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Last modified
7/14/2009 5:02:35 PM
Creation date
5/17/2009 11:15:01 PM
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UCREFRP
UCREFRP Catalog Number
9391
Author
Watts, G., W. R. Noonan, H. R. Maddux and D. S. Brookshire.
Title
The Endangered Species Act and Critical Habitat Designation
USFW Year
1997.
USFW - Doc Type
An Integrated Biological and Economic Approach.
Copyright Material
NO
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<br />the fish result in a change in the timing of the municipal and industrial water delivery projects .. <br />that have been planned as an integral part of the region's projected growth. Moving these <br />projects up in time increases the unit (acre-foot) cost of the water and moving the projects back <br />in time reduces the unit cost of the water. <br /> <br />The changes in the cost of the water were introduced in the form of a change in final demand that <br />is apportioned across all sectors of the economy. Thus, an increase in the cost of water to users <br />will result in increased expenditures on water. Under the fixed budget assumption of the small <br />open economy. the increased expenditure on water must crowd out other expenditures. An <br />extreme assumption is that the demand for water is infinitely inelastic. That is, the quantity <br />demanded does not fall as the price rises. In this case, the increase in the cost of water delivery <br />results in an increase in the level of expenditure on water of a per unit cost increase times the <br />original quantity of water delivered. 17 In effect, all of the cost increase for each water delivery <br />project is absorbed as an increase in the expenditures for water by the users in the area. Thus, <br />crowding out is complete, the expenditure on all other goods in the economy falls by the exact <br />amount of the increase in the level of expenditure on water. This is the assumption that underlies <br />the computation of the direct impacts. For the purposes of the 1-0 analysis, the expenditure <br />change was prorated across the sectors in proportion to each sector's share of total final demand. <br /> <br />In the Virgin River study the major impacts were projected to occur in the agriculture sectors as <br />land is retired from agricultural production and the construction sector through increased costs <br />due to water conservation. All sectors experience some impacts due to the increased cost of <br />water as delivery projects are modified to meet the needs of the endangered fishes. <br /> <br />For the Virgin study two impact scenarios are developed. Table 2 presents the values for each <br />scenario. The first scenario, the construction scenario (ST), meets the increased instream water <br /> <br />17 This assumption ensures that the water projects recover all costs including those associated with <br />accelerating the projects in time. <br /> <br />25 <br />
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