| Full text | |
| Author(s): |
Total Authors: 3
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| Affiliation: | [1] Pontificia Bolivariana Univ, Dept Civil Engn, Bucaramanga 681007 - Colombia
[2] Univ Potsdam, Inst Environm Sci & Geog, Karl Liebknecht Str 24-25, D-14476 Potsdam - Germany
[3] Univ Sao Paulo, Sao Carlos Sch Engn, Dept Hydraul & Sanitat, BR-13566590 Sao Carlos, SP - Brazil
Total Affiliations: 3
|
| Document type: | Journal article |
| Source: | WATER; v. 12, n. 11 NOV 2020. |
| Web of Science Citations: | 0 |
| Abstract | |
The sustainability of water utility companies is threatened by non-stationary drivers, such as climate and anthropogenic changes. To cope with potential economic losses, instruments such as insurance are useful for planning scenarios and mitigating impacts, but data limitations and risk uncertainties affect premium estimation and, consequently, business sustainability. This research estimated the possible economic impacts of business interruption to the Sao Paulo Water Utility Company derived from hydrological drought and how this could be mitigated with an insurance scheme. Multi-year insurance (MYI) was proposed through a set of ``change{''} drivers: the climate driver, through forcing the water evaluation and planning system (WEAP) hydrological tool; the anthropogenic driver, through water demand projections; and the economic driver, associated with recent water price policies adopted by the utility company during water scarcity periods. In our study case, the evaluated indices showed that MYI contracts that cover only longer droughts, regardless of the magnitude, offer better financial performance than contracts that cover all events (in terms of drought duration). Moreover, through MYI contracts, we demonstrate solvency for the insurance fund in the long term and an annual average actuarially fair premium close to the total expected revenue reduction. (AU) | |
| FAPESP's process: | 14/50848-9 - INCT 2014: INCT for Climate Change |
| Grantee: | Jose Antonio Marengo Orsini |
| Support Opportunities: | Research Program on Global Climate Change - Thematic Grants |
| FAPESP's process: | 14/15080-2 - Water insurance as climate and land use change adaptation tool for optimization of water permits under water transfer conditions |
| Grantee: | Guilherme Samprogna Mohor |
| Support Opportunities: | Scholarships in Brazil - Master |