A sensitivity analysis of simulated River Basin planning for capital budgeting decisions

The simulation model in this study is applied to the Grande Ronde River Basin which is located in northeastern Oregon. The exogenous variables in this study include: (1) hydrology data as based on 41 years of historical hydrology (uncontrollable exogenous variable); (2) capital sets as determined for three different sizes of two reservoirs or nine combinations (partially controllable exogenous variable); and (3) operating procedures as determined for three scales of irrigation development (partially controllable exogenous variable). The functional relationships for benefits entail relationships between hydrologie phenomena and benefits for seven uses of water. These seven uses include: (1) irrigation; (2) municipal and industrial water supply; (3) recreation; (4) salmon reared in reservoir; (5) resident trout in reservoir; (6) flood control; and (7) anadromous fish. The endogenous variables resulting from running the model include net present benefits and benefit-cost ratios for nine reservoir combinations and three operating procedures (a decision set of 27). The results from the runs indicate that some decision sets are clearly superior to others and reduces the choice set from 27 to three.