When, where and how

to make optimal decisions is what my students from CE 316, Civil Engineering Decision and Systems Analysis learned during Fall 2016. They are now proficient in linear, nonlinear, integer, mixed integer and multiobjective programming/optimization. They also know how to solve network problems like shipping goods, shortest paths, and maximizing flow. They can use the same network structures to make sequential decisions under uncertainty and optimally schedule construction jobs and complete them under budget, ahead of schedule. They know the time value of money and can tell you if a project is beneficial or not in the long run. I am happy to present a few snippets of their term projects, which were identified independently and completed successfully with minimum supervision.

Bidding for Projects: Is your company in constant confusion on what projects to bid for? Are you worried that the projects cannot be completed on time? Soon to be engineers from CCNY have a solution for your problem. Based on the planned duration of any project, they can help you select appropriate and optimal number of projects that will maximize your expected profit under various uncertainties.

Domestic and International Procurements: Do you know which are the best source companies that can supply required quality material (construction or otherwise) at the least cost? Do you want to hire a third party to verify the quality of the material? Don’t worry. We have a sequential decision software to help you pick the best company to procure material from and an associated testing company for quality control.

Operating Water System: Whether you are living in New York City, or in the Catskill area, you can relax, sit back and enjoy the best quality water, even during a drought. Our specialists are at work in satisfying all our competing needs.

CCNY is Starving: With limited food options around the campus, have your ever wondered what to eat to stay healthy and get enough calories to complete the homework, all at a low price? You can do it under $10 per day.

Meal Plan: Are you a high school in the city? Do you know if your daily meal plan is the best? We can give you a nutrition optimized meal plan for high school lunches based on federal regulations and food items approved by the New York City Department of Education.

Where is that food coming from: Do you know what places are best for producing various crops under climate, water, economic and market limitations? Whether you are a farmer or a public planner making water, agriculture, energy policy decisions, we can make your life easier by providing this knowledge in an adaptive framework.

Our secret weapon: Two other secret projects are underway for our design competitions. I will reveal the details of these weapons when we win the competition next semester.

Adios!

Resolution: Data Analysis Made Easy for a Million People

I will create a platform to make data analysis easy for atleast a million people.

I am not an expert in statistics by any means. I have a Civil Engineering degree with water resources and hydroclimatology background. As a necessity, I picked up the statistics and data analysis concepts from my mentors and several experts in the field. I use them regularly, and at a fairly advanced level in my investigations and research. Over time, I have gained confidence and reasonable expertise that enables me to teach data analysis for undergraduate and graduate level students in an engineering school. I have also been successful in my teaching and somewhat popular among students. I feel well trained and equipped for this battle.

I clearly understand that there may not be a million people who are interested in data analysis. If my mission succeeds, I will have created interest in more than a million people. Whether I succeed or not, is up to Time. If I succeed, the world will be a better place with more analytical people. If I fail, atleast I will fail spectacularly.

Over the next few blog posts, I will reveal more details about the platform.

‘Dam’n Floods

December 2016: San Francisco – Kary, who I shared an Uber ride with, thinks that Pineapple Express is a funny name for a storm.

November 2016: Vietnam – Ha Ting, Quang Tri and Quang Binh provinces that experienced rainfall in October, are hit by another wave of heavy rainfall events. Tens of thousands of people displaced.

October 2016: Argentina – Long-term flooding in Buenos Aires affects rural and farming areas. Persistent rainfall leads to an overflowing Quinto River. Agricultural emergency declared.

July 2016: China – Yangtze River overflows. Around 40,000 houses destroyed. More than 1.5 million hectares of cropland damaged.

June 2016: Texas – Heavy rain has increased river levels. President Declares Disaster for 12 counties.

A common thread in all these events is that the floods lasted for more than 30 days and are associated with repeated rainfall into the region. These are colloquially called long duration floods. Understanding the causes of these types of floods and using that information for managing water infrastructure is a recent area of research.

Nasser Najibi is working in this field and has recently published an article in Advances in Water Resources Journal on the atmospheric teleconnections of long duration floods. Large dams along the main stem of the Missouri River Basin are selected for this investigation. For each dam, we differentiate long duration floods from short duration floods and identify what hydrological, climatological and atmospheric conditions cause the long duration floods. Nasser derived a precursor index that shows an incipient condition for long duration floods. There is an organized atmospheric structure (spatial arrangement of high-pressure nad low-pressure areas) that draws the storm tracks repeatedly into the region causing recurrent rainfall events. These repeated waves of rainfall events fill up the dams and cause river overflows. We are now developing reservoir operation models using this prognostic information for managing flood hazards better . More information can be found in the journal article. We welcome any comments.

