title: How to manage future groundwater resource of China under climate change and urbanization: An optimal stage investment design from modern portfolio theory.
abstract: Groundwater management in China has been facing challenges from both climate change and urbanization and is considered as a national priority nowadays. However, unprecedented uncertainty exists in future scenarios making it difficult to formulate management planning paradigms. In this paper, we apply modern portfolio theory (MPT) to formulate an optimal stage investment of groundwater contamination remediation in China. This approach generates optimal weights of investment to each stage of the groundwater management and helps maximize expected return while minimizing overall risk in the future. We find that the efficient frontier of investment displays an upward-sloping shape in risk-return space. The expected value of groundwater vulnerability index increases from 0.6118 to 0.6230 following with the risk of uncertainty increased from 0.0118 to 0.0297. If management investment is constrained not to exceed certain total cost until 2050 year, the efficient frontier could help decision makers make the most appropriate choice on the trade-off between risk and return.
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Shanshan
authors: S
authors: Hua
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China. Electronic address: liangjie82@163.com.
authors: Jie
authors: J
authors: Liang
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China. Electronic address: zgming@hnu.edu.cn.
authors: Guangming
authors: G
authors: Zeng
authors: Chinese Academy for Environmental Planning, Beijing 100012, PR China.
authors: Min
authors: M
authors: Xu
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Chang
authors: C
authors: Zhang
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Yujie
authors: Y
authors: Yuan
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Xiaodong
authors: X
authors: Li
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Ping
authors: P
authors: Li
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Jiayu
authors: J
authors: Liu
authors: College of Environmental Science and Engineering, Hunan University, Changsha 410082, PR China; Key Laboratory of Environmental Biology and Pollution Control, Hunan University, Ministry of Education, Changsha 410082, PR China.
authors: Lu
authors: L
authors: Huang
mesh_terms: D002681:China; D057231:Climate Change; D052918:Environmental Restoration and Remediation / Q000191:economics* / Q000379:methods; D060587:Groundwater; D007449:Investments / Q000191:economics*; D035501:Uncertainty; D014507:Urbanization; D014877:Water Pollution, Chemical / Q000191:economics; D062066:Water Resources
keywords: China; Climate change; Groundwater management; Modern portfolio theory; Urbanization