Robust and Equitable Regional Infrastructure Investment Pathways Require Cooperating Water Utilities to Understand Counterparty Risks

Climate change and growing water demands challenge urban water utilities seeking to maintain supply reliability. Recent estimates project that water infrastructure in the United States requires $2.2 trillion of investment by 2039. Regionalization strategies – wherein utilities in close geographic proximity cooperate to manage drought risks and co-invest in new infrastructure – are increasingly necessary for leveraging economies of scale to increase the cost-effectiveness of investments and navigate deeply uncertain risks. However, regionalization also brings new challenges to water supply management. Successful regionalization strategies must equitably balance the interests of multiple partners while navigating power relationships between regional actors. Successful strategies must also minimize counterparty risks, defined as risks that stem from the actions of cooperating partners. In long-term planning contexts, new infrastructure investments will fundamentally reshape the state dynamics of regional systems, challenging water utilities to dynamically adapt. This work introduces Equitable, Robust, Adaptive, and Stable Deeply Uncertain Pathways (DU PathwaysERAS), an exploratory modeling framework for developing regional water supply management and infrastructure investment pathways. Our framework explores equity and power relationships within cooperative infrastructure pathways using multiple rival framings of robustness, each representing a competing hypothesis about how performance objectives should be prioritized. To capture the time-evolving dynamics of infrastructure pathways, DU PathwaysERAS features new tools to measure the adaptive capacity of pathway policies and evaluate time-evolving vulnerability. We demonstrate our framework on a six-utility water supply partnership seeking to develop cooperative infrastructure pathways in the Research Triangle, North Carolina. Our results indicate that commonly employed framings of robustness can have unintended adverse consequences for equity across partners. Results further illustrate that regional and individual vulnerabilities are highly interdependent, emphasizing the need to craft agreements that limit counterparty risks. Beyond the Research Triangle, these results are broadly applicable to cooperative water supply infrastructure investment and management globally.