Key Takeaways Cooperation among water utilities expands opportunities to provide an affordable, reliable water supply, both now and in the long term. Computational modeling of utility partnerships can explore the potential benefits (and pitfalls) of cooperative infrastructure development. Analysis of agreements for shared treatment plant development in North Carolina provides a framework for design and evaluation of cooperation in other utility contexts.

Regionalization approaches—where utilities in close geographic proximity cooperate to manage drought risks and co‐invest in new infrastructure—are increasingly necessary strategies for leveraging economies of scale to meet growing demands and navigate financial risks. However, regionalization also brings new challenges to water supply planning. Successful regionalization policies must equitably balance the interests of multiple partners while navigating power relationships between regional actors. In long‐term infrastructure planning contexts, this challenge is heightened by the evolving system‐state dynamics, which may be fundamentally reshaped by infrastructure investment. This work introduces Equitable, Robust, Adaptive, and Stable Deeply Uncertain Pathways (DU Pathways ERAS ), an exploratory modeling framework for developing regional water supply management and infrastructure investment pathways. DU Pathways ERAS provides an integrated framework for stakeholders to evaluate the equity of policy outcomes across cooperating partners and explore regional power relationships within cooperative infrastructure policies. To capture the time‐evolving dynamics of infrastructure pathways, DU Pathways ERAS features new tools to measure the adaptive capacity of pathway policies and evaluate time‐evolving vulnerability. We demonstrate our framework on a six‐utility water supply partnership seeking to develop cooperative infrastructure investment pathways in the Research Triangle, North Carolina. Our results indicate that commonly employed framings of robustness can have large and unintended adverse consequences for regional partnerships. Results further illustrate that regional and individual vulnerabilities are highly interdependent and emphasize the need to limit counterparty risks through carefully designed cooperative agreements. Beyond the Research Triangle, these results are broadly applicable to cooperative water supply infrastructure investment and management globally.

Water managers must constantly balance investment in infrastructure upgrades to ensure reliable water supply with the affordability of water rates for consumers. As a result, trade-offs between water supply and financial objectives have become central to the long-term sustainability of utility operations. Few studies, however, have directly quantified decision-relevant financial benchmarks of water supply system adaptation. Benchmarks include debt covenants, guidelines required by creditors seeking assurance that debt will be repaid. Violation of covenant thresholds risks a downgrade of a utility's credit rating, higher interest rates on future debt, and higher costs for new infrastructure. This work introduces an exploratory modeling framework that carefully couples adaptive water supply planning with financial modeling to better track how utility budgetary decision making can adapt to infrastructure expansion and future water demand growth. Demonstrated through an evaluation of infrastructure planning for Tampa Bay Water (TBW), results showcase TBW budgetary adaptation in response to water demand growth and supply expansion, quantifying the financial implications of infrastructure planning decisions and demand growth on water rates as well as the bond covenants. This study underscores the importance of integrating dynamic and adaptive financial modeling in providing realistic decision support that addresses both supply reliability and financial stability.

Hydrologic variability presents significant challenges to water providers in terms of managing supply risk, but resilient systems must also manage the corresponding financial risk. During drought water providers pump less water, make fewer water deliveries, and earn less revenue. Meanwhile, their costs are mostly fixed, with a large fraction linked to debt service resulting from the capital-intensive development of water supply infrastructure. The consequent budget shortfalls can be very disruptive and must be managed effectively if this critical infrastructure is to remain resilient in a future that involves increasingly frequent and severe droughts. For this research, an object-oriented model was developed that integrates hydrologic and financial systems to provide new insights into ways in which large water providers can better quantify and manage their financial risk and establish strategies for promoting greater financial resiliency in the face of climate change. This work involves a case study of the Central Arizona Project (CAP), one of the largest water providers in the Western U.S. that serves nearly 6 million people (e.g., Phoenix, Tucson), as well as large tracts of irrigated land and the demands of several Native American tribes. Current reductions in CAP's access to Colorado River water will reduce its water deliveries by 40% this year, resulting in substantially lower revenues. In response, CAP will raise its wholesale water prices significantly so that it can meet its costs. As an alternative to increasing wholesale prices, CAP could consider reducing the financial risks of hydrologic uncertainty by utilizing some portion of its reserve funds or leveraging its ad valorem tax. Results suggest that CAP's use of reserves could limit annual price increases to 10% or 15% per year through 2028, but to limit annual price increases to 5% under drier conditions would nearly deplete existing reserves in a few years.

