Accounting for carbon: selecting the appropriate discount rate for multi-objective optimisation of water distribution systems

The optimisation of water distribution systems (WDSs), which has been a research focus for over 30 years, is now incorporating minimisation of greenhouse gases (GHGs) into the design of pumping systems. A multi-objective genetic algorithm analysis may be used to identify the Pareto optimal front for the tradeoff between cost and greenhouse gas emissions. These trade-offs are considerably influenced by the discount rate used. At present, discount rates based on the cost of capital of 6 to 8% are commonly used, which favours smaller pipe sizes, with increased pumping energy costs. We are recommending that a smaller discount rate be used, such as the 1.4% value suggested in the Stern Review on the Economics of Climate Change in England in 2006. The outcome will be that the total life cycle GHG emissions can be reduced.

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