Oh, and Pineapple Express is not just a 2008 comedy film or a funny name for a storm. It is also a common term for a strong and persistent flow of atmospheric moisture that causes heavy precipitation in mid-latitudes. Its discovery initiated this new field of climate-informed flood risk research.

No Rate Hike Before Elections

At 2 pm today, the Federal Reserve will come out with their statement on economic projections and Chairwoman Janet Yellen will hold a press conference. Investors are keenly waiting for FED’s signal on the rate hike and borrowing costs for the near to long term. Janet Yellen will come out and speak for “hike”, but they will not raise the rates now because of the proximity to the election. Any rate hike now will only lead to pricking the stock market bubble, and that will look bad. Nobody wants to see a repeat of 2008 pre-election months. So that puts the hike off the table at least till 2017. Who knows if she will continue as the chairwoman after the election. But the reality is that the rates have to be higher. Prepare yourself.

The History of New York City Water

pepactonArun Ravindranath has published his work on the history of New York City Water supply and the Delaware River Basin Compacts in Water Policy Journal. His work is focused on understanding water risks and how the reservoir systems perform under changing climate and political and institutional constraints. He is developing a framework to assess the dynamics of natural and human systems to inform water allocations and policy. We welcome any comments. Here is a quick summary of the work.

The Delaware River is the longest continuous river in the Eastern United States. The river basin encompasses four states, New York, New Jersey, Pennsylvania and Delaware, covers roughly 13,000 square miles, and supplies more than 15 million people with water for drinking, agriculture and industrial use. The Delaware water release policies are constrained by the dictates of two U.S. Supreme Court Decrees, 1931 and 1954, and the need for unanimity among four states and New York City. Critical stakeholder groups include New York City, a variety of environmental interests, and key water organizations from the four states. The reliance of several entities on upstream water sources has led to competing interests, conflicts, and disputes over the years. Arun, through this investigation, has explored important changes in the allocation rules, key implementation issues surrounding drinking water supply and environmental impacts on the downstream ecosystem, wildlife, and fisheries, and provided context for social value changes.

Image - courtesy of nyc.gov.

A New Demand Drought Index

drought

Elius Etienne has published his work on droughts in Journal of Hydrology. He led the entire project from data collection on agriculture, climate and water use, to quality control, to developing the drought indices and validating them. The indices that he designed are an improvement over the standardized indices which do not consider water demand. This Demand-Sensitive Drought Index can be used with aggregate demand (like all agriculture) or can be utilized as a disaggregated index for a particular sectors’ water demand. He also derived drought resilience and recovery estimates for the United States. In the context of the current droughts in various parts of the country, this work can aid the policy experts in mapping the potential duration, severity, and recovery of the drought to proposed changes in demand such as agricultural water use changes and domestic supply restrictions. He has developed a website for sharing these findings. The Project App provides the background, databases and the tools and simulation modules for public understanding. He also created a quick five-minute audio slideshow on the demand sensitive drought index and its utility.

Recent Visit to University of British Columbia

I visited the University of British Columbia over spring break where I participated in a conference on Challenges of Urbanization. The conference had four other invited speakers from Canada, the USA, and India to discuss the recent urbanization experience of India and their lessons for the future. My talk was on assessing and addressing the risk from an unsustainable trajectory of climate, water, food, energy and incomes for India. I was fortunate enough to have shared the stage with Dr. Prathap Bhanu Mehta in this discussion. Dr. Mehta is the President of Center for Policy Research in India. He previously taught at Harvard’s Kennedy School and NYY Law School. He is an eminent thinker and political theorist of today’s time. His work can be found here.

In my talk, I presented the anatomy of the water crisis in India and some reasonable set of solutions that can be implemented to restore water and environmental sustainability. Details of the work can be found in the UNESCO’s Global Water Forum’s Discussion Paper. For the underlying methodologies, you can read my Water Resources Research Article.

Time to Revisit Water Privatization?

public_good

CNN Money recently reported seven publicly traded water utilities that have seen new highs and an average year to date performance of at least 7%. The anticipation that the recent water pollution crisis in Flint, Michigan would initiate several states and municipalities to involve private water utilities for managing their water supply may have motivated the investors to long these stocks. Several of these publicly traded companies are part of the National Association of Water Companies, a consortium of private water companies that provide a broad range of water services. Private water companies serve almost one-quarter of the countries population.

Shika Dalmia of Reason magazine has a comprehensive coverage of the water crisis and the mishaps of the governance at various levels. It started with choosing the less expensive Karegnondi Water Authority (KWA) over the Detroit Water and Sewage Department (DWSD) for a new contract and re-opening the Flint water treatment plant in the interim. Cash-strapped cities like Flint can benefit from privatizing their water utilities as private enterprises would make investments needed to meet the stringent water quality standards. Their long term infrastructure investments would perhaps compensate for the past under-investment in the water infrastructure. Flint particularly has a receding population base with at least a billion dollars in unfunded liabilities.

