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<br />RANKING PROCEDURES <br /> <br />Background <br /> <br />...... <br />~~ Until studies in the late 1980's were completed, the value of salinity control <br />00 was not fully quantified. Early attempts in the 1970's roughly estimated the <br />~ value at about 1/6 of the present value of $340 per ton, but this early <br />estimate was aCknowledged to have missed large classes of impacts. Even nOW <br />the economic impact to the Republic of Mexico has not been quantified and is <br />not included in the benefit value. <br /> <br />This early lack of knowledge lead the program managers to concentrate their <br />efforts on cost control. They formulated a least cost approach to controlling <br />salinity on a ton-by-ton basis. This approach assumes the benefit of salinity <br />control, whether measured in tons or dollars, is equal throughout the basin. <br />This is a practical approach for all salinity control projects upstream of the <br />impacted areas. Salinity control below the impacted areas would be less <br />beneficial. Projects lower down in the system would need to be adjusted to <br />account for this. As it turns out, most all of the effective projects have <br />been in the upper portion of the basin. <br /> <br />Since the 1970's, cost-effectiveness has been used to rank alternatives for <br />implementation. It started off as dollars per milligrams/liter and later was <br />converted to dollars per ton. Cost-effectiveness ($/ton) is now defined as <br />the cost to prevent 1 ton of salt from entering the river system. It can be <br />directly related to a cost/benefit ratio where the cost is the cost to prevent <br />each ton of salt from entering the river and the benefit is value of each ton <br />of salinity control. <br /> <br />Estimating Economic Impacts of Salinity of the Colorado River, Februazy 1988 <br />updated the economic impacts of salinity in the Colorado River Basin and <br />developed a method of forecasting economic impacts as salinity levels rise and <br />water use changes in the future. The first objective of the study was to <br />update and refine the estimates of economic damages from salinity that had <br />been described in earlier studies. The study estimated damages were $311 <br />million per year based on 1976-85 salinity levels in the Lower Basin and 1986 <br />dollar values. During this period, salinity averaged 767 mg/L at Imperial <br />Dam. <br /> <br />The second objective of the study was to provide a better means of estimating <br />present and future salinity damages and the value of salinity control through <br />the development of a computer program. Damages for 1976-85 period were <br />estimated to be $311 million per year, but as salinity levels increase to more <br />normal levels, damages increased. In 1993, with salinity at 784 mg/L, damagss <br />were estimated to exceed $500 million per year. Salinity continues to <br />increase. Damages are projected to approach $1 billion per year in the next <br />few years. Studies using the model estimate the benefit of the salinity <br />program at $340 per ton (1994 dollar values) . <br /> <br />To date, the average cost-effectiveness for the program is running about $70 <br />per ton. At a value of $340 per ton, the benefit to cost ratio of the program <br />would be about 5:1 ($340 benefit/$70 cost). New projects proposed under the <br />1995 amsndments could greatly improve this ratio. For example, both the <br />Price-San Rafael and San Juan River Units have cost-effectiveness estimates of <br />$39 per ton. If authorized, they would realize a 9:1 benefit to cost ratio <br />($340 benefit/$39 cost). If non-federal cost sharing is deducted, the ratio <br />increases to 12.45 to 1. <br /> <br />13 <br />