Overview
Description and rationale
All ownership systems must have at least a global borrow and payback system, and can also include local borrow and payback systems as well. These allow for one owner to borrow water from another owner, with the requirement that there is payback of the borrowed water at a later time. Borrow and payback is necessary to allow the ownership system to function and it enables better and more flexible use of available water. When an exchange occurs, unallocated water owned by one owner is utilised by another owner. The water used by the other owner is termed a borrow and is reconciled against the borrowing owner’s water share. The borrow must be accounted for to determine how much water the borrowing owner should later pay back.
The actual rules that govern borrow and payback are likely to be highly specific to any given water management plan. Currently there is only one river system in Australia where borrow and payback is allowed, namely the River Murray (authorised via the Murray-Darling Basin Agreement). The implementation of borrow and payback in Source is principally designed to model the arrangements authorised in the Murray-Darling Basin Agreement, as followed in practice. However, the implementation is intended to provide sufficient flexibility that would enable it to be used for other ownership systems.
How a borrow is shared between owners using a distribution system, accounted and reconciled, in Source, is described here. For more information on how a borrow is generated, in the first instance see the Scientific Reference Guide entry for Ownership at nodes and links - SRG.
Scale
On a spatial scale, ownership applies to a river system or defined section of a river system. Source utilises the concept of an ownership system, which covers the section of a river system where the same set of owners share water in the river. It is possible for one modelling scenario to include multiple ownership systems. Ownership of water at each modelled location can be tracked at every model time-step.
Principal developer
This version of Borrow and Payback has been developed as part of the development of Ownership modelling by eWater CRC for Source.
Scientific Provenance
Borrow and Payback has been modelled in predecessors to Source, such as IQQM and MSM, for many years. The concepts in these models have been updated and enhanced to suit the needs of Source.
Version
Source version number 2.19.1.
Dependencies
The model configuration in Source must include at least one Ownership System with at least two Owners for borrow and payback to be modelled.
Availability
Automatically included with the full version of Source.
Structure & processes
Theory
Introduction
The Murray Darling Basin Agreement enables the operators in the River Murray to exchange the ownership of volumes of water between the states of New South Wales (NSW) and Victoria when the lending state has water surplus to its requirements. An example of this is when state owned tributary inflows are greater than expected. These excess tributary flows result in a state’s share of water in the river being surplus to that required to meet to meet its ordered requirements. Where possible, this excess water is utilised by the other state (owner) and the amount of water that needs to be released from storage is reduced. The water used by the other state (owner) is termed a borrow and is reconciled against the state’s water share. In the case of the River Murray, payback and account balances are reconciled at Lake Victoria.
The Agreement also allows for NSW and Victoria to borrow water from one another that is held in storage. As an example, NSW may borrow Victorian owned water held in Hume Reservoir if NSW has insufficient volume in Hume Reservoir to meet downstream demand (noting that NSW must have the capacity to payback the borrow). The Agreement requires that a separate account of borrow is maintained at some storages as:
- Different storages have different probabilities of spilling and filling. Thus water in some storages is more valuable.
- Water in Menindee Lakes and Lake Victoria can only be used to supply a very small amount of diversions.
Hence accounting is required for:
- System borrows – where unallocated water in the river is used to meet another owner’s order/requirement.
- Local storage borrow – where one owner has insufficient water in storage to meet downstream requirements and borrows from other owners’ shares in the storage.
To model borrow and payback arrangements similar to those described in the Murray-Darling Basin Agreement, Source supports a global borrow accounting system that applies throughout an ownership system, and also local borrow accounting systems for individual storages. The Agreement refers to an exchange of water, which indicates that when a state/owner borrows water, it needs to pay back to the owner it borrowed the water from. In a global system, payback can occur anywhere in the river network covered by the system of ownership. In a local system, payback must occur at the same storage. Payback can only occur when the borrowing owner has water within the relevant system (the ownership system or a storage) to transfer to the lending owner.
Modelling of borrow and payback is performed for every model element where there is a loss from or a gain to the river. These include:
- Inflow and confluence nodes
- Wetland hydraulic connectors
- Loss nodes
- Supply point nodes
- Controlled splitter nodes
- Storage nodes
- Links
Borrow and Payback accounting occurs mainly during the flow distribution phase, although some aspects of Borrow and Payback are also considered in the order phase.
