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<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />'I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />o ~"j"1 ~ 0 <br />H".J__, _1...__. <br /> <br />SECTION 2 <br />ECONOMIC METHODS <br /> <br />2.1 Introduction <br />The objective of the economic analysis described in this report was to <br />estimate the benefits and costs of bringing arable land parcels under <br />irrigation on the Ute Mountain Ute and Southern Ute Indian Reservations. <br />Benefit-cost analysis is an economic efficiency criterion that places all <br />of the consequences of a project in a money matrix. Benefit-cost analysis <br />can be viewed as a straightforward extension of financial feasibility <br />analysis, in which revenue is compared with cost for an individual business <br />enterprise. Benefit-cost analysis, however, broadens the concept of <br />revenue to include all dollar-valued social benefits, and broadens the <br />concept of cost to include the dollar value of any social cost, if any, <br />associated with a project. In its broadest application, benefit-cost <br />analysis can be used to compare all of the benefits of an enterprise with <br />its total cost to determine whether it is economically efficient from a <br />social perspective. <br />The use of benefit-cost analysis in the evaluation of water projects <br />dates back to Albert Gallatin, Jefferson's Secretary of the Treasury. In <br />1808, Gallatin stressed the need for comparing the benefits and costs of <br />waterway improvements that might be undertaken by the federal government. <br />Use of the technique was formalized in the Federal Reclamation Act of 1902 <br />and the Flood Control Act of 1936 for water projects. Since that time, <br />benefit-cost analysis has become the standard conceptual framework for <br />evaluating the desirability of water projects. <br /> <br />4 <br /> <br />- <br /> <br />L <br />