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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 />