Hedging Rule for Reservoir Operation: How Much, When and How Long to Hedge

223 p.Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 2008.This dissertation adopts an interdisciplinary approach for water resources systems analysis by integrating knowledge, principles and methods form hydrology, engineering, economics and operation research. The research addresses fundamental questions of hedging such as when, how much and how long to hedge through both theoretical analysis and numerical modeling. These questions are related to the timing, magnitude and temporal scale of applying hedging rules, respectively. Detailed results show how the decision making of hedging is influenced by physical conditions, hydrological characteristics and economic incentives. The framework especially addresses the importance of explicit stochastic dynamic approach and the impact of uncertainty on the decision making of hedging. The outcomes of this dissertation include (1) an analytical framework and a numerical model for hedging rule analysis, (2) an extended horizon theory and numerical procedures for estimating forecast horizon for optimal reservoir operation under hedging, (3) an examination of the error bound between the decision with the actual available forecast and the decision with idea perfect forecast, and (4) an application on a real reservoir operation problem. These are expected to contribute to the understanding of benefits, limits and impact factors on hedging rule and provide guideline to the application of hedging rules for rational reservoir operations.U of I OnlyRestricted to the U of I community idenfinitely during batch ingest of legacy ETD