The Measurement of Economic Uncertainty in Public Water Resource Development

Bernard W. Taylor and Ronald M. North

American Journal of Agricultural Economics, 1976, vol. 58, issue 4_Part_1, 636-643

Abstract: The existing benefit-cost criteria for evaluating water resource projects are deterministic and therefore incomplete, since the uncertainty inherent in project outcomes is not considered. A Monte-Carlo simulation approach is used to generate a mean and standard deviation for the benefits, costs, benefit-cost ratio, and net present value for the controversial Spewrell Bluff Project. Subjective estimates defining probability distributions of project benefits and costs were obtained from the Corps of Engineers. A project selection process that includes probability considerations in the benefit-cost criteria is recommended and several approaches for including uncertainty as a variable are suggested.

Date: 1976
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:58:y:1976:i:4_part_1:p:636-643.

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