Adjusted Benefit-Cost Ratios for Six Recent Reclamation Projects

A. Myrick Freeman

American Journal of Agricultural Economics, 1966, vol. 48, issue 4_Part_I, 1002-1012

Abstract: The Bureau of Reclamation' benefit-cost estimates for six single-purpose projects are reviewed, major sources of bias are identified, and adjustments are made where the required data are readily available. The principal sources of bias in the Bureau's benefit-cost estimates are using a low discount rate, counting secondary benefits, using overoptimistic projections of prices, not counting the opportunity cost of farm labor, and not counting the opportunity cost of water. Adjustments using available data can be made for all but the last. After adjustment, revised benefit-cost ratios are less than one for five of the six projects studied. A comparison of the Bureau's estimated project construction costs with realized costs is favorable.

Date: 1966
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