Greg Characklis, PhD, director of the Center on Financial Risk in Environmental Systems and Philip C. Singer Distinguished Professor in the Department of Environmental Sciences and Engineering, is part of a team awarded $2.5 million by the National Science Foundation (NSF) to study the variability of flood and drought conditions in the Willamette River Basin in northwestern Oregon and its effects on food, water and energy production in the region.
The grant is part of the NSF’s Innovations at the Nexus of Food-Energy-Water Systems (INFEWS) initiative that seeks to catalyze interdisciplinary research to secure the future of food, energy, and water systems while maintaining Earth’s vital physical and natural systems. The grant is the second from the highly competitive INFEWS program for Characklis and co-principal investigator, Jordan Kern, PhD, a research assistant professor with the UNC Institute for the Environment. The pair led a 2016 effort that resulted in another award to study drought’s impact on energy and agricultural production in California.
Oregon State University is the lead institution on the new grant, but a significant portion is coming to UNC-Chapel Hill. Characklis and his team will use these funds to assess the financial risks associated with disruptions to both water and energy systems as a consequence of extreme hydrologic conditions.
“Two-thirds of the electricity in the Pacific Northwest is generated by hydropower,” said Characklis. “Variability in snow and rain fall have a huge impact on the amount of electricity produced by this primary source. Under very wet and very dry conditions the system needs to adapt quickly, but these adaptations have financial consequences that can be difficult to manage.”
When water is scare, more expensive alternative energy sources are needed to support demand. During very wet years, hydropower turbines must be run continuously to keep reservoirs from overflowing. This saturates the electricity grid and forces other generators, typically wind producers, to shut down. The resulting losses can create financial risks that discourage investments in renewable energy.
The UNC team will translate the behavior of the hydrologic system into financial impacts and then develop novel strategies to help the region manage the financial consequences of hydrologic uncertainty for both generators and consumers.
“Better management of financial risks can often have positive environmental benefits—in this case—by providing the financial stability that facilitates more renewable energy development,” Kern said.
The Center on Financial Risk in Environment Systems is a newly launched partnership between UNC’s Department of Environmental Science and Engineering, a part of the Gillings School of Global Public Health, and the UNC Institute for the Environment. The center is focused on understanding the links between financial losses and drought, hurricanes and other extreme environmental events through integrated modeling of natural, engineered, economic and financial systems.