An Economic Evaluation Model of Investment Alternatives in Water Supply Systems

To compare enlargement alternatives in the Hazbani-Dan water supply system, we developed an evaluation process that considers organizational, technological, and economical factors. The suggested alternatives are intended to improve system utilization by combining additional water resources and users. We used the criterion of expected annual return to compare the alternatives and a linear programming model to allocate water for different users according to policy priorities. Based on the results, we used a nonlinear programming model to allocate water for hydroelectric energy production. An annual return of about one million dollars is predicted for the most economical alternative versus a return of one hundred thousand dollars prior to enlargement. However, due to managerial factors and lack of reliable data, only two of the four possible physical enlargements were implemented as recommended, with an expected annual return of $422,000.