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I I I I I I I I I I I I I I I I I I I Total Cost per Share of Stock $2,274,495 -;- 5812 = $391 Cost Per Acre-foot Of Water Delivered For An Average Year $2,274,495(30 -;- 800 A-Ft = $95 If the benefit is in terms of the increased production, as shown in Table 1, where the value of approximately 4000 acre feet of water in the system produces additional income of$3,157,000 the benefit to cost ratio is much higher than 1. The water stored in Carl Smith is approximately 20 % of the total water delivered in the system, If the production loss is 20% of the increase in production due to irrigation, and the yearly cost is equal to the yearly payment to the CWCB plus the Company's 10% share, the benefit to cost would be: Benefit(Cost = $3,157,000 x 0.20 -;- $75,817 = 8.3 If the Benefit is based on the current rental rate of water of approximately $50 per acre-foot, the benefit to cost ratio is low. The problem with this comparison is it assumes water is available for rent from another source which is generally not the case. Benefit/Cost = $50 x 800 acre-feet -;- ($2,274,495 -;- 30) = 0.53 If the "feasibility" of the project is based solely on the conventional "Benefit to Cost" ratio using the market value of the water versus the cost, the rehabilitation of the Carl Smith Darn would not be considered feasible. However, the water cannot be replaced by other sources and thus there would be a marked reduction in production on the 10,000 acres of land served by the Leroux Creek Water Users. The reservoir is also important as an equalizer and would make operation of the system somewhat more difficult. Water in this system is rarely sold separate from the land and thus the market value of the water is difficult to determine. Some water has recently been offered for sale at $2,500 per share which is roughly $2,500 per acre-foot. If the value of the water increases at a rate of 2 % per year, it would be worth approximately $5,200 per acre-foot by the year 2029 which is the end of the loan period. The average value over the 30 years would be roughIy $3,850 per acre-foot for a total value of $2,887,500 which is greater than the total cost of the project. With rehabilitation of the dam, the water is retained with a future value well in excess of the cost of the project, plus the value of the crops that are raised with the water over the life of the reservoir. This would place the value of the reservoir at several times the cost of the project. Carl Smith Dam Feasibility Page 36