Designing Hydro Supply Chains for Energy, Food, and Flood

Problem definition: In this paper, we identify the unique challenges and trade-offs in hydro system development for developing countries and provide a supply chain perspective to expand these countries’ hydro networks for energy, irrigation, and flood control. Academic/practical relevance: The interconnected issues of water, energy, food, and flood are among the most formidable challenges faced by developing countries worldwide. The development of hydro systems has the potential to address all these issues simultaneously and thus has been prioritized in the international community to reduce poverty and promote sustainable economic development. Methodology: We develop a new integrated and dynamic modeling framework to capture the conflicts of these issues, explore the synergy among different sectors, and maximize overall benefits. The framework integrates hydro plant location and distribution decisions for both power and water; it endogenizes the budget and thus captures the dynamic interaction between water resource development and economic growth. Results: We derive analytical results in stylized models to develop general insights on the key driving forces and build a decision support model to solve large-scale problems in practice. By applying the model to the case of Pakistan, we provide solutions that outperform common practices in all aspects of energy, irrigation, and flood control. Managerial implications: Our results, both analytical and numerical, provide robust insights into the optimal development strategies on the location, sequence, and mix of hydro projects for developing countries.