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WSP07981
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Last modified
1/26/2010 2:29:39 PM
Creation date
10/12/2006 2:42:26 AM
Metadata
Fields
Template:
Water Supply Protection
File Number
8446
Description
Cache La Poudre Platte Project
State
CO
Basin
South Platte
Water Division
1
Date
11/1/1982
Title
Economic Evaluation Procedures Phase II Cache la Poudre Project Study
Water Supply Pro - Doc Type
Report/Study
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<br />. <br /> <br />. <br /> <br />Capital costs will be annualized at interest rates of 5, 7 1/2, <br />and 10 percent consistent with the discount rates used for the <br />primary information displays and the sensitivity analyses. <br /> <br />SUEPlementa~_Ir~!9ath~~_Be~~~~ts. The benefits of <br />supplemental irrigation shall be estimated in the same way as was <br />done for the Interim Report. An estimated unit value of $30 per <br />acre-feet of water developed will be used Ear the Phase I I <br />analyses. <br /> <br />Improved Management Benefits. The benefits of improved <br />management for 50,000 acre-feet of irr igat ion water shall be <br />estimated in the same manner as was done for the Interim Report. <br />An assumed unit value of $5 per acre-foot will be used Eor the <br />benefit-cost analyses. In addition, the final report will <br />include a discussion of the possible range of values for the <br />improved management benefits. <br /> <br />Period of Analysis <br /> <br />The periOd of analysis will consist of the estimated project <br />life (up to 100 years) and a preceeding authorization and <br />construction period. Benefits and costs occurring throughout the <br />period of analysis will be brought to the present (1982) for <br />comparison and aggregation using conventional discounting <br />procedures. <br /> <br />Discount Rates <br /> <br />The economic evaluations will be prepared using each of <br />three discount rates. All of these rates will be net of <br />inflationary considerations. The low rate will be 5%, which is <br />taken to reflect the cost of borrowing to the State and other <br />public entities. This rate is appropriate under the assumption <br />that public budgets are set without reference to the opportunity <br />costs of capital in the private sector and that such budgets are <br />fixed in total amount, irrespective of decisions on the <br />individual projects which must be funded from them. Under these <br />assumpt ions, proposed proj ects compete only with each other for <br />available funding. <br /> <br />The h iqh discount rate to be used is 10%. 'J'h is ra te <br />reflects the inflation-free opportunity cost of capital in the <br />private sector. It is appropriate under the assumptions that the <br />levels of public budgets are not established independently of the <br />merits of the individual projects to which they will be <br />allocated, and that such projects will therefore compete not only <br />with each other but also with private sector investment <br />opportunities. Both the high and low discount rates will be used <br />Eor purposes of sensitivity analysis, <br /> <br />The interest rate to be used for the primary information <br />displays will be 7 1/2%. This rate approximates the discount <br />rate presently employed in federal water resource development <br /> <br />-5- <br />
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