Resilience in Practice: Avoiding Planning Traps
Plenary keynote delivered on Monday, 12 August 2024, at the IWA World Water Congress & Exposition in Toronto, Canada.
We convene today under the banner of “Shaping our Water Future.” In North America, many of our most capable water utilities are RE-shaping themselves in anticipation of an unpredictable future, expected to be profoundly different from our past, and sure to be full of surprises. With leadership from the US Water Alliance, a widely held “One Water” vision imagines all of our agencies and interests acknowledging the interconnectedness of what we do and collaborating in its accomplishment.
Among water utility leaders, the willingness to invest in that vision may be at an all-time high — thanks in part, to many of you here today.
Where I live in Southern California, the race is on to reinvent our existing independent water and wastewater systems — moving from two separate single-purpose utilities to closed-loop, multi-purpose projects and partnerships among and within agencies.
At times, it feels like water utilities are in a competition to get all of our water recycling projects on-line, at full-scale, as quickly as possible. Pure Water San Diego, Pure Water Los Angeles, and Pure Water Southern California, together with the completed Orange County Groundwater Replenishment System, and the expanding Inland Empire Regional Water Recycling Program are on track to spend $40 billion, adding over 600-million-gallons-per-day of potable recycled water to our existing imported and local water supplies.
That is the equivalent of roughly 2.3 million cubic-meters-per-day.
These recycling facilities must be integrated into an existing system-of-systems serving vast urban populations. They all must be attuned to the needs of sanitation systems, as well as traditional water supply, treatment, and distribution systems. For those relying on groundwater recharge, they must be coordinated with groundwater basin managers and the recharge facilities that capture and store rainwater.
Achieving interconnectedness and uninterrupted service, rivals the complexity of a heart transplant — using an new artificial heart. I imagine that it is easier to manufacture an artificial heart than it is to successfully implant it into a living person.
Successfully implanting our new large-scale recycling facilities will be equally daunting. We know how to design, construct and operate facilities that convert wastewater into drinking water. But like a heart transplant, it will be very challenging to integrate them into highly-complex urban infrastructure networks.
And while our vision may be integrated and holistic, our approach to engineering planning and project implementation looks more traditional than transformational — producing large-scale centralized facilities, which, once built, will have limited “adaptive capacity.”
I am using the term “adaptive capacity” to mean the ability of an engineered system to be changed or modified to cope with both new opportunities, as well as unanticipated conditions that undermine our assumptions. Generally speaking, our implementation strategies ignore the value of flexibility, and the risks resulting from its absence. I was recently confronted with the reality of this adaptation blind spot.
Two months ago today, I participated in a week-long value engineering workshop at one of many large water districts in the Colorado River Basin.
Weeks earlier, I had tried to graciously decline an invitation to submit my resume. I was well acquainted with the VE process from years working at a large engineering firm. And there was a simple explanation for why I was never invited to participate in a value engineering workshop — I am a planner not an engineer.
When it was explained that in addition to value engineering, a small group of experts would focus on value PLANNING, I relented. I was selected to be one of the out-of-the-box thinkers.
Under the title “Overall System Integration,” the out-of-the-box team was asked to assess the big picture — a high-altitude evaluation of the plan’s goals and how the new system was expected to accomplish them.
In addition to our out-of-the-box group, the value engineers, split into two groups: one focused on major pipelines; and the other taking-on a very large, new regional water treatment plant, planned to serve demands over thirty-years in the future — with half the ultimate capacity built in the first phase of the program.
The two value-engineering teams took a deep dive into the details of preliminary engineering already completed. They developed recommendations to improve the resilience of project components exposed to extreme conditions. The simplest example was a suggestion to consider large-diameter flexible pipe in areas above known fault lines and subject to seismic risks. While more costly, flexible pipe has more “adaptive capacity” in an earthquake than its more rigid (resilience engineers might say “brittle”) alternatives.
While value engineering teams took a magnifying glass to each component of the program, the out-of-the-boxers were in a hot-air balloon, peering down through binoculars.
From that altitude, I saw the result of decisions that were bold and aggressive — a big water treatment plant and miles of large-diameter pipelines to convey drinking water to where it was likely to be needed and plans to build it as quickly as possible. Let me share a little more context.
The program is located in an agricultural region anchored by a rapidly growing city, with clusters of dense suburban development along major highways. Water sources include groundwater, supplemented with untreated surface water diverted from the Colorado River Basin to meet irrigation needs. For municipal and industrial users, a combination of disinfected groundwater and treated surface water satisfy today’s urban demands.
Like much of the Western United States, the transition of land uses from rural agricultural to urban and suburban development has planners rightly focused on the storage, conveyance, and treatment infrastructure needed to accommodate the change in user type and water quality requirements.
I realized that my concerns diverged from the conventional wisdom that has long influenced large-scale water infrastructure investments.
As the week went on, I felt more anxious.
So little was known about the timing and location of future treated water demands, it seemed perilous to construct such a large and expensive facility before knowing when and where demands would actually materialize. In the orientation meeting, when asked about the scale of the treatment facility and the absence of any significant current demands for treated water, we were told, “It’s a bit of a Field of Dreams approach: If we build it, they will come.”
