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1 < l ~ 1 , I 1 I 1 I I , j '. ~ \ ! .~ ~ ~ I I ( ! , l I ~ i ~ l i ! I 1 ., i i i 1 I , l I II I I .- . ~*~.: -~, i\f~'i~': 01"13118 oming adjudications proposed 100 year lives for purposes of anal- ysis, and it would probably be preferable to accept this assump- tion rather than give the appearance of attempting to bias the analysis. WRC shall consider and recommend a proposed project life assumption to the Department of Law. The project life as- s'umption shall be finally selected in consultation with and shall be subject to the approval of the Department of Law. A second assumption involves the discount rate. A discount rate or rates shall be selected by WRC. WRC shall make its se- lection based on substantial research and in consultation with and subject to the approval of the Department of Law. WRC shall document and justify to the Department of Law the choice of the discount rate or rates used in the benefit cost analysis, and fi- nal recommendation of an approach in this area. The question of whether secondary benefits and costs should be considered in the benefit-cost analysis shall be thoroughly reviewed and discussed at length with the Department of Law prior to the completion of the analysis. WRC shall include this in the analysis at the direction of the Department of Law. The project team will, once the important components of the analysis have been determined, discount future streams of capital costs and re- turns to agricultural activities to arrive at a net present value which will be used to determine a benefit-cost ratio. This pro- cedure will be used for each distinct, identifiable parcel of land for which irrigated activity has been proposed. Sensitivity analyses shall be performed to determine wheth- er a favorable or unfavorable benefit cost ratio is a function of the size of the land parcel under consideration, or is truly rep- resentative of agricultural activities in the region. In addition to the benefit-cost analysis described above, the project team shall also assess financial feasibility or profitability of irrigated agricultural activities. In order to carry this out certain assumptions about economic returns to land and other production factors will be changed to formulate a true dollar profit or loss for each irrigated parcel. The results of this financial analysis shall then be compared with the results of the benefit-cost analysis to determine whether the results are comparable, or if not, what factors led to the divergence in re- sults. Product: .!lPcumentation concerning selection of the proj ect li fe. the discount rat.e, and consideration of secondary benefits and costs. Benefit-cost analyses for each parcel and system being considered. -8- ~ I ,.:~:,:: ,,' .{'"-";,,--,;,".,,-<;.:,.,'i;:~< )x:, '" ~': : ."" , . ", ~ ,c, '"". ,~,', . .. '.~;'u' ' C.'__', , ,~...