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Integrated Resource Planning (IRP)
SA White Paper Prepared by the Florida Section of the American
Water Works Association
March 7, 1995
Effective management of Florida's water resources is becoming increasingly complex and more
challenging. Many factors contribute to this challenge:
Scarcity of acceptable water resources
Numerous and often competing objectives of water supplies
The need for environmental preservation and/or restoration
A more knowledgeable and participatory public
The high cost of water supply development
The future uncertainty of all these factors
Because of the number, magnitude, and inter-related nature of these issues, "business as usual"
in water resource management will no longer be sufficient. We must use an integrated resource
management approach if we are to meet the objectives of regulatory agencies, provide water at a
reasonable cost. satisfy the needs of the environment, and maintain the quality of life for Florida
Issues Facing Water Suppliers in Florida
Water Supply Alternatives
No water supply alternatives can be developed cost-effectively by every utility, in every
watershed, in every geographic area of Florida. Even though reuse of reclaimed water will play a
role in the water resource future of the state, mandating its use across the board may not be
economically prudent or cost-effective in meeting growing water demands. Analysis of supply
alternatives and subsequent decisions regarding implementation should be made at the local level,
in the context of an integrated water resource plan tailored to meet the needs of the area affected.
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Water Use Permitting
Two issues in particular relate to water use permitting: designation of water sources suitable for
future use and permit duration. Utilities would benefit greatly if water management districts
identified protected water sources as well as those suitable for future development. If water
sources not suitable for development were known in advance, utilities could automatically omit
them from consideration in long term water supply planning efforts. A second concern is permit
duration. Permits of 5 to 10 years are the norm, and are far shorter than the time it takes a
permitted to plan. fund, and construct water supply facilities. Water supply planning horizons
typically range from 20 50 years. Permit duration should be lengthened to match the realistic
time needed for full development of the resource.
Water suppliers are responsible for providing sufficient quantities of high quality water to meet
the needs of their customers, who bear the cost of existing and new water supply development.
Water suppliers are opposed to mandates specifying the use of certain water sources (i.e., reuse)
to meet local water demands unless sufficient financial support is provided to offset water supply
development costs which otherwise would be borne by the utility ratepayers.
No simple solutions remain for the water resource issues facing Florida. Mandating the
#" implementation of certain water supply alternatives for all utilities in Florida without consideration
of local and regional water resource, economic. socio-political. and long range planning concerns
would not result in the most prudent resource investment, nor would such mandates result in an
effective water management strategy. Alternative sources must be evaluated in the context of an
integrated approach, weighed against clearly stated policy objectives, resulting in a mix of supply
scenarios which best meet the needs of the area.
Integrated Resource Planning Defined
Integrated Resource Planning (IRP) differs from traditional water supply planning because it
considers a wide range of conventional and innovative water supply strategies for evaluation. IRP
incorporates least-cost planning, but also considers the optimal mix of alternative water supplies,
which may or may not result in selection of the least-cost plan. Alternative supplies which might
be evaluated in the resource plan include but are not limited to:
Water reuse (indirect potable, urban, recreational and agricultural irrigation,
cooling tower make-up water, environmental restoration, etc.)
S Aquifer Storage and Recovery (ASR)
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Development of lower quality sources using advanced treatment technologies (i.e.,
^ reverse osmosis)
Surface water storage and recovery
These options are evaluated on a "level playing field" with factors such as reliability, uncertainty,
and externalities weighed during the evaluation. The IRP approach is based on clearly stated
policy objectives and allows for meaningful public involvement throughout the process.
Elements of an IRP
A number of common elements are found in different IRP applications, but there is no single right
way to carry out the process. In fact, the most effective IRPs are developed by customizing the
approach to better meet the needs of the study area. Certain elements, however, are common to
all IRPs. These include:
1) Clearly-defined policy objectives
2) An open and participatory process
3) Evaluation of supply and demand options
4) Economic analysis which incorporates externalities
5) The calculation of risks and reliability
Clearly-Defined Policy Objectives .
