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<br />DRAFT <br /> <br />(2) All unprotected current and future instream uses; <br /> <br />(3) Future direct uses not currently in place; and <br /> <br />(4) The "publ ic at large" in the area of or ig in who experi- <br /> <br />ence lower quality public services. <br /> <br />To summarize, we have now identified the parties and/or <br /> <br />types of in-basin uses that are not protected from transfer- <br /> <br />related losses under existing water law. <br /> <br />Since many of these <br /> <br />values lie in the future, we must equate them to present values <br /> <br />for purposes of determining appropriate compensation. The <br /> <br />pr.ocedure for accomplishing this equivalence is known as "dis- <br /> <br />counting."98 <br /> <br />98A dollar now is worth more than a dollar later because <br />today's money can be invested at some interest rate. If r is the <br />rate of interest, the future value [FV(t)] t years hence of N <br />dollars received today would be: <br />(I) FV(t) = (I + r)t N <br />In this sense, N represents the "present value" (PV) of E'V(t) to <br />be received t years from now, or dividing by (1 + r)t, <br /> <br />( 2) PV = FV (t) <br />(I + r) t <br />If there exists a sequence of future values, FV(I), FV(2), ..., <br />FV (t), each to be rece i ved in the .correspond ing future year s, a <br />present val ue can be computed for the en ti re sequence by add ing <br />the individual annual present values: <br /> <br />l 3) PV = FV ( I ) + FV ( 2 ) + + FV ( t) <br />(l+r) (l+r)2 (l+r)t <br />The selection of an appropriate interest rate <br />rate) r is somewhat controversial, but for public <br />(and assuming no inflation) a rate in the five <br />range is generally chosen in practice. <br /> <br />(or a discount <br />sector purposes <br />to ten percent <br /> <br />49 <br />