Laserfiche WebLink
<br />. <br /> <br />. <br /> <br />in terms of per acre foot of storage and per acre foot of average <br /> <br />annual water delivery (the latter is not shown in the Interim <br /> <br />Report). The discussion of the market price of municipal water <br /> <br /> <br />rights now included in the Interim Report, but not used in J;.eh-./Iu' <br /> <br />benefit calculations, has been a source of some confusion to <br /> <br />readers. It will be more meaningful if related to the additional <br />cost of storing and deliver~ing water through the alternative <br />means when that cost is expressed in term of water delivered, <br /> <br />J;/~~ <br /> <br />The second method of municipal water supply benefit <br />estimation should be the opportunity cost of water in the <br />agricultural sector.!. as described by Bob Young in his earlier <br />memo to Tudor. I believe that this method is properly grounded <br /> <br />in economic theory, but that it may provide an underestimate of <br /> <br /> <br />true economic value because it neglects transaction costs. It, <br /> <br />therefore, establishes a lower bound for the value of M&I water, <br />The alternative cost of storage method, on the other hand, <br />establishes an upper bound for M&I water value. Sensitivity <br />analysis will help to reveal whether it would be useful to <br /> <br />attempt a quantification of transaction costs in the context of a <br /> <br />subsequent Cache la poudre stQdy, should one occur. <br /> <br />Implementation of the Alternative Cost Approach. <br /> <br />The alternative cost approa9h to benefit estimation also <br />requires that comparable cost~ng procedures be employed for the <br />hydropower project and its alternative if economic benefits are <br /> <br />to be correctly estimated. <br /> <br />It is not proper to use the <br /> <br />-10- <br />