To successfully develop an IRP, policy objectives which reach well beyond traditional planning
goals, must be clearly defined. A water supplier will likely be trying to achieve multiple and often
competing policy objectives. Nonetheless, each must be explicitly stated so that potential
alternatives can be weighed against the established, guiding objectives. In defining the policy
objectives, consideration must be given to regulatory, organizational, political and cultural
opportunities and constraints that presently exist or which may come in to play over the planning
horizon. Examples of policy objectives include: minimizing the risk of water shortage,
preserving wetland habitat, or using the highest quality water for the greatest public need,
maximizing water use efficiency, to name a few.
Open and Participatory Process
Involving interested and potentially affected stakeholders is an essential clement and differentiates
IRP from traditional planning approaches. There are a number of reasons why this step is useful.
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First, the public is far more interested, knowledgeable, and active than ever before. The water
industry has enjoyed a fair amount of anonymity and autonomy in the past; that scenario is gone
forever. This is especially true when environmental impacts or health effects are concerned.
Second, a wide range of "publics" automatically will be affected because a variety of alternatives
are being considered. These diverse stakeholders will have a number of valid, previously
overlooked ideas worthy of consideration in the planning process.
Public involvement provides an opportunity to hear from these stakeholders-elected officials,
ratepayers. environmental groups and concerned citizens-early in the process, which minimizes
the risk of being "blind-sided" later in the process. With the early, meaningful input of these
groups in the planning process, the resulting project will have public "buy-in," be more
comprehensive, have a greater chance of being permitted, and be more likely to remain on
Evaluation of Supply and Demand Options
IRP is similar to traditional planning in that a number of supply alternatives are identified for
consideration. IRP differs, though. in that demand-side (conservation) alternatives are included
and evaluated with the same rigor as conventional or innovative supply options. The important
features of this element of an IRP is the identification of as many alternatives as possible and
screening of the options according to carefully selected criteria. The evaluation criteria should
reflect the policy objectives and result in the selection of options which best achieve the stated
objectives. Evaluation criteria will likely vary depending on the type of measure being considered,
but might include:
Water quality and treatment requirements
Expected life of the option
Ability to obtain permits
It is important to begin the process with a very wide range of alternatives, and conclude with a
manageable number of potentially realistic water supply solutions which maximize the stated
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Economic Analysis Which Incorporates Externalities
r The level of analysis with an IRP is consistent with traditional supply planning, and includes
information regarding cost (expressed as the present value of capital and operating costs), unit
cost of the alternative (i.e., S/1000 gallons of water provided) and availability. Two analyses make
IRP different from traditional planning: the inclusion of externalities in economic evaluation, and
the evaluation of conservation measures. To arrive at the true cost of any water supply
development option, externalities must be identified and quantified. For example, if an identified
groundwater source pumped to capacity will result in damage to adjacent wetlands, then at least
three scenarios which impact water supply costs must be assessed:
1) incorporating the cost of mitigating the impacts
2) reducing pumpage and adding an additional water supply alternative to the
3) transferring the cost stemming from lost or damaged wetlands to society as a
IRP also includes and requires the same rigorous consideration of conservation alternatives. For
each conservation measure considered, water savings and total program costs (expressed in
present worth) must be determined. This level of analysis allows supply and demand-side
alternatives to be compared fairly in terms of cost of development and return on investment.
. Calculation of Risks and Reliability
An essential element of IRP is the calculation of risks and reliability. This data is central to the
integration process. and allows for the accurate assessment of trade-offs among supply scenarios.
Because any planning for the future is dependent upon a variety of projections and forecasts.
uncertainty is inherent in any plans based upon those original projections. Four methods are
commonly used for assessing the risk associated with differing resource scenarios: sensitivity
analysis, scenario analysis, probability analysis, and decision analysis.
