53:171 Water Resources Engineering
Problem #10
Incorporating Flood Risk in Economic Analysis

(Adapted from WRE-Linsley 13.17) A contractor is planning the diversion works for construction of a dam in a remote area.  Dam construction is estimated to require two or three construction seasons.  If the capacity of the diversion works is exceeded during the intervening wet season, the contractor will suffer $400,000 in damages. Assume a 5.5% as the interest rate.

Based on flood frequency analysis, an Extreme-Value Type I (Gumbel) distribution best fits the sample of annual maximum peak discharges. The sample mean is 21,980 cfs and the sample standard deviation is 12,055 cfs (see class handout on EV1 distribution).

Estimates of the costs of the alternative diversion works of different capacities are:

Capacity (cfs) Cost
70,000 $200,000
60,000 $160,000
50,000 $120,000
40,000 $100,000
30,000 $80,000
20,000 $60,000
  1. What diversion works capacity would you recommend to the contract (if total cost is the only criteria) for a 2-year construction project (one intervening wet season)?
  2. What diversion works capacity would you recommend to the contract (if total cost is the only criteria) for a 3-year construction project (two intervening wet seasons)?
Last changed on 02/25/14 by Gabriele Villarini.