Risk Analysis for Reservoir Operation

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Abstract
The planning of reservoir operation presents decision makers with a trade‐off between competing functions, which are energy production and flood control in this study. To optimally resolve the trade‐off between maximization of energy revenues and minimization of downstream losses, the interaction between the expected value and variance of revenues (accruing from the reservoir operation) is included in a stochastic daily reservoir operation planning model. By parametrically varying the expected value and variance of the objective function, the risk‐averse nature of decision makers is incorporated, resulting in a range of feasible alternative policies that reflect the decision maker's attitude toward revenue maximization and poor performance of the reservoir operation.