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I I I I I I I I II I I I I I I I I I I DDlI:.2 is well established, a variety of applied methods for estimating benefits and costs are available to the economist. As a practical matter, the choice of analytical methods is a major determinant of the final magnitudes of the benefits and costs. To avoid any biases in the choice of analytical techniques, it was decided that the economic analysis of PIA on the Ute Indian reservations would follow guidelines put forth by the federal government for the evaluation of federal water projects. These guidelines are published in Economic and Environmental Principles and Guidelines for Water and Related Land Resource Implementation Studies, U.S. Water Resources Council, 1983. This document specifies guidelines that must be followed in the evaluation of federal water projects, and similar guidelines have been used to quantify Indian reserved rights in previous adjudications. The following subsections give a brief overview of the principal analytical methods prescribed by the Guidelines. 2.2 Benefit Estimation The WRC Guidelines state that the agricultural benefits of a water project are the value of increases in agricultural output (or the cost savings inherent in maintaining a given level of output) at the national level. These benefits are referred to as National Economic Development (NED) benefits. They can result from either the increased production of crops that might result from bringing new land into production, or the economic efficiency gains that might be achieved by modernizing production practices. In the analysis of PIA, ~he former criterion is relevant. As mentioned previously, if production increases in one region are offset by production decreases in another region, no NED benefits result. 6 - M