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<br />CElICA Procedures To Be'Followed'
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<br />, (I) An estimate of the cost 'of each eCosystemrestonition measure and an estimate of the <
<br />environmental output it wilt produce will be developed. All costs will be calculated in terms of
<br />, present worth using tile, appropriate discount rate and annual ized (see Appendix 0 of ER 1105-2-
<br />100 ori Economic and Social Considerations for more detailed information). Ecosystem
<br />restoration outputs are not discounted, but will be computed on an average annuaJ basis, takingU
<br />, into c'onsideration that the outputs achieved can vary over time. For eXample, if one of the outputs
<br />isa mature oak forest, the full benefits maynot berealizedJor 30 years.
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<br />(2) After estimating the costs and outputs of each solution, all possible combinations of
<br />" ecosystem restoration measu~s will be fonnulated. Each possible combination may be
<br />considered an alternative plan. Bydefiriition, scales within a measure are mutl!ally'exc1usive;"
<br />,they represent the application or implementation of different amounts of agivenmeasure.
<br />Formulating all possible combinations requires choosing one scale from each of the measures to'
<br />combine in turn with one scale from each of the other measures, until all possible pennutations
<br />have been combined. The "No action" possibilitY for each management measure should also be
<br />, included in the permutations. When measures and scales are combiried,the cost and output of
<br />eachcoristituent part of the corribiriationis summed. Each combination thus has an assoCiated,
<br />total costand totaloutput. '
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<br />(3)' AU possiblecorrtbinatioris of ecosystem restoration ~easures and~cales (which are, in effect,
<br />all possible alternative plans) will be sorted in terms of increasing output. ThiS will be done as a
<br />. prelude to cost effectiveness analysis. . .
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<br />(4) Once all possible plans have been fonnuiated and sorted by increasing output, the nextstep.
<br />will be to conduct a cost effectiveness analysis. Cost effective means that, for a particular level of
<br />output, no other plan costs less. Furthermore, no plan yields more output for the same or less cost.
<br />Graphing cost effective plans in terms of their respective costs and outputs can help visually.
<br />display the relation~~jp between the increasing financial investment required for increasing
<br />environmental outputs. Each ofthi\fcost effective plans produces its associated level of output at
<br />the least cost; no other pla,n can provide as much output for the same level of investment This is
<br />an important point to make in ecosystem restoration evaluations, and an important criterion in
<br />qualifying plans for further evaluation... .
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<br />(5) The next step will be to examine the efficiency of each of the cost effective pl~s,which is
<br />. accomplished th,rough incremental cost analysis. In incremental analysis those cost effective .
<br />plans that are most efficient in production are identified. These plans, known as"Best Buy" plans,
<br />. 'provide the greatest .increase in outpq.t for the least increase in cost. They have the lowest ..
<br />incremental costs per unit of output Begir.mingwith the "No Action"a.ltetnative;wewm.
<br />compute the incremental cost, incremental output, and incremental cost per unit of incremental
<br />output advancing from the No Action alternative to each successive alternative. The incremental
<br />cost is the additional cost incurred in selecting one plan over another. Similarly, the incremental .
<br />output is the additional output gained in-selecting one plan over another. The incremental cost per
<br />unit of incremental output is the incremental costdivided by the incremental output. It shows the
<br />change In cost from No Action to each other alternative plan in a per U11it basis...
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<br />. (6) The next step wiil be to recalculate the incrementaJcostper unit of iricremental output of
<br />implementing each remaining plan instead of the last selected plan. The same decision rule still
<br />.. applies: of the remaining plans (all larger than the first Best Buy phm), select the plan with the .
<br />lowest incremental cost per unit ofincremental output, then remove from consideration (in this
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