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<br />. <br /> <br />. <br /> <br />circumstances in which available evidence suggests that imperfect <br />market functioning calls observed prices into question as <br />reliable indicators of willingness to pay, Under such <br />circumstances it may be necessary to simulate market prices. <br /> <br />The cost avoidance method of benefit and cost estimation <br />will not be used except when an explicit test is made to conf irm <br />that the value of the avoided alternative is at least as great as <br />its cost, Otherwise, the probability of spurious estimates <br />through the use of this method is unacceptably high. The <br />requisite test is that of the ~xistence of effective demand. <br /> <br />~Similarly, the estimation of the value of h~~ <br />unemployed or un loyed ~OH es will be based upon market <br />prices in the ab e of an e . t test of the likelihood of <br />s~PIOyment or underemployement, <br /> <br />project Costs <br /> <br />project costs shall consist of all direct construction <br />costs, as defined in Task 12, activity 1'2.. c.. , interest during <br />construction (IDC), and annual operation, maintenance, and <br />replacement costs. It is these streams of cos ts, +lot all erage <br />ll.l.hue.l GO"t-", which shall be discounted ..ee 1982, when net direct <br />economic benefits .aft8 beftcfit coot rati05 are computed, <br /> <br />Direct construction costs plus IDC shall not be represented <br />as the equivalent of the initial investment required. Task 12, <br /> <br />-3- <br />