August 30, 2010

Operation Delaware River

How applied inventory research — and one professor’s passion — created a political and environmental breakthrough for Gotham’s lifeline.

Catherine New

On an average day New York City’s population uses more than 1 billion gallons of water. More than half comes directly from the Delaware River. For the last four decades, the city’s reservoirs near the river’s headwaters have provided a reliable water supply. All looked well for Gotham — rain or shine.

For conservationists and fishermen in the Catskills, among them Columbia Business School’s Peter Kolesar, the landscape looked different. The reservoir’s conservative storage policies and erratic dam releases contributed to a diminished wild trout population and degraded environmental quality of the river. As a result, tensions between fishermen and city officials simmered for years — sometimes boiling over. Today, much of that tension has been resolved thanks to research by Kolesar, professor emeritus in the School’s Decision, Risk and Operations Division. Leading a team of scientists and fishery experts from conservation groups and collaborating with Professor Upmanu Lall of Columbia’s Earth Institute and department of Earth and Environmental Engineering, Kolesar devised a new reservoir water-release policy that balanced the city’s needs for a secure water supply with benefits to the environment.

This research is the backbone of the new Flexible Flow Management Policy (FFMP) that determines the amount of water released from the dams. In 2007, the Delaware River Basin Commission (DRBC), which administers the Delaware’s waters, implemented the policy; estimates place the economic benefit at $163 million annually in fishing and boating income with a 200 percent increase in aquatic habitat for fish. The FFMP has also reduced potentially dangerous water spills. The immediate and significant impact of their research was nationally commended in April, when it was nominated for the esteemed 2010 Franz Edelman Prize. The award recognizes innovation in operations research that has a significant impact on organizations — and often for society.

“What is so valuable about the FFMP,” says Carol Collier, executive director of the DRBC, “is that you can have it all. You can have a system that provides water supply for humans and the ecological flow necessary for the river.”

Political Waters

Rules regarding how much water flows downstream date back to a 1931 Supreme Court decision that allowed New York City to divert and use up to 800 million gallons of water per day. The city was simultaneously obligated to release enough water from its reservoirs to maintain a minimum flow to New Jersey, Pennsylvania and Delaware.

There was no organized advocacy for the river’s environmental interests at this time, and the rules put the river’s fish at risk. It was common for the river to have low flows during the summer, raising water temperatures and diminishing the insect population — the main source of food for many of the fish. Trout — a cold-water fish — were especially vulnerable.

For the next several decades, the water rules remained unchanged even as aquatic life was dying. The turning point came in 2004 after Kolesar had a casual chat with conservationists agitating for a change in the rules, which were soon up for review by river management. As an operations management professor, and a conservationist at heart, Kolesar thought he might have a solution.

In his view, the environmental and water supply issues had strong parallels with a classic DRO problem: how can a manufacturer — through controlling inventory — accommodate demand and supply variability? Kolesar and his team looked at the water-release policy from the perspective of inventory theory and feedback control and created simulation models based on 73 years of daily-flow data. By quantifying the risks and benefits of increased water flow, they created an algorithm that expressed the dams’ water release as a function of the storage in the reservoirs and the season of the year.

“If you were manufacturing cars or detergent, your issue would be to control how much finished product inventory you have,” Kolesar says. “On the river, the water behind the dam is the inventory, the supply is the precipitation in the mountains and the demand is the city’s water consumption. Our basic strategy is: if you have more water, release more water. If you don’t have a lot, you have to be more conservative.”

At a public briefing in August 2006, Kolesar demonstrated how the algorithm accounted for both adequate water storage and more water for fish. River management agreed to use his team’s analysis, eventually reaching a consensus for new water rules — the FFMP — that all the downriver states, New York City and conservationists agreed upon in 2007.

Victory for Diverse Stakeholders

The success of the plan has been more than an economic victory; it has been a win on both political and environmental fronts. It underscores how operations analyses can overcome stakeholders’ conflicting needs to find a universally beneficial solution. The project was unique in that it did not have a sponsor or client; the conservationists, with Kolesar at the helm, incorporated their knowledge into an existing political process. The primary driver was love for the river itself and a desire to bring quantitative evidence to grassroots activism.

The success of the FFMP also signals progress for the way environmental policy is made. Fifty years ago, the water policy was focused on a singular outcome — ensuring water storage for New York City. As the environmental movement has matured and new methods of quantitative research have been developed, policymaking has transformed into a more integrative process, accounting for a more diverse set of needs and environmental issues. That kind of multidimensional decision-making process, taking place across business and management disciplines, has considerable export value.

Indeed, news of the plan’s success has traveled to other water-challenged regions. Officials from Georgia, Alabama and Florida, who have been fighting for years over water allocation from Lake Lanier and the Tennessee River, have invited key players from the DRBC and Kolesar’s coalition to share their knowledge. “The benefit of what we did—to have the analysis that could bring disputing parties into agreement — was a breakthrough,” Kolesar says.

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