But what if they didn’t come? How could this system adapt? Its scale and scope severely limited flexibility — potentially sticking future staff with the operations and maintenance of a large-scale treatment plant serving a small fraction of the forecasted demand.
I had seen this before. The Metropolitan Water District of Southern California, mothballed most of a large water treatment plant, when the member agency it served decided to only purchase untreated water, providing their own water treatment. When it comes to treatment, communities have choices.
To say the obvious, we live in a world of extreme uncertainty, and accurately forecasting conditions twenty-five to fifty years into the future is impossible. And yet, as water utility managers, we have a deeply engrained belief that the future is predictable, and most (if not all) of our planning tools are anchored in that predictability.
I want to touch on three planning traps that restrict future flexibility:
setting planning horizons decades in the future,
assuming economies of scale, and
attempting to optimize future system performance.
Planning Horizons
First, while it may seem that planning horizons up to 50 years into the future make sense, given the expected useful life of 100 years for conveyance and 50 years for treatment facilities — today that’s not entirely so. Instead, it creates false confidence in the future value of large-scale investments. Unfortunately, in many cases, these decades-out planning horizons are set in administrative codes and ordinances — forcing planners to make predictions far beyond the limits of common sense.
Economies of Scale
Long planning horizons and linear demand forecasts strengthen the argument in favor of economies-of-scale. It is often said that “bigger is better.” Admittedly, economies of scale are real, but only under certain conditions. One of those conditions is that large-scale facilities do not deliver economies unless they are performing at full scale.
If for whatever reason, actual demands are lower than expected, dis-economies of scale result. Chasing economies of scale can be a trap — leaving us with less future flexibility and expensive misplaced investments. In short, bigger is not always better.
Optimization
Finally, our search for an optimal solution can also be a trap, reinforcing the belief that there is one right solution for our future needs. It tends to weed-out future alternatives rather than preserving options to adapt our decisions. Optimization is also highly dependent on performance predictions — predictions of how facilities will function and predictions of demand for the product produced.
Our ability to forecast population growth, economic conditions, and technological advances is as limited (maybe more limited) than our foresight regarding climate. The chronic effects of climate change are driven by physics. Our demand forecasts are driven by people and commerce, the choices they have available, expected benefits, and human psychology.
If our current analytical tools are less reliable in a world of extreme uncertainty, is there anything we can do about it? The answer is yes.
Let’s incorporate the value of preserving flexibility into our capital planning. In industry these methodologies are generally referred to as “real options analysis” — methods to help identify and monetize the value of adaptive capacity. That is, the value of keeping options open and avoiding over-investment in rigid, brittle infrastructure.
There is real value in the ability to rapidly expand or shed capacity, and real savings in the flexible staging of expenditures, that allows for resolution of some unknowns over time – both positive (say, new technologies) and negative (unexpected changes that undermine our assumptions). Frequently, the policies and practices associated with infrastructure investments tend to take a more “now-or-never,” “all-or-nothing” approach.
And yet, even after accepting that we just don’t know how big that water treatment plant needs to be fifty years from now, or where it should be located, many of us, including me, retreat to the professional methods and tools that have buttressed our confidence in the past. Nobel Prize Winners Kahneman and Tversky, in Thinking Fast and Slow, warn us against our fallback tendencies:
“it is wrong to blame anyone for failing to forecast accurately in an unpredictable world. However, it seems fair to blame professionals for believing they can succeed in an impossible task. Claims for correct intuitions in an unpredictable situation are self-delusional at best . . . If you find this conclusion surprising, you still have a lingering belief that intuition is magic. Remember this rule: intuition cannot be trusted in the absence of stable regularities in the environment.”
So, without any radical changes in how we go about our business, let’s be more conscious of the limitations of both our decision-making tools and intuitive beliefs — insuring that our future investments increase our ability to adapt, while avoiding the traps that prevent it. That is one way to significantly enhance resilience through our professional practices.
Let’s implement “big fixes” in manageable steps — making them beneficial and affordable from the start — that is technologically, institutionally, and economically feasible. Likely, that means our first steps will be smaller in scale, with committed customers, and designed for rapid expansion and/or creative repurposing.
In addition, let’s invest in real options that may be needed in response to unexpected events or trends. If there is landwe might need, let’s secure it today. If there are regulations that must change, let’s develop them now. If there are new technologies that might increase our available options, let’s invest in them. We don’t usually view these costs as essential. But they are. Real options have value. Let’s make that value an explicit part of our capital and operating budgets — creating the capacity to alter tomorrow’s plans and projects.
Finally, let’s not constrain the ability of future water leaders to adapt our best ideas, in the belief that we know better what they will need fifty years from now. In the rapidly changing world we are in, big fixes are more likely to be tomorrow’s antiquities, and monumental infrastructure investments today are less likely to serve us for the ages. Our future water leaders will need all the adaptive capacity they can muster.
I will leave you with a quotation, attributed to Albert Einstein, that some find perplexing, but is at the essence of what I am trying to convey:
“We cannot solve our problems with the same thinking we used to create them.”
