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. . . .... .f' ..,',' .~ ........., t..' '\ ,.4.1......1' :J BASALT PROJECT AGRICULTURAL ECONOMY AND FINANCIAL ANALYSES Annual equivalent benefits Farm budgets uSed in project benefit evaluations were made in anticipation of a continuing trend toward improved farm techniques and on a level of farm management expected to be reached in 15 to 20 years after the end of the development period. Project irrigation benefits are expected to average $1,414,400 annually, including direct benefits of $683,800, indirect benefits of $617,000, and public benefits of $113,600. Direct benefits are measured by the increase in net farm income and accumulation of farm equity. Indirect benefits represent the increased profits of businesses supplying goods and services to farms within the area and enterprises handling, processing, and market- ing products from the project area. Public benefits would result from increased employment opportunities, improved. community facilities and services made possible by increased tax revenues, and from stabilization of the economy as a result of dependable irrigation water supply and including an allowance of $1,235 for alternative employment opportuni- ties for the operators of the new farm units. Estimated negative direct and indirect benefits in an amount of approximately $32,000 resulting from the reduction of dry farm wheat land by the project were included in the analysis. Annual equivalent costs Construction costs of the Basalt project are estimated in Chapter II at $17,545,000, and annual operation and maintenance costs at $49,000. The average annual equivalent cost of developing the project would be $604,000. This annual equivalent cost represents the initial investment amortized at 2~ percent interest for the lOO-year period of analysis, annual operation, maintenance, and replacement costs, and an assigned economic share of costs of river regulatory features of the Colorado River Storage project, based on a rate of $2.00 for each acre- foot of annual stream depletion caused by the Basalt project. The net capital investment includes the construction costs and interest during construction. Interest during construction was computed at a simple interest rate of ~} percent and assuming a uniform expenditure of the construction funds over a period of 4 years. Useful life of the features was assumed to be 100 years. Derivation of annual equivalent costs is illustrated in the tabulation on the following page. 37