July 1985
Western Journal of Agricultural Economics
TABLE 3. Economic Feasibility of SCS On-Farm Salinity Control Units.
|
Unit |
Non-discounted Total Benefits’0 |
Non-discounted |
Present Value of |
Present Value of |
Benefit/ |
|
Grand Valley |
$67,600,000 |
$60,100,000 |
$19,729,000 |
$35,735,000 |
0.6 |
|
Uinta Basin |
$39,520,000 |
$91,700,000 |
$11,144,000 |
$52,569,000 |
0.2 |
|
Virgin Valley |
$19,351,000 |
$4,900,000 |
$8,537,000 |
$4,404,000 |
1.9 |
|
Maopa Valley |
$10,134,000 |
$9,000,000 |
$4,336,000 |
$7,842,000 |
0.6 |
|
Lower Gunnison |
$174,203,000 |
$177,500,000 |
$50,227,000 |
$104,214,000 |
0.5 |
|
Price-San Rafael |
$52,000,000 |
$22,800,000 |
$17,594,000 |
$15,730,000 |
1.1 |
|
Upper Virgin River |
$5,200,000 |
$2,600,000 |
$2,201,000 |
$2,257,000 |
1.0 |
|
McEImo Creek |
$29,647,000 |
$29,000,000 |
$10,877,000 |
$21,671,000 |
0.5 |
|
Mancos |
$10,400,000 |
$11,100,000 |
$4,404,000 |
$9,575,000 |
0.5 |
•$39,100 direct agricultural benefits + $218,700 municipal benefits = $257,800 per mg∕liter or $26 per ton of
salt removed. Benefits are discounted for a six year hydraulic retention time at 8%.
b Assumes a 20 year life for on-farm improvements.
° Estimated total costs over the life of the program, including construction, technical assistance, monitoring and
evaluation, and extensive education costs. Source: U.S. Soil Conservation Service, 1983.
d Discounted at 8%. Assumed 1) all units begin construction in year 1, 2) all costs are incurred in proportion to
construction costs at the beginning of each year, and 3) salinity reduction begins at end of year construction
costs are incurred and occurs in proportion to costs incurred that year.
equivalent households was similarly de-
rived for the Central Arizona Project area.
A 250,100 household estimate for the
Lower Main Stem region is based on ex-
pected growth in the region.
Municipal benefits from salinity control
can thus be estimated for each year of the
20 year planning horizon that represents
the life of on-farm salinity control mea-
sures. This benefit stream is discounted at
8 percent interest to obtain the present
value of municipal damages avoided from
the reduction in salinity. Multiplying by
the capital recovery factor for 20 years
and 8 percent converts the present value
of the uneven stream of benefits to an es-
timate of average annual municipal salin-
ity damages avoided of $308,300 per mg∕
liter. Then we discount for the river’s hy-
draulic retention time, yielding a munic-
ipal salinity control benefit estimate of
$218,700 per mg∕liter, or $22.05 per ton
of salt removed. (Although we attempted
to use the same assumptions as given in
USBR (1980) our derived estimate is
somewhat less than used in later USBR
reports.)
These estimates ignore any potential in-
tangible benefits, such as health costs or
8
the possible aesthetic disutility of saltier
water. No authority, however, has sug-
gested that these possibilities are of any
significance. The above damage estimates
might also prove low if water conserva-
tion efforts lower average household water
use, allowing the number of households
served by a fixed water supply to increase.
However, new technologies may be de-
veloped that help ameliorate salinity
damages. Also, the model does not allow
replacement with the lowest cost alterna-
tive. For example, copper water pipes or
cast iron wastewater pipes would prove
less costly than galvanized steel pipe over
time (d’Arge and Eubanks, p. 264; An-
derson and Kleinman, p. 21).
Secondary (Indirect) Economic
Impacts
An important difference between our
estimates of salinity damage and those de-
veloped by USBR is in the treatment of
secondary economic impacts. The USBR
(1983) incorporates secondary benefits
from agricultural damage abatement in
the amount of $128,000 per mg∕liter (de-
veloped from regional impact multi-