EP 1165-2-1
30 Jul 99
(1) Value of Goods and Services Resulting from a Plan. The
specific procedures for computing these NED benefits are presented in
P&G, Chapter II. Provision is made for computing other benefits when
documented in the planning report and consistent with P&G 1.7.2(b).
That reference sets forth the general measurement standard:
willingness to pay as conceptually measured by the area under the
demand schedule. Since it is not possible in most instances for the
planners to measure the actual demand schedule, four alternatives are
permitted:
(a) Actual or Simulated Market Price. Where the market is
considered reasonably adequate and competitive, the value of outputs
is based on probable exchange values that are determined by supply and
demand factors, and expressed in monetary terms by means of price, at
the time of project construction. Where project output is substantial
and is expected to influence market prices, a price midway between
that expected with and without the plan may be used to estimate the
total value. The appropriate market value for certain principal
agricultural commodities is specified by the WRC.
(b) Change in Net Income. The benefit is measured by the
value of output of intermediate goods as inputs to producers with, as
compared to without, the plan.
(c) Cost of the Most Likely Alternative. The expected costs of
production by the most likely alternative source that would be
utilized in the absence of the project may serve as a basis for
measuring the value of goods and services.
(d) Administratively Established Value. Administratively
established values are values for specific goods and services
explicity set and published by WRC. An example is the unit-day value
for recreation.
(2) Unemployed or Underemployed Labor Resources. These
benefits are conceptually an adjustment to the cost of the project,
because there is no economic cost associated with the use of an
otherwise unemployed resource. Benefits are limited to payments to
unemployed and underemployed labor resources directly employed in the
construction and installation of the plan for projects in areas
designated by WRC as having "substantial and persistent" unemployment.
(P&G 2.11)
e. Risk and Uncertainty. The degree of risk and uncertainty
associated with the project evaluation is displayed in a manner that
makes clear to decision makers the types and degrees of risk and
uncertainty believed to characterize the project; the adjustments in
project design that could be made to modify the degree of risk and
uncertainty; and the gains and losses in various dimensions that might
accrue from those adjustments. The guidelines (P&G 1.4.13) state that
planners have a role to characterize to the extent possible the
different degrees of risk and uncertainty and to describe them clearly
so decisions can be based on the best available information. A risk-
based approach to water resources planning captures and quantifies the
extent of risk and uncertainty in the various planning and design
components of an investment project. The total effect of risk and
uncertainty on the project's design and economic viability can be
examined and conscious decisions made reflecting an explicit trade-off
between risk and costs. Risk-based analysis can be used to compare
plans in terms of the likelihood and variability of their physical
performance, economic success and residual risks.
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