Perhaps, the first modern privatization of waterworks dates back to 1989 when England and Wales, under the leadership of Margaret Thatcher, sold ten public water utilities. Caroline Van den Berg from the World Bank, in her article in viewpoint in 1997, reported that these reforms delivered a volume of new investments in water supply systems, full compliance with the drinking water standards and have lead to a higher quality of river water along with more transparent water pricing system.

Privatizing water comes with resistance. The two primary arguments against privatization are the public good and the natural monopoly ideas. Public good by definition has to be non-excludable and non-rival in consumption. Non-excludable for water as good is the fact that the entity providing it cannot exclude the access of water to people who do not pay for it. Nonrival in consumption of water is the fact that one person’s use does not reduce somebody else’s.

Recently, DWSD and Baltimore Water Department (both public water utilities) shut off water for customers with delinquent accounts. Clearly, water as a commodity in not non-excludable in the eyes of public water utilities, especially when they are up against decreasing revenues. Water is also rival in consumption. If I use X gallons of water for my lawn, those gallons of water are not available for my neighbor. One could argue that water supply is unlimited, making it practically non-rivalrous, and hence, the marginal utility of water is zero. Try winning that argument with a farmer in Central Valley, California or resident in San Fransisco. Hence, on both accounts, water as a public good fails.

Monopoly-Man

The nature of water industry, some argue, necessitates a natural monopoly since it requires massive fixed costs and economies of scale in the production of the good. Hence, in the long run, two or more companies that started off operating as competitors, would eventually have to yield to either one that could expand and achieve lower unit costs with increasing output. The inconvenience caused by having to deal with many water and sewer lines underground further supports this argument. It is reasonable for anyone to, therefore, think that there will be one company that will capture the entire market and start exploiting the consumers with higher prices.

Assuming that the monopolistic company has in fact raised the water rates, a rational customer, in the absence of any competing companies (for the time being) will respond to this rate increase through under consumption and rationing –thereby decreasing the revenue for the monopolistic utility. Residents of California, in 1976, have demonstrated a rationing of 40% to 50%, thus drastically reducing the revenues of their respective water districts.  The customer will prioritize his needs and budget the super expensive water supplied by the monopolistic company for essential needs. The client would respond to price increases in the same way as he would to water supply shortages — “conservation.”

He will consider purchasing bottled water if it is cheaper that the current water rate. The price signal is already out, and a different company can provide water trucks to the community at a more competitive rate. Recall that the customer is only stuck with this company as there is no one else who can come into the market, lay the pipes and start providing water. Bottled/truck water is rather mobile for any new company to come into the market. If the rates are exorbitant, to the point that the customer cannot afford any water, he is then compelled to create his own by rainwater harvesting and traditional water purification techniques. Remember, at that price level, his time value of developing water resource for survival is still much cheaper than the water rate he was offered. Price gouging so-called natural monopolies can seldom sustain. Economist Thomas DiLorenzo, in his article on “the myths of natural monopoly” has a comprehensive treatment of this concept, starting with the origins of the term “natural monopoly” in economics.

In the last two years, Flint switched three utilities (all three public) for providing water. DWSD whose contract expired on 2014, the new KWA, which was supposed to provide water from Lake Huron in two years time and the interim water supplier from the Flint River. Suffice to say that this is proof enough to bring in private utilities who would compete for market by providing lower rates and better services. The Department of Environmental Quality of Michigan and the Environmental Protection Agency, responsible for ensuring quality checks, might, in fact, be more vigilant on the private companies than their public counterparts. The private companies are also liable to class action lawsuits in the event of such incidents. The municipality, on the other hand, may claim sovereign immunity.

Steve Hanke and Stephen Walters, in 1987, presented the ideas of how a privatized water system can work. They proposed a franchise bidding system where the company wins based on the water rates and services it offers. They also provided examples of private waterworks from France. In the United States, economist Charles Howe, in his national academy of press’s open book in 2002, presented a comprehensive assessment of issues and experiences from privatization of water services.

It is time to revisit these issues and reflect on private water provision in the US.

Random Thoughts on National Debt

 

debt

The United States of America’s nation debt clocked 19 Trillion last week.

This decision to continue taking on more debt is analogous to a bankrupt family applying for a new credit card to pay its old “maxed out credit card bills”.

How can a proper credit check on a family with huge debt = F, but the rating of US treasury bonds be always AA+?

My FICO score instructs me to pay off the revolving balance to be in good standing. Shouldn’t the same hold for the national debt. Whoever lent us this money is in for a big haircut or should get ready for a Zimbabwean style pay off.

My share of the national debt as of today is $158,902. Are we planning to pay it off honestly with savings? I am generally a stingy person, but I cannot catch up with this year after year.