Sensitivity analysis assesses the impact that individual variables will have on the resource plan. If
the resource mix is highly sensitive to any of the variables, it may be beneficial to collect more
data and improve forecasting methods of the highly sensitive variable. For example, if a water
supply is highly sensitive to water quality issues, more research may be necessary to further define
water quality trends, factors affecting water quality, and possible treatment enhancements to limit
the amount of risk associated with that variable.
Scenario analysis is similar to sensitivity analysis in that the stability of the resource mix is
measured against changing variables. With scenario analysis, however, many assumptions are
Probability analysis takes the above approaches one step further and assigns a probability of
occurrence of any of the forecast variables. For example, it is known that water demand forecasts
DEP-.SECRETAY'S OFFICE TEL:1-904-488-7093 Nov 28 95 9:09 No.001 P.07
are variable and largely influence water supply planning initiatives. In this example, a probability
of demand forecast being low is 20 percent, high 20 percent, and medium 60 percent. These
#' probabilities are adjusted and the effect on the optimal resource mix is observed.
Decision analysis is the most complex means of assessing uncertainty, and may include aspects of
all three of the previously discussed approaches. Decision analysis requires that all variables be
quantified to some degree and results in a "decision tree," or suggested resource investment path.
which displays potential outcomes of the plan based on the input values of multiple decision
Benefits of IRP as a Water Resource Planning Tool
IRP possesses numerous advantages compared to traditional planning. By its very nature, IRP
increases the likelihood of successfully planning, permitting and developing water supplies.
Why? Because policy objectives are clearly identified and crafted with considerable input by
affected stakeholders. Because the public is involved, the process is automatically broadened and
results in a wider, more creative range of alternatives. Public and political support for the plan is
enhanced because environmental interests are included in the analysis in the form of efficiency
(conservation), wetland preservation or mitigation, and regulatory issues. From a risk of
investment standpoint. IRP is advantageous because it often, but not always, results in a series of
incremental supply additions with corresponding incremental investments. The financial risk
associated with this approach is less than with conventional supply investments, which tend to be
singular. large investments in one major water source. If planning assumptions supporting such a
/" large investment are wrong, the cost of the error is much higher.
Another benefit of IRP is the ability to make comparisons of alternatives based upon trade-offs
associated with each option. For example. least-cost planning would select the measure that
results in the lowest cost. and traditional planning would select the option with the least risk of
supply shortfall. With an IRP approach, a combination of both or possibly neither alternative
might be chosen. Although least-cost planning is used to establish a list of alternatives, the
combination of measures, weighed against the policy objectives, might result in a resource mix
which includes a higher total cost but also minimizes environmental damage. The optimal mix of
water resource alternatives will vary from place to place depending on the options available and
the stated policy objectives.
Finally, IRP results in a series of unique combinations of water resource alternatives (i.e., ASR.
reuse, and conservation) with distinct and measurable characteristics. Consideration of these
discrete options inherently leads to better decision making. When policy makers are faced with
clearly differentiated choices where the benefits, costs, risks and societal values are incorporated.
the outcome can only result in the greatest good for the community.
