Strategic Water Utility Management and Financial Planning Using a New System Dynamics Tool

This study demonstrates how to implement a novel system dynamics (SD) strategic water utility management and financial planning tool. Using data from several local water utilities in Ontario, Canada, the tool is run to simulate 20 years to investigate: (1) long-term fee-hike rates required for syste...

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Bibliographic Details
Published in:Journal - American Water Works Association 2015-01, Vol.107 (1), p.E22-E36
Main Authors: Rehan, Rashid, Unger, Andre, Knight, Mark A., Haas, Carl
Format: Article
Language:English
Subjects:
affordability
Asset Management
Case studies
customer satisfaction
Customer Service
Financial performance
Financial planning
financial sustainability
Financing
Infrastructure
infrastructure management
Modeling
Ontario, Canada
service performance
Strategic management
Strategic Planning
Sustainability management
system dynamics
Utility Management
Utility rates
Water conservation
water consumption
water main networks
Water use
Water utilities
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Summary:This study demonstrates how to implement a novel system dynamics (SD) strategic water utility management and financial planning tool. Using data from several local water utilities in Ontario, Canada, the tool is run to simulate 20 years to investigate: (1) long-term fee-hike rates required for system financial sustainability; (2) service and financial performance metrics for pay-as-you-go, borrowing, and capital reserving strategies; and (3) consumer affordability as a result of water use charges. For the case study, reserving cash and allowing water fees to increase by up to 7% per year are found to be the best financing strategy to eliminate infrastructure backlog/deficit. The study demonstrates the benefits of an SD model for developing and preparing strategic and tactical asset management, water conservation, and financial plans. The SD model parameterization and implementation for the demonstration case study can be helpful to other utilities in adapting the model to their own specific circumstances.
ISSN:0003-150X
1551-8833
DOI:10.5942/jawwa.2015.107.0006