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AN ANALYSIS OF CONTEMPORARY AND
HISTORICAL ECONOMICS ASSOCIATED WITH WATER
DEVELOPMENT PROJECTS IN WYOMING

D.S. Brookshire, R.G. Cummings
and G.L. Watts

1990
Technical ReportWWRC-90-12

Technical Report

to the

Wyoming Water Research Center
University of Wyoming
Laramie, Wyoming

David S. Brookshire
Ronald G. Cummings
Gary L. Watts

March, 1990

Contents of this publication have been reviewed only for editorial and grammatical correctness, not for technical accuracy. The material presented herein resulted from research sponsored by the Wyoming Water Research Center, however views presented reflect neither a consensus of opinion nor the views and policies of the Water Research Center or the University of Wyoming. Explicit findings and implicit interpretations of this document are the sole responsibility of the author(s).

An Analysis of Contemporary and Historical Economics
Associated with Water Development Projects in Wyoming

Phase I Report

by

David S. Brookshire
Ronald G. Cummings
Gary L. Watts

March 19990

This study was sponsored by the Wyoming Water Research Center (grant #5-38727), University of Wyoming, Laramie, Wyoming. All opinions and conclusions are, however, our sole responsibility.

FOREWARD

This report presents the Phase I effort to develop a framework for evaluating historical and future water projects in Wyoming. The title of the project is "An Analysis of Contemporary and Historical Economics Associated with Water Development Projects in Wyoming" and was funded by the Wyoming Water Research Center.

The central goal of the Phase I effort was to develop a preliminary methodology for the evaluation of Wyoming Water projects. To that end a number of questions required consideration. These questions were:

  1. What are the forces and/or considerations that potentially are and/or will "drive" Wyoming's Water Development Program?

  2. What is the appropriateness, for Wyoming's Water Development Program, or traditional project evaluation procedures that were principally developed for federal water projects?

  3. What do the citizens of the state of Wyoming desire? What perspectives do they have regarding what is "important" in designing a set of water project evaluation criteria?

  4. Finally, how does one, given the above inquiries, incorporate all of the perspectives and considerations into a meaningful decisionmaking framework?

In our attempts to address question 1, we found that we must investigate Wyoming's wealth of water resources and the issue of scarcity in other downstream states. Additionally, federal legislation potentially might affect Wyoming's water program as well as might the ever evolving legal and institutional environment. These issues are explored in Appendices A, B, D, and E.

Chapters 2 and 3 present our attempts at addressing question 2. That is, should methods for evaluating Wyoming water projects incorporate considerations beyond those of traditional benefit-cost measures. Our answer was yes, that a more comprehensive analysis is required that goes beyond simply converting all impacts into a dollar metric. Appendix F explains the issue of interpreting a divergent set of impact measures.

Chapters 2, 3, and the appendices provided the groundwork for the administration of a survey to the residents of Wyoming. That is, what are the appropriate evaluation criteria for water project evaluation? Should only strict efficiency measures be utilized or are other considerations of equal or greater importance? We found, as discussed in Chapter 4, that control of Wyoming's resources is of critical importance if such control violates traditional benefit-cost efficiency notions. The survey results are presented in Chapter 4 and the actual survey and backgroun results are presented in Appendix C.

Chapter 5 presents the preliminary methodology that we propose to utilize in the evaluation of historical water projects and compare the results to more traditional approaches. The proposed methodology incorporates what we learned from the survey and our other efforts. Chapter 6 offers the outlines of our proposed task structure for Phase II of the research.

Chapter 1 - Introduction
Chapter 2 - Perspectives on Benefit-Cost Analysis: Efficiency and Non-Efficiency Considerations
Chapter 3 - Benefit-Cost Measures and Considerations
Chapter 4 - Evaluation Criteria: A Survey of Wyoming Residents
Chapter 5 - Bringing It Together: A Preliminary Methodology
Chapter 6 - Plans for Additional Research: The Next Steps
Appendix A - Wyoming's Wealth of Water Resources and Scarcity Elsewhere
Appendix B - The Permitting Process for Water Projects
Appendix C - Survey Statistics
Appendix D - A Digression: Augmenting a Region's Water Supplies, Transfers, Increased Efficiencies, and Markets
Appendix E - Legal and Institutional Aspects Relevant for Multiple Objective Planning
Appendix F - The Question of Integration
Refereneces
Footnotes

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