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Monetary Criteria 150 G Investment Cost Investment cost is the initial outlay which would be required to cover the expenses of project construction and interest charges before the pro- ject begins generating revenues or other benefits, For all development alternatives which would involve new construction, this study assumes a lO-year construction period with equal financial commitments in each year of the period and interest charges 'at 7112 percent per annum, Net Economic Benefit Net economic benefit is the present value of project benefits less the present value of project costs, It includes all positive effecls, direct or indirect, to whomever they may possibly accrue, Agricultural water supply benefits, hydropower bene- fits, and water use benefits comprise the elements used to calculate net e~onomic benefit in this assessment. Net economic benefit is expressed in present-value terms, 1n olher words, benefits and costs occurring over many years. including both the period of project construction and the ensu- ing life span of the project, have been brought 10 a common point in time, The prospective agricultural benefits of South Plalte River Basin alterna- tives are estimated from the antici- pated waler deliveries al the farm headgates, or increased ground water pumping, altributable to those alter- natives. Both direcl deliveries from the projects themselves. and indirect deliveries through reuse of return flows. have been included. 14 New project water deliveries could be used in Ihree distinctly different ways, It could be delivered 10 pres- ently unirrigated lands. used to sup- plement waler presently applied 10 partially irrigated lands, or used to replace some or all of the ground or surface water presently used to irri- gale fully irrigated lands, The economic analyses of Soulh Plalte River Basin alternalives were based upon the assumption that new irrigation water supplies would be used to irrigate those lands which promised to return the highest value per unit of water applied. The value of irrigation water has been calculated as $48 per acre-foot delivered to the farm headgate, by assuming thallwo acre-feet of water are applied to each acre annually, [The mean irrigation application actually exceeds Iwo acre-feeL) Municipal and industrial water sup- plies, like those of irrigation water, may be evaluated by different meth- ods, One alternative is the market value method, A capital, or one-time market value of $2,000 per acre- foot, has been used in this study, Only one water resources develop- ment alternative included in the study includes provisions for generating hydropower. Alternalive II-A gen- erates peaking power in a pumped storage mode. Peaking power and reserve capacity can be valued at the cost of the alternative means of gen- erating such power. Department of Energy peaking power values. based on alternative means of generating the same amount of power. have been used as the high values. Current market prices have been used as a low value, and points between them have been used as the most likely power values for purposes of this assessment. Mostofthe water produced formuni- cipal/industrial use, agricultural water use, or hydropower would be re- turned to the hydrologic system and become available for reuse down- stream. thereby generating additional benefits. The type of water use will determine the ratio of relurn flow available to initial water delivery and thus will influence the magnitude of possible water reuse. For purposes of this sludy, it has been assumed that Iwo-thirds of all irrigation water deliveries and one-third of all muni- cipal water deliveries would be con- sumptively used, Return flow is, then, the unconsumed two-thirds of all municipal water deliveries and the unconsumed one-third of agri- cultural water deliveries. In addition, one-third of all conveyance losses is estimated to be lost through evapo- transpiration, leaving two-thirds of such "losses" to recharge the allu- vium. For the economic evaluation of each alternative, this water reuse has been assumed to occur two to four times, depending on the location in Ihe basin where the water is first diverted,