Nonlinear Reservoir Optimization Model with Stochastic Inflows: Case Study of Lake Tenkiller

Abstract

This study is primarily concerned with the planning and management of a multipurpose reservoir. An economic stochastic optimization model is developed and solved to maximize the net economic benefits derived from marketed urban and rural water supply, hydropower generation, and nonmarketed lake recreation uses with consideration of stochastic inflows. Unlike most studies including nonmarket benefits, both the value of a single-day visit and the number of visits as functions of lake level. Results show that for Lake Tenkiller, when recreational benefits are included, it is beneficial to maintain high lake levels until mid-August, and then start drawing down for hydropower generation. A sensitivity analysis is also performed with different values of visits and peak electricity prices. The sensitivity analysis results show a benefit gained by managing the lake’s level to protect recreational activities; and that this gain is positive for several different potential scenarios, showing this conclusion is robust.