Cooperative management of natural resources is a key component of a transition to a sustainable society and urban water supply planning is a prime example. Regional cooperation among urban water utilities is a powerful mechanism for improving supply reliability and financial stability in urban water supply systems. Through coordinated drought mitigation and joint infrastructure investment, water utilities can efficiently exploit existing water supplies and reduce or delay the need for new supply infrastructure. However, cooperative water management brings new challenges for planning and implementation. The benefits of cooperation may not be uniformly distributed across cooperating partners, resulting in the "instability" of cooperative compromises. Further, cooperation may add new vulnerabilities for each partner by imbuing their cooperating partners with the power to impact their performance through policy actions. Power imbalances stemming from these vulnerabilities can lead to conflict between cooperating partners that destabilize otherwise robust planning alternatives. This work contributes a new exploratory modeling centered framework for assessing cooperative stability and mapping power relationships in cooperative infrastructure investment and water supply management policies. Our framework uses multi-objective optimization as an exploratory tool to discover how cooperating partners may be incentivized to defect from robust regional water supply partnerships and identifies how the actions of each regional partner shape the vulnerability of its cooperating partners. Our methodology is demonstrated on the Sedento Valley, a highly challenging hypothetical regional urban water supply benchmarking problem. Our results reveal complex regional power relationships between the region's cooperating partners and suggest ways to improve cooperative stability.

Urban water utilities, facing rising demands and limited supply expansion options, increasingly partner with neighboring utilities to develop and operate shared infrastructure. Inter‐utility agreements can reduce costs via economies of scale and help limit environmental impacts, as substitutes for independent investments in large capital projects. However, unexpected shifts in demand growth or water availability, deviating from projections underpinning cooperative agreements, can introduce both supply and financial risk to utility partners. Risks may also be compounded by asymmetric growth in demand across partners or inflexibility of the agreement structure itself to adapt to changing conditions of supply and demand. This work explores the viability of both fixed and adjustable capacity inter‐utility cooperative agreements to mitigate regional water supply and financial risk for utilities that vary in size, growth expectations, and independent infrastructure expansion options. Agreements formalized for a shared regional water treatment plant are found to significantly improve regional supply reliability and financial outcomes, despite highly correlated weather and climate across neighboring supply systems (e.g., concurrent drought events). Regional improvements in performance, however, mask tradeoffs among individual agreement partners. Adjustable treatment capacity allocations add flexibility to inter‐utility agreements but can compound financial risk to each utility as a function of the decision‐making of the other partners. Often the sensitivity to partners' decision‐making under an adjustable agreement degrades financial performance, relative to agreements with fixed capacities allocated to each partner. Our results demonstrate the significant benefits cooperative agreements offer, providing a template to aid decision‐makers in the development of water supply partnerships.

Climate and land cover change strongly shape water resources management, but understanding their joint impacts is extremely challenging. Consequently, there is limited research of their integrated effects on water supply systems, and even fewer studies that rigorously account for infrastructure investment and management interventions. We utilize ecohydrologic modeling to generate watershed outflows under scenarios of climate and land cover change, which in turn drive modeled water utility‐level decision making for the Research Triangle region of North Carolina. In the Triangle region, land cover and climate change are both likely to increase water supply availability (reservoir inflows) individually and in tandem. However, improvements from water supply increases are not uniform across management system performance indicators of reliability, conservation implementation frequency (i.e., water use restrictions), and infrastructure investment. Utility decisions influence the impact of hydrologic change through both short‐term (e.g., use restrictions and water transfers) and longer‐term infrastructure investment actions, in some cases offsetting the beneficial effects of additional water supply. Timing and sequencing of infrastructure development are strongly sensitive to climate and land use change as captured by their impacts on utility performance outcomes. This work underscores the need to consider adaptive management system responses and decision‐relevant performance measures when determining the impacts of hydrologic change on water availability.