Assumptions and constraints
Table 1. Assumptions and constraints
| No | Assumption/constraint |
|---|---|
| 1 | An ownership system must have a global borrow and payback system. |
| 2 | An ownership system’s global borrow and payback distribution hierarchy applies in all storages where there is no local borrow and payback system. |
| 3 | Borrow and payback systems only operate when ownership is enabled. |
| 4 | A borrow can occur anywhere in an ownership system when one or more owners has insufficient water to meet requirements. |
| 5 | When a global borrow and payback system is reconciled/paid back at a storage, the payback storage must maintain a local borrow and payback system. |
| 6 | For payback at a storage, owners are checked to see if they have to forfeit lending credit if they do not have enough airspace available. This is to ensure that the owner has enough capacity to be repaid. |
| 7 | When a global borrow and payback system is reconciled/paid back at a storage, all owners in the system must payback water at the same storage. |
| 8 | Borrow and payback accounting will occur prior to resource assessment. Resource assessment and accounting must consider the total sum of all borrows in the model, and thus includes:
|
| 9 | The borrow network for the global borrow and payback system must be complete. That is, there must be a connection between each owner and every other owner (the connection can be made at any priority level). |
| 10 | The borrow network for sharing a system constraint must be complete. An operator is not going to refuse service to an owner if there is surplus capacity available to use to serve them. |
Definitions
| Airspace | Difference between the volume in a storage (reservoir) and its full supply level. |
| Borrow | In systems with multiple owners, losses and gains are shared by defined ratios. In such cases it is possible for different owners to have surpluses and deficits in the use of these losses and gains. For efficient river operations these surpluses can be shared to owners with deficits. The borrow records the trading of these fluxes from owners with surpluses to owners with deficit. |
| Payback | This is the reverse of borrow; i.e. when the water that was lent to a particular owner is paid back by the borrower. |
| Borrow Network or Distribution System | System that prioritises the sharing of each owner’s surplus water to other owners with a deficit/insufficient water to meet their requirements. |
| Unallocated water | In the flow distribution phase, all water is either allocated (previously ordered) or unallocated. Unallocated water is not associated with a demand node or a non-consumptive requirement. Water that was ordered but not extracted on passing the node that generated the order, becomes unallocated water. |
Other definitions can be found in the eWater glossary.
Structure of Borrow and Payback Systems
Overview
When modelling borrow and payback, an ownership system for a scenario will have:
- A single global borrow and payback system that contains one or more member storages. Reconciliation and payback of borrow can occur in a specified storage, or on an ownership system wide basis. If payback is to occur at a storage, this storage must also be one that maintains a separate accounting system to that used for the global borrow and payback system.
- Zero or more local borrow and payback systems, each associated with a single member storage. The local system storage cannot be a member of any other local borrow and payback system. A local system’s storage may be used for reconciliation of the global system.
The structure of borrow and payback systems is illustrated in Figures 1 and 2, below.
Figure 1. Entity relationship diagram: Borrow and payback
Figure 2: Example of storage allocation to a scenario's borrow and payback systems
Figure 2 illustrates how each storage that falls within a scenario’s ownership system can only be a member of one borrow and payback system, except that where there is reconciliation/payback at a storage for the global system, this storage must also be in a local system.
Rules of the Borrow and Payback System (Summary)
Rules defining the borrow and payback system are listed below:
- Borrow is permitted to occur anywhere in the system. This applies to local systems as well as global systems. Note that where borrow in a storage is concerned, this is required only when one owner has run out of storage share.
- A borrow network/distribution system defines how any owner’s surplus water is shared amongst other owners. See Distribution of Surpluses for more information on how this is done. In a global system, every owner must be able to share to every other owner.
- In scenarios where ownership is configured, all storages must be members of a borrow and payback system. By default they are members of the global system.
- Individual storages can be configured to either:
- Account for borrows at a local level, which means that payback can only occur by ‘recolouring’ storage volumes. For example, any borrow in Hume Reservoir on the River Murray, must be paid back by reassigning water stored in Hume Reservoir.
- Account for borrows as part of a global borrow and payback balance. Note that borrows recorded under local borrow and payback systems are not included in the global set of accounts.
- For local borrow and payback systems and for global borrow and payback systems that are reconciled at a storage, the amount of borrow from other owners is limited by how much surplus the other owners have.
- A record of the net borrow between each of the water owners in an ownership system is maintained for:
- The global borrow and payback system (exclusive of storages configured to maintain local accounts)
- Each storage configured to maintain a local account of borrows. A storage configured to account for borrows locally does not participate in the global borrow account (i.e. borrows are not accounted in two places).
- Global borrow is either:
- Paid back in a storage: A user defined input parameter identifies the storage where balances are reconciled. This payback storage must have a separate, local borrow-payback system configured.
- Not explicitly paid back. Borrow balances adjust, in due course, as a result of the action of resource assessment systems (RAS). See Interaction with Resource Assessment Systems for a description of how this occurs.
- For local systems, or for global systems where a payback storage is nominated: Payback is attempted each time step at the storage. See Repayment of Borrow for more information on how this is done.
