Laserfiche WebLink
<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />8.0 <br />ECONOMIC AND FINANCIAL EVALUATION <br /> <br />8.1 GENERAL <br /> <br />Several different concepts for rehabilitation of V ouga Dam were evaluated, and construction <br />cost estimates were developed. Each of the rehabilitation alternatives enables safe operation of <br />Vouga Dam and Reservoir. Each of the Phase I options would most likely allow continued <br />operation of the darn through the length of the loan repayment period. An economic evaluation <br />was also conducted to compare the costs of rehabilitation for each of the options to the value of <br />the V ouga Reservoir water. <br /> <br />8.2 ECONOMIC ANALYSIS <br /> <br />An economic analysis was conducted by comparing the estimated value of the crops that could <br />be raised with and without water from the reservoir with the long-term costs for the assumed <br />life of the project. For this analysis, a fifty-year project life was used. <br /> <br />Based on information provided by the Division 4 Engineer, the use of late season water from <br />the reservoir would result in the production of an additional ton of hay per acre of cropland. <br />Using an estimated value of$75 per ton and approximately 680 acres ofirrigable land results in <br />a total annual benefit of $51,000 from the use of the reservoir. Mr. Labrouche indicates there <br />are no significant incremental costs associated with the production of the additional ton of hay <br />per acre since the crop is generally grazed by livestock rather than cut for transport or sale. <br /> <br />For the pwposes of this economic analysis, the life of the project rather than the term of the <br />VRA loan was used. In addition, only future costs were considered to be relevant to the <br />investment decision, and sunk costs were ignored. <br /> <br />Approximately, $191,500 of the total estimated cost of $1,025,900 has already been spent and <br />is considered here as sunk costs. Future costs then are assumed to be $1,025,900 less $191,500 <br />or $834,400. Amortized at 4.75 percent over 50 years, this amounts to an annual cost of about <br /> <br />242161R1.DOC 02-12-97(),08PM)/RPT <br /> <br />8-1 <br />