EVALUATION OF THE OLDMAN RIVER BASIN IRRIGATION PROPOSALS: IMPLICATIONS FOR INTERBASIN TRANSFERS

Abstract

This paper is a review and assessment of the Oldman River Basin Study, Phase II economic evaluation. Emphasis is placed upon the role and importance of economic evaluations for water resources plannings and the implications for interbasin transfers are discussed. There are two issues which cast doubt on the purported economic merits of development alternatives in the Oldman Basin as identified in that study. The first issue is the improper inclusion of secondary benefits arising from increased regional employment. The second issue is the assumed zero opportunity cost of extra capital and labour required when shifting from dryland to irrigated agricultural land use. Adjustment for these two factors render benefit-cost ratios less than one thus raising some question about the merits of the Oldman irrigation proposals in terms of economic efficiency. Any assessment of future water development or diversion proposals should take these two factors into account.