Assessing tradeoffs in the design of climate change adaptation strategies for water utilities in Chile

Abstract

Climate change is a challenge to drinking water providers worldwide and to regulatory frameworks that considerlong-term investment decisions. Coping with an unstable climate warrants adjustments in regulations and newinvestments. The investment required to maintain a selected service level needs to balance the potential for highregret stranded assets with the political and socioeconomic consequences of not meeting water demands. Inrecent years, the City of Santiago in Chile has seen drought events associated with climate change, which couldworsen in the future. Chile’s drinking water regulatory framework does not account for uncertainty in infrastructuredesign to cope with the potential impacts of such events. This work presents an adaptation optiondesign process that considers multiple plausible climate change-impacted future scenarios, accommodating bothstructural and nonstructural measures. In our Santiago case study adaptation measures include extensions to theexisting Chilean water market and traditional structural alternatives (e.g., storage infrastructure); all are representedin a simulation model of the water utility. We evaluate and optimize packages of efficient adaptationmeasures for various climate scenarios. This allows comparing different portfolios of combined institutional andinfrastructure interventions via a range of stakeholder measures and comparing their tradeoffs under differentplausible climate-impacted hydrological scenarios. Results showed that water supply performance withoutclimate change adaptation is worse under climate scenarios with lower water availability, which are likely to beassociated with higher GHG emission scenarios such as RCP 8.5. The optimized portfolios implement variouscombinations of adaptation strategies to reduce the impacts of this poor performance. Considering the uncertaintyon future climate scenarios, the use of nonstructural adaptation measures such as option contracts exhibitsthe advantage of providing water in critical periods while avoiding large investments such as building reservoirsor the purchase of permanent water rights, which could end up underused if favorable climate scenariosmanifest.