Distribution of Surpluses
The Murray Darling Basin Agreement only requires that borrow and payback occur between two state owners, so no specific rules have been required to determine how an owner shares out their surplus water when there is more than one other owner which could require it – i.e. those with a deficit. To allow the flexibility to meet future requirements, Source allows the modeller to configure for each borrow and payback system a ‘distribution system’ (otherwise referred to as a borrow network, see Assumptions and Constraints 9 and 10).
The distribution system specifies the list of owners that share at each priority level. Distribution of surpluses is performed in order of priority level, from ‘highest’ to ‘lowest’. Surpluses must fully meet requirements (deficits) at a ‘higher’ priority level before the next priority level is considered. Distribution within a priority level is proportional, i.e.:
- Owners with a surplus share their surplus in proportion to their share of the total surplus.
- Owners with a deficit receive surpluses in proportion to their share of the total deficit.
At an ownership system level, it must be possible for every owner to lend to every other owner, to ensure that water not required by one owner is available to any other owner that might need it. Hence for a global borrow and payback system, sharing must be enabled for every owner-other owner combination.
Repayment of Borrow
Payback of borrow occurs in the flow phase each time step. In a local borrow and payback system, the reconciliation and payback always occurs at the specified storage for the system. For the global borrow and payback system, the modeller must specify system’s reconciliation type to determine the ‘location’ at which payback occurs. Two reconciliation types are allowed for:
- System: When this is selected, there is no explicit payback process. Borrow balances are adjusted over time via the action of resource assessment systems.
- Storage: In this case, payback occurs at a selected storage that has a separate local accounting system. The modeller selects the storage from a list of those within the ownership system that have a local borrow and payback system.
The payback process occurs once the volume of water owned by each owner is determined. The amount each owner with debt can pay back creditor owners is limited by the volume of water they have in storage. The amount of payback a creditor can receive is limited by their airspace in the payback storage.
As with borrow, payback occurs in priority order. An owner’s debts at the highest priority level must be paid back before the next priority level is considered. Payback within a priority level is proportional, i.e. owners with a debt pay back the debt to each other owner in proportion to the other owner’s share of the owner’s total debt at the priority level.
Once each payback volume is determined, its ownership is simply transferred from the debtor owner to the creditor, and the borrow account is adjusted for the volume transferred. If full payback is not possible at a time step, the remaining debt is preserved, so it may be paid back in future time steps.
Interaction with Resource Assessment Systems
Resource assessment systems (RAS) take into account the borrow between owners when determining the volume of water available for allocation. In a global borrow and payback system without a payback storage nominated, payback is effected by adjusting the water availability in the resource assessment process and then letting the day-to-day borrows in the flow phase deal with moving the water back to the creditor.
For example, if there are two owners A and B, and A owes B 200 GL, and at resource assessment both A and B have 1000 GL each in storage:
- A available resource = 1000 - 200 = 800 GL
- B available resource = 1000 + 200 = 1200 GL
Owner A allocates 800 GL to its users and B 1200 GL. Later in the season after the users of owner B have used 1000 GL, B runs out of water and by borrowing starts to take back water from A (which has 200 GL in storage it can't allocate).
Methodology
Variables and Entities Used
Variables and entities used are listed in Tables 2-5, that follow. Rows highlighted in grey refer to entities. Each entity may have its own set of variables and/or methods, which are described in a separate table.
Table 2. Variables and entities: general
| Symbol | Purpose/Description | Units |
|---|---|---|
| Allocation(RAS) | Allocation for resource assessment system RAS | volume |
BPSystem BPSystem(RAS) BPSystem(ownersys) | Borrow and payback system. See Table 3 for variables and methods specific to this entity. BPSystem(RAS) is used to manage the same water resources as resource assessment system RAS BPSystem(ownersys) belongs to ownership system ownersys. | n/a |
| nBPSystem(RAS) | Number of borrow and payback systems that are used to manage the same water as resource assessment system RAS | n/a |
| nBPSystem(ownersys) | Number of borrow and payback systems that belong to ownership system ownersys. | n/a |
| component | Model component index. | n/a |
| nowner | Number of owners in the ownership system the borrow-payback system belongs to. | n/a |
| nowner(pl) | Number of owners that have a borrow & payback sharing relationship at priority level pl. | n/a |
| n_other_owner | Number of owners, other than the ‘current’ one, a total is being calculated for. | n/a |
| n_other_owner(pl) | Number of owners, other than the ‘current’ one, a total is being calculated for that have a borrow & payback sharing relationship at priority level pl. | n/a |
