WSP00818

• File Number: 8273.100.50
• Description: Colorado River Basin Salinity Control - Federal Agency Reports - BOR
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 12/1/1980
• Title: Colorado River Salinity - Economic Impacts on Agricultural, Municipal, and Industrial Users
• Water Supply Pro - Doc Type: Report/Study

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loss. This factor of 5.3:2 WClS then used to derive
the agricultural regional income loss from the
ostimates of climct agricultural damages. Since
the reed regiollill income loss includes the direct
ns well as indil'(;r,t impacts, a multiplier of 5.32
was used to flet out the direct effects from
indll8ct effects. The estimClted indirect impacts
ilre shown on t"ble 1 2 8S regional income loss,
but direct aqrlr,liltural profit loss is not included.

Methodolo,jlcll det"ils of the derivation of
indirect impacts can be found in appendix 78 of
tile above.cited r'eport

C. Municipal f)amag"~

Estimations of rnonetary impacts (additional
costs) to municipal water users in the study areas
wore deriverl hy cCllcul8ting the present worth of
differing lifetimes of typical household items
subjected to different levels of TDS. The
procedure detnrmirlGs the annual costs of
replFlcement required to rnaintain the services of
a certain household item over a 50-year period.
Since cost estirllatcs were presumed to have a
time horizon equal to the economic lifetime of
1:1 typical housing unit, dDmages were based on
capital repl;lcement costs. Replacement was
considered 10 OCCUI at the nnd of the economic
life of tho previous I III it Costs were adjusted for
the final replact'lrwnt period In instances where
the end of 50 years occurred hefore the
economic lifo of the last unit has expired.

LJsif)~J water' heaters as an exarnrle, table 4
shows the meill' economic lifetime Dt 210 mg/L
rDS to be 8."1-1 years. Therefore, replacement
occurred every 8.-;4 years after' the initial
investment, thllS replacino the unit six times,
which accounted for 52.44 years of the 50-year
household Illelrr\\e. Costs for the remaining 7.55
years (less tl1an the averagn economic lifetime)
were b8sed all ihe relntionship of replacement
costs for this seqment to costs required for a full
economic life of B.l4 ye<lrs and discounted rn
tho same rTlclrln(;r- as previous lump sums.

1 able 4 COllt~lln:; th8 estimated mean lifetimes of
survey items in the Los Angeles area and table
5 shows the sorne data resulting from the Las
Vegas-Phoeflix- rlJCson survey (see appendix 1 of

~ Ibid.. p. 313<~"\4 (ilpp. / by Howe, Charles W., and
YOlln~, Jf'lffr"ey n

the Andersen and Kleinman report" for survey
details). Two groups of sigoificantly differing
water qualities were surveyed in each area and
corresponding mean lifetimes were calculated
for the respective household items. Using 0.10
as the test criterion, significant items were
selected and analyzed by attaching monetary
value to the different mean lifetimes. The
difference between the resulting present value
sums (present value of the item at the higher TDS
level minus present value at the lower TDS level)
is considered to be the amount of additional
costs per item over the 50-year life of a
household.

Damages were based on the average capital
replacement costs in 1975 discounted at 8
percent. The results have been updated to 1975
dollars by the Consumer Price Index in order to
make like comparisons With other damage
estimates. Table 5 shows the 1975 value and
difference of replacement cost streams of
significant items (from table 41 for the Los
Angeles survey and table 7 contains the same
information for the Las Vegas-Phoenix-Tucson
survey.

Since different households mayor may not
contain some or all of the items, a representative
household for each area was tYPified. Table 8
shows the number of units per household
considered to be typical for the Los Angeles area
(Los Angeles-Long 8each SMSA (Standard
Metropolitan Statistical Area)), Central Arizona
Project service area (SMSA's of Phoenix and
Tucson). and the Lower Main Stem of the
Colorado River (Las Vegas SMSA aod municipal
communities along the river to the Mexican
Border).

Total lifetime replacement costs were converted
to costs per milligram per liter by dividing the
difference between TDS levels into the
difference in the cost streams displayed in tables
6 and 7. These values were multiplied by the
weighting factors contained in table 8 with the
results reflecting expected damages (costs) per
milligram per liter for each household. Next. the
cost per milligram per liter for each household
was amortized over 50 years at 8 percent in
order to estimate the corresponding annual
costs. These values are contained in table 9.

<) Ibid" p. 41-82 (app. 1 by Jackson. Ernest B.).

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