OFFICE TEL:1-904-488-7093 Nov 28 95
Marjory Stoneman Douglas Building
3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
OFFICE OF THE EXECUTIVE COORDINATOR
FOR ECOSYSTEM MANAGEMENT
Telephone #904/488-7454 (SC 278-7454)
Fax #904/488-7093 (SC 278-7093)
9:06 No.001 P.01
Virginia B. Wetherell
01L2 ab q
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Proposed Main Issues for
Water Supply Development and Funding Group
September 30, 1996
I. Supply Development and Related Planning and Reaulatory
Issues/Assianment of Responsibilities
1. Sources (Use of public lands; water conservation
as alternative supply; conservation/alternative
supplies in water shortage areas; local sources
first; designated uses)
2. Treatment technologies (Cost/benefit analysis of
treatment/supply methodologies; disposal of
concentrate from reverse osmosis and desalination)
3. Related Planning and Regulatory Issues (Wellfield
regulation; sustainability of water supplies and
ecosystems; safeguards for water transfers;
determinations of feasibility; water allocation;
linking land and water management; levels of
service as related to water supply; statutory
recognition of regional water supply planning;
relationship of RWSPs to water use permitting;
independent scientific peer review)
B. Assignment of Responsibilities
1. General Task--Defining the roles of WMDs, other
agencies, and nongovernmental interests in both
traditional and alternative water supply
2. Specific Considerations (Assigning authority to a
single entity within a WMD for water supply
research, planning, and regulation; local
government primacy in determining appropriate
water supply alternatives or options for
facilitating water supply development)
1. Identification of all Long-Term Funding Mechanisms
for both traditional and alternative water supply development, including
capital works projects, to meet existing and future needs (P-2000-type
program; water use fees; dedicating a fixed percentage of each WMD's
2. Other Funding Issues (Funding for demonstration of new or emerging
water treatment and supply technologies; levy of optional surcharge on
interjurisdictional water transfers to further develop alternative water
supplies; guidelines for state agencies to identify federal, state, and
regional funding mechanisms available for regional and local water
1. General Task--Identifying economic and regulatory incentives to
promote economically, environmentally, and technically feasible
traditional and alternative water supply alternatives (includes
2. Specific Considerations (Requiring that the term of water use permits
remains in effect as long as the amount of water available to use is
consistent with current and future demand)
1. Cost Issues (True cost and value of water; cost comparisons; full-cost
2. Cost-Distribution Issues (Who pays for new sources; equitable
distribution of costs)
Water Supply Options
DESCRIPTION: Require in the statutes the creation of true independent regional water supply
authorities to own, fund, and operate the entire regional water supply system for selected
regions of Florida.
Main elements of proposal:
The regional authority would be different from the current regional water supply authorities:
Created by legislature (or by resolution of a water management district?), not by local
governments, but still composed of local governments or by a regionally-elected board.
Would absorb and operate production and transmission facilities presently owned by
either an existing regional water supply authority or by a local government.
Would have a rate base largely consistent across the entire service area. This would
allow the costs of new infrastructure, such as desalination, to be shared by the region.
This proposal shares elements with Proposal 1:
Emphasis on regional nature of supply plans.
Emphasis on team approach to developing plans.
Use of alternative dispute resolution mechanisms.
Legislative direction on local sources first.
Final decisions on consumptive use permits by the governing board of the water
This proposal differs from Proposal 1:
Does not include the menu of allowable water supply options to be developed by the
water management district.
1. Allows water supply development and cost sharing across the entire region.
2. Makes the governments of a region responsible and accountable for water supply in the
3. Eliminates the optional membership in a water supply authority.
Water Supply Options
DESCRIPTION: Require additional specific assurances before issuance by a water
management district of a consumptive use permit.
Section 373.223(1) provides that:
(1) To obtain a permit pursuant to the provisions of this chapter, the applicant must
establish that the proposed use of water:
(a) Is a reasonable-beneficial use as defined in s. 373.019(4).
(b) Will not interfere with any presently existing legal use of water; and
(c) Is consistent with the public interest.
In addition to the requirements of section 373.223, there is authorization in section 373.219 for
conditions that the governing board may impose:
(1) The governing board or the department may require such permits for consumptive
use of water and may impose such reasonable conditions as are necessary to assure that
such use is consistent with the overall objectives of the district or department and is not
harmful to the water resources of the area. However, no permit shall be required for
domestic consumption of water by individual users.
In this proposal, either the legislature (by amending state law), the department (by amending
the Water Policy Rule), or the water management districts (by amending their rules) would
specify specific conditions for permits that assure sustainability of the water resource and
Summary of Suggested Priority Issues for
Water Supply Development and Funding Group
September 30, 1996
Note: This is a compilation of responses from various
participants in the group regarding the issues they
would most like to address.
