incluyendo la suspensión de la ejecución de objetivos siempre que sea necesario, la implementación de inclusión (subsumption) de respuestas, etc., en todos los puntos en los que sea necesario para evitar recomputaciones y garantizar la terminación cuando sea posible, no han proporcionan una interfaz simple, bien documentada y fácil de entender. Esta interfaz es necesaria para permitir integrar resolutores de CLP arbitrarios en el sistema de tabulación. Esto claramente dificulta un uso más generalizado de la integración de ambas extensiones. En esta tesis examinamos los requisitos que un resolutor de restricciones debe cumplir para ser integrado con un sistema de tabulación. Proponemos un esquema (y su implementación), que hemos llamadoMod TCLP, que requiere un reducido conjunto de operaciones (en particular, y entre otras, entailment y proyección de almacenes de restricciones) que el resolutor de restricciones debe ofrecer al sistema de tabulación. Hemos validado el diseño de Mod TCLP con una serie de casos de uso: la refactorización de un sistema de restricciones (difference constraints) previamente conectado de un modo ad-hoc con la tabulación de Ciao Prolog; la integración del sistema de restricciones CLP(Q) de Holzbauer; y la implementación de un resolutor de restricciones sobre retículos finitos. Hemos evaluado su rendimiento con varios programas de prueba, incluyendo la implementación de un intérprete abstracto que alcanza su punto fijo mediante el sistema de tabulación y en el que las operaciones en el dominio son realizadas por el resolutor de restricciones sobre retículos (finitos) donde TCLP evita la recomputación de valores abstractos de las variables ya contenidos en llamadas anteriores.

Analysis of the Optimal Sharing of Construction Risk in Public Procurement Contracts

This paper discusses a model based on the agency theory to analyze the optimal transfer of construction risk in public works contracts. The base assumption is that of a contract between a principal (public authority) and an agent (firm), where the payment mechanism is linear and contains an incentive mechanism to enhance the effort of the agent to reduce construction costs. A theoretical model is proposed starting from a cost function with a random component and assuming that both the public authority and the firm are risk averse. The main outcome of the paper is that the optimal transfer of construction risk will be lower when the variance of errors in cost forecast, the risk aversion of the firm and the marginal cost of public funds are larger, while the optimal transfer of construction risk will grow when the variance of errors in cost monitoring and the risk aversion of the public authority are larger

Optimization of water procurement decisions in an irrigation district: the role of option contracts

Water supply instability is one of the main risks faced by irrigation districts and farmers. Water procurement decision optimisation is essential in order to increase supply reliability and reduce costs. Water markets, such as spot purchases or water supply option contracts, can make this decision process more flexible. We analyse the potential interest in an option contract for an irrigation district that has access to several water sources. We apply a stochastic recursive mathematical programming model to simulate the water procurement decisions of an irrigation district?s board operating in a context of water supply uncertainty in south-eastern Spain. We analyse what role different option contracts could play in securing its water supply. Results suggest that the irrigation district would be willing to accept the proposed option contract in most cases subject to realistic values of the option contract financial terms. Of nine different water sources, desalination and the option contract are the main substitutes, where the use of either depends on the contract parameters. The contract premium and optioned volume are the variables that have a greater impact on the irrigation district?s decisions. Key words: Segura Basin, stochastic recursive programming, water markets, water supply option contract, water supply risk.