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The central theme of this report is that strict efficiency criteria do not capture nor represent the importance of water and water development to the state of Wyoming. We have argued that efficiency is a limited view of the world. This argument is supported by the extant literature addressing benefit-cost issues. We also tested this assertion vis-a-vis Wyoming residents through the administration of a survey. The survey clearly revealed that the preferences of the citizens are not bounded by strict efficiency criteria. That is, while efficiency is an issue, it is not the issue or criterion that solely guides the evaluation of Wyoming's water projects.

As such, we have attempted to develop a conceptual framework that moves beyond the narrow confines of benefit- cost measures and strict efficiency. This approach allows for project evaluation that captures many of the important aspects of water to the state of Wyoming. If the important considerations are indeed captured by our approach then the proposed approach will allow for a more representative evaluation procedure for choosing which water projects to build.


Phase II of this research will have two major thrusts. In reviewing our original proposal regarding Phase II we found that the spirit of our original proposed approach remains unchanged. That is, we must test and compare methodologies and identify critical aspects of water projects that are important to Wyoming. Thus, the focus of Phase II will be upon an evaluation of historical water projects from differing perspectives.

We will compare the robustness of our proposed approach with that of the traditional benefit-cost measure approach. This will involve the analysis of a representative but diverse group of historical water projects in Wyoming. In addition to the comparative approach between methodologies, the evaluation will also be accomplished from an ex-ante and ex-post perspective. Further, we will investigate the question of how important water projects have been and will continue to be to the state of Wyoming. Several steps are required to accomplish this goal.

First, a set of historical water projects for analysis must be identified. A set of criteria for the identification of these projects will be developed. These criteria will attempt to capture dimensions such as alternative types of storage projects, differing levels of "control" of Wyoming's water resources, differing levels and types of environmental impacts and differing degrees of distributional impacts. The number of projects to be analyzed will be dictated by data availability and budget constraints. We would propose to consult with the WWRC and WWDC in developing our criteria and in selecting the projects for analysis.

Second, the appropriate measures for the non-efficiency criteria would be further developed and refined for defining whether a project is "acceptable" or "unacceptable" as discussed in Section 5.3. For instance, what is an appropriate measure of "control"? Is it the amount of water in a containment facility and/or the amount in a particular basin relative to other basins that have significant downstream scarcities? How many miles of Class I fisheries should we allow to be destroyed before classifying a project as "unacceptable'? We have suggested the outline of these criteria in Chapter 5. However, we argue that these issues remain central to our Phase II effort.

Third, having developed the non-efficiency measures, the necessary primary and secondary data will be obtained. In some cases sufficient data will be available through published documents. In other cases, some primary data gathering may be needed. There is the possibility that another survey will have to be designed and administered for data collection purposes. This might involve visitation with users of the water projects. It should be noted that some aspects of the assessment methodology may not be amenable to historical testing. In such cases, an attempt will be made to clearly identify the resulting biases.

Fourth, an evaluation will be made as to whether another survey (in addition to the above mentioned possibility) should be administered. The purpose would be to provide a ranking in addition to the rankings derived from the traditional benefit- cost measure approach and our proposed methodology. This would potentially represent a test as to whether our proposed methodology more closely represented the importance of water projects relative to the importance as implied by the benefit- cost measure.

Finally, by taking an ex-post and ex-ante perspective, we will be able to focus on the extent to which the projects succeeded or failed in the generation of benefits and costs anticipated in pro-construction feasibility analyses, and the economic and institutional characteristics of the projects which can be identified as contributing to such success or failures. Attention will focus on the structure of the area economy to determine the extent to which indirect effects were truly associated with the projects' construction and operation. The role of social infrastructure also will be examined ex-ante and ex-post, to determine if the needs and costs for such infrastructure were adequately anticipated in project proposals. Thus, in addition to the overall ranking by the two approaches, the analysis will be a comprehensive identification of economic and institutional conditions requisite for indirect benefits, costs, and environmental effects, and the relationship between these economic and institutional variables and the magnitude of indirect and environmental effects (in dollars or otherwise).

Based upon the results of the above efforts, the preliminary assessment methodology will be refined and modified. Procedural steps necessary as well as necessary data to implement the methodology will be carefully detailed. It is anticipated that the historical analysis will lead to useful insights into the validity and applicability of the assessment methodology.

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