WSP05696

• File Number: 8220.100.60
• Description: Colorado River Storage Project ‎(CRSP)‎
• Basin: Colorado Mainstem
• Date: 2/1/1958
• Author: USOID/BOR
• Title: Financial and Economic Analysis, Colorado River Storage Project and Participating Projects
• Water Supply Pro - Doc Type: Publication

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COST ALLOCATIONS

facili tie~ serving more than one purpose are allocated to the various pur-
poses in a manner that permits each purpose to share in the economy of the
multiple-purpose development.

In the allocation procedu~e all benefits and costs including interest
during construction were converted to present values at the beginning of
the lOO-year period of analysis at an interest rate of 2 1/2 percent. The
total allocations made on this basis "ere then converted to appropriate
capital and annual amounts. The amount of interest during construction was
th~n converted to reflect a 2 7/8 percent rate to determine the amount of
interest during construction to be reimbursed.

Separable and joint costs

The separable costa for each purpose of the multiple-purpose project
are defined as the difference between the cost of the multiple-purpose
project and the cost of the project with the purpose omitted. Thus the
s~arable costs for each purpose include the costs of these project facil-
ities used solely by that purpose rlus the difference in costs of the
Joint use facilities that would change in size or design with the purpose
omitted. Separable costs were determined by assuming each purpose in turn
as the last purpose added to the multiple-purpose project. The remaining
joint costs are the total project costs less the sum of the separable costs
for the varioua purposes. The estimated separable costs of po"er, irri-
gation, flood control, and recreation for the four units of the storage
project and the remaining joint costs for the project are sho'ID in the
table on the follol/ing page.

Justifiable irrigation expenditure

The justifiable irrigation expenditure fo~ the Colorado River Sto~-
age project is limited to the maximum benefits that could be attributed
to the storage 'later replacement function or the costs of the most eco-
nomical alternative single-purpose replacement storage, wl1ichever is tho
lesse~. The alter~ative single-purpose ccsts were found to be substan-
tially less than the benefits and thus were taken as the justifiable
expendi ture. Both the benefits and the al ternuti ve costs are discussed
in the follo,nng sections.

Benefits

The maximum benefits that could be attributed to the water replace-
ment function of the storage project are taken as the benefits in excess
of local co~struction and operating costs of future water-consuming proj-
ects in the upp~r basin over the lOO-year period of analysis. Considera-
tion ~s given only to the benefits and costs associated with irrigation,
munic:i.pJJ., Md :Industrial use. The excess of the benefits over costs for the

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