| ownersys | An ownership system | n/a |
| owner | Current owner in system | n/a |
| owner(pl) | Owner that has a borrow & payback sharing relationship at priority level pl. | n/a |
| other_owner | Owner that is not owner | n/a |
| other_owner(pl) | Owner that is not but has a borrow and payback sharing relationship with at priority level pl. | n/a |
| RAS | Resource assessment system | n/a |
| pl | Priority level for sharing | n/a |
| t | Time-step index | n/a |
The following variables relate to a Borrow and Payback system:
Table 3. Borrow and Payback System Variables
| Variable or method | Purpose/description | Units |
|---|---|---|
| *BorrowBalance(t, owner) | Owner’s cumulative borrow balance at time step – equals the sum for all other owners: NetBorrow(t, owner, other_owner) | volume |
| *ComponentBorrowBalance(t, component, owner) | Owner’s time step t borrow balance for borrowing done at component. | volume |
| *ComponentNetBorrow(t, component, owner, other_owner) | Net borrow between owner and other_owner for time step t, performed at model component - +ve value indicates owner does the borrowing, -ve value indicates owner does the lending | volume |
| *NetBorrow(t, owner, other_owner) | Cumulative net borrow between owner and other_owner at time step | volume |
| Share(pl, owner) | Flag (Yes or No) specified by modeller indicating whether an owner, owner, shares with other owners at priority level pl. For any two owners, owner and other_owner, they can share at priority level pl if Share(pl, owner) = Yes and Share(pl, other_owner) = Yes. | n/a |
| Connected(owner, other_owner) | Flag (Yes or No) indicating whether two owners, owner and other_owner, are able to share using the configured distribution hierarchy, and is derived from Share(pl, owner). These flags are set up and used for validating the distribution hierarchy used in a global borrow and payback system. | n/a |
*Recorded values
The following variables are used by the Borrow method in the order and/or flow phases:
Table 4. Variables & entities: Borrow Method
| Variable or method | Purpose/description | Units |
|---|---|---|
| Airspace(owner) | Owner’s share of the airspace in the payback storage for BPSystem in the current time step (input parameter). Airspace is the difference between the volume in storage and the full supply volume – each owner has a configured fixed percentage of this. | volume |
| Borrow(owner, other_owner) | Amount owner borrows from other_owner in this instance of sharing (calculated). This may be limited by airspace if it is within a storage. | n/a |
| component | Model component accessing the borrow method (input parameter). | n/a |
| BPSystem | Borrow system to use for the current round of sharing (input parameter). | n/a |
| Deficit(owner) | Deficit volume/capacity/flux per owner in the current time step (input parameter). | n/a |
| OwnerBorrowed(owner) | Total each owner borrowed from all other owners in this instance of sharing (output parameter). | n/a |
| OwnerLent(owner) | Total each owner lent to all other owners in this instance of sharing (output parameter). | n/a |
| Surplus(owner) | Surplus order/flux/capacity for owner in the current time step (input parameter). | n/a |
| TotalDeficit(pl) | Total of owner deficits at priority level pl (calculated). | n/a |
| TotalSurplus(pl) | Total of all owner surpluses remaining to be shared to other owners with a deficit at priority level pl (calculated). | n/a |
| UpdateAccounts | Input parameter that indicates whether borrow and payback system accounts should be updated. | n/a |
The following variables are used by the Payback method at a Storage Node in the flow phase:
Table 5. Variables & entities: Payback Method
| Variable or method | Purpose/description | Units |
|---|---|---|
| Airspace(owner) | Owner’s share of the airspace in the current time step (input and output parameter). Airspace is the difference between the volume in storage and the full supply volume – each owner has a configured fixed percentage of this. | volume |
| BPSystem | System to perform paybacks for (input parameter). This must be associated with the current storage. | n/a |
| CanPayback(owner, pl) | Maximum volume of debt owner can pay back to lending owners that share at priority level pl in BPSystem. This is limited by the owner’s storage share. (Calculated) | volume |
| CanReceive(owner, pl) | Maximum volume owner can receive this time step as payback for loans to other owners that share at priority level pl in BPSystem. This is limited by the owner’s airspace. (Calculated) | volume |
| component | Model component accessing the payback method (input parameter). | n/a |
| PaidBack(owner, pl) | Volume of debt owner paid back to all lending owners that share at priority level pl in BPSystem. (Calculated) | volume |
| Received(owner, pl) | Volume owner received as payback for loans to other owners that share at priority level pl in BPSystem. (Calculated) | volume |
| TotalCanPayback(pl) | Total volume all debtor owners that share at priority level pl in BPSystem can pay back lending owners using their storage share. (Calculated) | volume |
| TotalCanReceive(pl) | Total volume all lending owners that share at priority level pl in BPSystem can receive as payback from debtor owners into their airspace. (Calculated) | volume |
| Payback(owner, other_owner, pl) | The volume an owner paid back to the other_owner for sharing at priority level pl (Calculated). | volume |
| Storage(owner) | Owner’s share of the storage volume in the current time step (input and output parameter). | volume |