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Input‐Output Models, Economic Surplus, and the Evaluation of State or Regional Water Plans
Author(s) -
Young Robert A.,
Gray S. Lee
Publication year - 1985
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/wr021i012p01819
Subject(s) - normative , economics , key (lock) , cost–benefit analysis , state (computer science) , adaptation (eye) , environmental economics , water resources , natural resource economics , capital (architecture) , business , environmental resource management , computer science , geography , ecology , philosophy , physics , computer security , epistemology , algorithm , optics , biology , archaeology
The adaptation of input‐output models for normative (benefit‐cost) appraisal of state or regional water plans is discussed. The economic surplus approach is taken to be appropriate for regional, as well as for national program appraisals. A conceptual framework, based on a willingness to pay concept, is developed to provide a formula for estimating direct economic benefits of state water development plans from input‐output models. Key elements of the formula are the costs (including opportunity costs) of primary resources utilized by water users particularly capital, labor, management, and land. A number of influential empirical studies are shown to incorrectly account for opportunity costs facing water users in producing sectors, thereby reporting erroneously high measures of economic benefits.