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<br />~ <br />o::t' <br />en <br /> <br />CHAPTER VII <br /> <br />FINANCIAL ANALYSIS <br /> <br />Annual Benefits and Costs <br /> <br />The degree to which the Silt project would be economically justi- <br />fied was determined by comparing the project's National benefits and <br />costs. For the comparison both benefits and costs were computed as <br />average annual equivalent values over a 100-year period beginning with <br />the first year of project operation. Construction costs were computed <br />on December 1949 prices while benefits and annual operation, maintenance, <br />and replacement costs were based on average prices for the 1939-1944 <br />period. An interest rate of 2.5 percent has been considered in studies <br />of Federal funds expended and revenues received. <br /> <br />Annual Benefits <br /> <br />Irrigation benefits. Direct irrigation benefits of $93,100 would <br />result from the increased income from agricultural production and the <br />economies in agricultural operations made possible by project develop- <br />ment. These benefits were measured by the estimated increases that <br />v~uld result from the project in earnings of the land and water, labor <br />and management, and invested capital. These increased earnings are <br />readily susceptible of monetary evaluation from comparative analyses <br />of farm economy anticipated both without and with project development. <br /> <br />Indirect benefits from irrigation of project lands would result <br />from processing of additional agricultural products and from increased <br />local sales of goods and services. Processing benefits would include <br />the increased value of merchandising, industrial processing, and whole- <br />sale and retail trade involved in the conversion of agricultural produce <br />into consumer goods. The benefit realized from local sales of goods <br />and services would consist of the increased expenditures made oy local <br />residents for transportation, consumer goods, and public and professional <br />services. The estimated annual values of these indirect irrigation <br />benefits are tabulated below. <br /> <br />Indirect benefit <br /> <br />Annual value <br /> <br />Processing and merchandising of <br />increased agricultural produce <br /> <br />$60,100 <br /> <br />Increased local sale of goods and <br />services <br />Total <br /> <br />17,600 <br />l77 , 700 <br /> <br />49 <br />