Benefit-Cost Analysis and the Discount Rate for the Corps of Engineers' Water Resource Projects: Theory and Practice

Description:

Construction of large water resource projects, such as those of the Army Corps of Engineers (Corps), can be controversial because they involve trade-offs among various river uses, and between current and future generations. Pursuant to federal water project planning guidelines, the Corps weighs these trade-offs using benefit-cost analysis. If its analysis shows that a project’s national economic development (NED) benefits exceed its NED costs, the Corps seeks project authorization from Congress. Congress authorizes the Corps to construct some of these large water projects through (usually) biennial Water Resource Development Acts. Since the Corps rarely recommends a project that does not have a benefit-cost ratio greater than 1.0, this report describes the decisions that influence this ratio, with a focus on the role of the discount rate.

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Creation Date: June 23, 2003
Partner(s):
UNT Libraries Government Documents Department
Collection(s):
Congressional Research Service Reports
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Place of Publication: Washington D.C., USA
Date(s):
  • Creation: June 23, 2003
Description:

Construction of large water resource projects, such as those of the Army Corps of Engineers (Corps), can be controversial because they involve trade-offs among various river uses, and between current and future generations. Pursuant to federal water project planning guidelines, the Corps weighs these trade-offs using benefit-cost analysis. If its analysis shows that a project’s national economic development (NED) benefits exceed its NED costs, the Corps seeks project authorization from Congress. Congress authorizes the Corps to construct some of these large water projects through (usually) biennial Water Resource Development Acts. Since the Corps rarely recommends a project that does not have a benefit-cost ratio greater than 1.0, this report describes the decisions that influence this ratio, with a focus on the role of the discount rate.

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29 pages.

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Partner:
UNT Libraries Government Documents Department
Collection:
Congressional Research Service Reports
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Resource Type: Report
Format: Text