Optimal Reservoir Operation and the Value of Carryover Storage

California's water supply system is made up of a complex interconnected system of reservoirs, streams and aqueducts that are managed by a mixture of federal, state and private agencies. Water must be shared between competing agricultural and urban demands while protecting the State's riparian and Delta environments. Optimal management of the State's surface and groundwater resources is analyzed using CALVIN, an economically driven network flow optimization model. Water demands are estimated for a fixed 2020 level of development. Monthly input hydrology is based on the historic record for the 72-year period 1922-1993. The optimization model solves all time steps simultaneously, so that reservoir releases and groundwater extraction are partly influenced by perfect foresight of future inflows. This paper outlines a technique for limiting the foresight of economically driven optimization models. The technique is currently being developed and tested for CALVIN. CALVIN is run successively for 12-month periods. The end-of-period storages from one model run are the beginning-of-storage for the following run. End-of-period storage values or penalties are used to prevent excessive drawdown of aquifers and draining of surface reservoirs. Aggregated penalties on end-of-period surface storage give directly the value of system carryover storage. Penalties on end-of-period groundwater storage reflect the potential value of groundwater mining.