Real options analysis application for floodgate operation to control salinity intrusion in agricultural areas

ABSTRACT

Salinity intrusion caused by a rise in the sea level has adversely affected water utilization along rivers. One solution adopted by government agencies is to assign an appropriate river flow rate by utilizing a floodgate operation. Current floodgate operations rely on historical water drainage and operator experience, which lacks flexibility to respond to a fluctuating water supply. This paper proposed a framework using real options analysis (ROA) to create strategic alternatives to support decision-makers (DMs) regarding floodgate operational scheduling. The sea level was used to estimate the salinity intrusion distance and as a decision criterion. Apart from raising or lowering the floodgate, the ROA strategy may recommend to the DMs that they “wait-&-see” for a substantial sea-level change in the future and apply the “operate-as-before” approach in certain instances. The methods can be applied to a water discharge plan using separate floodgates in the same river basin or a dam.

KEYWORDS:

• Floodgate operation scheduling
• salinity intrusion
• flexibility
• real option analysis

Acknowledgments

The research was partially supported by a grant from the Faculty of Engineering at Kamphaeng Saen, Kasetsart University, Thailand and the Graduate Program Scholarship from the Department of Civil Engineering, Faculty of Engineering at Kamphaeng Saen, Kasetsart University. The authors would like to thank DHI Water Environment and Health for the MIKE application. Any opinions, findings, and recommendations in this paper are those of the authors and do not necessarily reflect the opinions of the funding agency.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from the corresponding author, [NA], upon reasonable request.

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/23789689.2024.2303795

Additional information

Funding

The work was supported by the Kasetsart University .

Notes on contributors

Eknarong Decha

Eknarong Decha holds a master’s degree from the Department of Civil Engineering, Kasetsart University, Thailand. He is now working as a project engineer for a construction company.

Nathee Athigakunagorn

Nathee Athigakunagorn is an associate professor at the Department of Civil Engineering, Kasetsart University, Thailand. His research interests include construction decisions under uncertainty and simulation of infrastructure processes.

Charinee Limsawasd

Charinee Limsawasd is an associate professor at the Department of Civil Engineering, Chulalongkorn University, Thailand. Her research interests include sustainable construction planning, green construction contracts, and sustainable options for construction equipment fleets.

Samuel Labi

Samuel Labi is a professor at Lyles School of Civil Engineering, Purdue University, USA. He also holds the director position of USDOT’s Next Generation Transportation Systems (Nextrans) at Purdue and serves on the editorial boards of multiple ASCE journals. He has written two university-level textbooks: Transportation Decision Making (2008) and Civil Engineering Systems (2014).