Abstract
ABSTRACT. Water and related land resource planning has generally been characterized by project evaluation in isolation. Feasible alternatives have been ignored because the economic analysis did not include the interdependence of such subregional and regional variables as factor and product prices and production possibilities. This paper presents an economic framework, consistent with a regional development objective and an efficiency criterion, for proposing and evaluating resource projects. Subregional and regional derived demand curves for water are developed under alternative assumptions of subregional competition, regional market restraints, and yield and price uncertainty. The derivation of water demand curves using the proposed regional framework as compared to sub regional isolation has the desirable properties of (1) a marginal analysis that is more flexible over time is substituted for a static average analysis; (2) range estimates incorporating probabilities are substituted for point estimates; (3) approximations to functional demand curves are substituted for “needs”; and (4) fewer resources are required to meet a regional market restraint.
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