New domestic, renewable energy resources must be considered to increase energy security in the U.S. Ethanol production through second-generation (cellulosic) feedstocks will help the U.S. meet the legislative Renewable Fuel Standard, which mandates 36 billion gallons of renewable fuels by 2022. However, conversion of cropland to meet the cellulosic feedstock production goals may have unforeseen environmental consequences. Using Soil Water Assessment Tool (SWAT) outputs and National Agricultural Statistics Service (USDA NASS) economic data, we conducted a spatial optimization of bioenergy feedstock introduction into the Arkansas White-Red River Basin based on water quality and economic objectives, subject to constraints on total land conversion. Results displayed tradeoffs between bioenergy yield for three crops (switchgrass, sorghum and poplar) and land rent objectives. Optimal solutions tended to prioritize conversion of land in eastern AWR subbasins where yield and water quality objective improvements were greatest. A small number of subbasins contributed to basin-wide water quality improvements, whereas subbasins contributing to economic benefits were more spatially dispersed, indicating that water quality responses are more likely to constrain feedstock placement. Biomass production targets can be met vianumerous spatial arrangements, whereas marginal improvement in water quality objectives can best be achieved by selectively siting perennial feedstocks in the eastern half of the region.

Key TakeawaysCapacity‐sharing agreements can help water utilities make use of spare capacity while long‐run demands catch up with projections by allocating project capacity and splitting infrastructure costs between multiple utilities.Utility size, projected growth, and regional context all can influence the most effective choice of capacity‐sharing agreement.Analysis of cooperative agreements can inform utility managers on how to effectively design and implement agreements of their own.

Using municipal wastewater effluent as a feedstock in algae cultivation is a promising approach for increasing the commercial viability of algal biofuel production. However, differences in site-specific characteristics at municipal wastewater treatment plants (WWTPs) could drive tradeoffs between maximizing the profitability of algae production and minimizing the cost of meeting water quality standards. A complicating factor is how water quality regulations are enforced, namely the potential presence of nutrient trading markets that would monetize removal of nutrients from wastewater effluent. This study develops an analytical framework for optimizing the siting of an algal biofuel production facility within a network of WWTPs. A combined life cycle assessment (LCA) and techno-economic analysis (TEA) model of an algal biofuel production facility is integrated with a simplified watershed model. An evolutionary algorithm is used to identify optimal sites for algal biofuel production and explore financial tradeoffs for algae biofuel producers and wastewater treatment plants. This analytical framework is then applied to a high-priority, impaired watershed in North Carolina, the Neuse River Basin.

In the eastern United States, intermittent transfers of treated water are being used more often as a drought management tool; however, untreated raw water transfers, similar to those observed in the western US, are rare. Nonetheless, raw water transfers, free of most physical and financial constraints associated with treating and piping water, are possible within an eastern US regulatory context and could aid in meeting future demands while delaying or avoiding expensive infrastructure. This study demonstrates how raw water transfer schemes along a common river course can influence trade-offs between reliability and financial objectives in the Research Triangle in North Carolina. Regional utility actions are simulated under a wide range of future hydrologic conditions with and without raw water transfer schemes available. Raw water transfers are found to maintain regional supply reliability while reducing demand management interventions. Raw water transfers also significantly reduce politically contentious interbasin water transfers, as well as lowering regional financial risk and long-term debt through decreased dependence on infrastructure and increased planning flexibility. Relaxing US Army Corps of Engineers rules related to the accounting of reservoir inflows as applied to raw water transfers was also observed to improve regional objectives.

In the Eastern U.S. intermittent transfers of treated water are common tool for drought management, but untreated “raw” water transfers are rare. Nonetheless, raw water transfers, free of physical and financial constraints of treating and piping water, show promise within an Eastern regulatory context and could aid in meeting future demands and delaying or avoiding expensive infrastructure. This work develops a detailed simulation model to investigate several raw water transfer schemes along a common river course, exploring tradeoffs between reliability and financial objectives in a multi-utility framework. Applied within the Research Triangle of North Carolina, modeling provides management solutions for an Eastern U.S. region at risk of future water shortages. Raw water transfers alone and through cooperative supply management are observed to improve supply reliability, reduce demand management interventions and inter-basin transfers, reduce financial risk, and lower long-term debt through decreased dependence on infrastructure and increased planning flexibility.