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WWRC 90-12
An Analysis of Contemporary and Historical Economics Associated with Water Development Projects in Wyoming


This report describes the results of our first year of work on the project entitled "An Analysis of Contemporary and Historical Economics Associated with Water Development Projects in Wyoming."1 The motivation for the project is the need for a better understanding of the economic ramifications of projects proposed for construction under Wyoming's Water Development Program. This need is summarized aptly in the Request for Proposals issued by the WWRC in May, 1988.

In more rapidly growing and more populous states in the western United States conflicts among users for limited water supplies are creating the need for far reaching additional water development projects as well as innovative legal means of transferring the water and its rights from one use to another. As Wyoming looks to its future and the potential need for water development, it is critical that a clear understanding of all the economic ramifications of water development projects be understood. This may require that Wyoming not only look at its own water supply and demand picture (both present and the future), but that this picture be couched in a broader context of the water supply and demand activities ongoing in surrounding western states to determine what effect they may have on Wyoming water development. While the research conducted must approach the issues from the perspective of Wyoming, it should serve to elevate and articulate reasoned concerns applicable to many western states. (P. 1)

The objective of our first year's research effort was to formulate a preliminary set of economic methods and criteria for evaluating Wyoming water projects. These methods were developed in the context of water needs in surrounding states and the desert southwest that may affect Wyoming's water development possibilities in the future. The methods also attempt to take into consideration the legal framework within which water rights are couched and the institutional framework in which water development decisions are made in the western United States.

Our economic methodology is preliminary in the sense that it has not yet been used to evaluate any specific water projects. The second year of this research project would, however, involve a comparison of traditional benefit-cost approaches with our new methods in the evaluation of historical water projects in Wyoming and surrounding states. Based upon that analysis, refinements would be made to the new methods before they were finalized for use by Wyoming water planners.

90-12 Table of Contents
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