Stakeholders analysis in water supply systems

PhD Dissertation ETH #13992 by Donald E. Tillman

Summary

A shift of focus is essential if water supply systems are to be optimized and further developed. Emphasis was traditionally placed predominantly on the technical aspects. However, the technical problems have now been largely solved: strongly fluctuating demand for water can be satisfied at any time by a high-quality service. Nevertheless, the water utilities must cope with increasing pressure from a public claiming a lack of efficiency. Why, for example, was capacity expanded in the last 25 years in spite of a decline in consumption? Technical reasons alone cannot explain such phenomena. The interests, characteristic behavior and factual constraints of the stakeholders involved must also be taken into account and the focus broadened to include such aspects.

Furthermore, utilities face an increasing danger of becoming insufficiently flexible to anticipate existing and new challenges. Whereas they developed under stable and predictable conditions in the past, they are now exposed to a more dynamic and uncertain environment (e.g. uncertain consumption development, new technologies such as the local use of rainwater competing with the centralized supply network, strong liberalization pressures etc.). Although flexibility is required to cope with this development, the long life span of the infrastructure, existing regulations and the prevailing "supply-oriented" incentives given to various stakeholders impede adequate system management. The traditional means of ensuring the required flexibility - large infrastructures with built-in redundancy - are no longer suitable in view of the explicit need for overall efficiency. Existing engineering rules must be rethought in the light of these recent changes.

The objective of this research project was to contribute to the knowledge of the influence and effects of stakeholders on water supply systems. What are the prevailing interests, strategies of action and interactions among the relevant stakeholders? The project also aimed to point out existing risks of current stakeholder behavior and to identify possible ways of designing and operating water supply systems which increase flexibility and adaptability.

In order to address these goals, a specific methodology was developed on the basis of a combination of sociological and technical tools. It contains the following steps:

• Typical rules of behavior of the stakeholders are proposed by the facilitating knowledge engineer and are then expressed on the basis of the literature, interviews and observation. These rules are presented in an “if – then” format. For example: “If capacity reserve is less than 20%, then an expansion of capacity is planned”.

• With the aid of domain knowledge obtained from the stakeholders involved in a participatory process, these rules are discussed, analyzed, changed and supplemented. This process results in a rule catalog which documents the characteristic goals, interests, strategies and rules of behavior.
  

• An agent-based computer model comprising these rules of behavior is subsequently developed. The validity of the model is checked by modeling the historical development of a real utility and comparing the model output (capacity, investments, water tariff, debt etc.) with the reality. A sensitivity analysis helps to check the relevance of individual parameters (part of rules).

• Once the model had been validated with data sets from a real utility, multiple-scenario testing was used to explore different management and engineering strategies, thus allowing ideas for developing flexible management and design schemes to be generated.
  
  

This methodology was tested in a case study. The interactions of relevant stakeholders, namely the utility managers, engineering firms, politicians, consumers and the state, were analyzed and quantified. This process resulted in an improved understanding of the incentives and constraints of the stakeholders and the decision-making rules which they applied. It also served to structure the discussion, to visualize the influence and behavior of the stakeholders and to stimulate their intuition and awareness of future developments.

Despite the complexity of water supply systems, the model - based on about 140 rules of stakeholder behavior - was able to replicate the general development of both capacity and cost-related variables. The sensitivity analysis performed indicated that no specific parameter of the behavioral rules applied by the engineers dominates the development of the infrastructure (e.g. 15 or 20% reserve). More importantly, the development of average consumption, especially consumption peaks, and the strategies applied (e.g. targeting a reserve or not), constitute the significant factors contributing to the development of the infrastructure.

The performance of three different strategies (sets of rules) was initially tested against general demand patterns. The strategies were then applied in retrospect to the observed development of consumption in the past. And thirdly, they were used to generate a selection of scenarios of the future development of the utility. The benefits and limitations of the strategies were visualized and became the subject of debate. It was shown that the traditional rules of engineering almost inevitably lead to large capacity reserves. This results in inefficient operation, higher costs and possibly to technical problems. It may also involve a risk of sanctions from consumers and politicians, thus limiting the utility's flexibility and freedom of action.

In view of these risks and the uncertainty of future developments, the strategic and operational flexibility of a utility may be enhanced by introducing demand-side management. Such a strategy emphasizes the active influencing and guidance of demand and focuses on water services rather than merely on the quantity of water provided to consumers. It may well lead to long-term benefits, and any short-term drawbacks are manageable.

If the design and supply concepts are to be adapted to the new risks and situation as described above (e.g. declining demand, financial focus, political skepticism, renewal of existing infrastructure), then the web of incentives must also be changed. Incentives influence the outcome of the planning process by setting the boundary conditions within which the stakeholders can optimize their response on the basis of their interests. Existing incentives still inhibit the utilities from improving their flexibility and performance. Incentives should be increasingly directed toward the services to be provided (e.g. produce clean dishes) and not toward the flow of water to be maximized (clean dishes with water). This change is indispensable for maintaining an efficient and affordable water supply system which is well accepted once again.