I. Supply Development and Related Planning and Requlatory
Issues/Assignment of Responsibilities
a. The use of state, regional, and local public
lands as locations for water supply projects,
b. Water conservation as a water supply option.
c. The need for emphasis on appropriate and
feasible water conservation efforts and
development of alternative water supplies in
areas of identified water supply shortages.
d. Local sources first; criteria for determining
whether proposed cross-jurisdictional water
supply development is appropriate; the
transfer of water as the option of last
resort once all other environmentally sound,
financially and technically feasible options
(includes conservation) have been exhausted
and concurrence of affected local government
has been obtained.
e. Determining a limitation of potable water for
non-potable use; s. 373.019(6), F.S., more
strictly enforced; reclaimed water as primary
source for irrigation.
2. Treatment technologies
a. Need for cost/benefit analysis of existing
and future water treatment/supply
methodologies to select suitable
b. Providing appropriate, environmentally sound
alternatives for the disposal of by-products
from reverse osmosis and desalination.
3. Related Planning and Regulatory Issues
a. Regulation of wellfield locations by local
b. Development of water supplies in a manner to
ensure the sustainability of the ecosystems
in the areas from which the water is being
withdrawn (through environmental performance
standards, MFLs, diversification of sources,
use of alternative sources, determination of
safe yields, demand management, etc.);
assuring sustainability of water resources
for both the environment and the people.
c. Safeguards for donor local governments in the
event of proposed or actual water transfers.
d. Ensured participation of affected local
governments in developing RWSPs and
determining feasibility of water supply
e. Water use permitting and/or allocation of
resources within a defined regional plan.
f. Alternative water sources and determination
g. Linking water management with growth
management; considering the recommendations
of the Land Use and Water Planning Task
h. Establishing functions, values, and levels of
service on which supply sources and needs can
be based; then setting milestones and
scheduling guidelines for WMDs to identify
and quantify water supply needs and sources
on a 20- to 50-year horizon.
i. Giving legal status and recognition to
regional water supply plans in Chapter 373,
F.S., and defining the meaning of the plans
in relation to the existing three-pronged
j. Independent scientific peer review for
minimum flows and levels and other aspects of
planning; upfront peer review.
B. Assignment of Responsibilities:
1. Defining the roles of WMDs, other agencies, and
nongovernmental interests in both traditional and
alternative water supply development.
2 Assigning authority to a single entity within a
WMD to do research, plan, and regulate proper
usage for water supply, to eliminate duplication,
lower cost, ensure continuity.
3. Assigning primary responsibility to local
government for determining appropriate water
supply alternatives or options for facilitating
water supply development.
1. Identification of all Long-Term Funding Mechanisms
for both Traditional and Alternative Water Supply
Development, Including Capital Works Projects, to
meet existing and future needs.
a. P-200C-type program
b. Water Use fees
c. Dedicating a fixed percentage of each WMD's
2. Other Funding Issues
a. Source of Funding for demonstration of new or
emerging water treatment/supply technologies.
b. Guidelines for state agencies to identify
federal, state, and regional funding
mechanisms available for regional and local
water supply development.
c. Levy of optional surcharge on
interjurisdictional water transfers to
further develop alternative water supplies.
1. Identifying economic and regulatory incentives to
promote economically, environmentally, and
technically feasible traditional and alternative
water supply alternatives (includes conservation).
2. Requiring that the term of water use permits
remains in effect as long as the amount of water
available to use is consistent with current and
1. Cost Issues
a. Identification of the true cost and value of *
b. Comparison of the cost and environmental
impact of district-funded water conservation
programs to the development of additional
water and wastewater treatment capacity.
c. Basing interjurisdictional water transfers on
2. Cost-Distribution Issues
a. Determining who pays the cost of developing
and supplying new sources of water.
b. Distributing the cost of capital outlay for
development, operation, delivery, and/or bond
debt equitably according to usage.