Market Mechanics 55 



in terms of the aggregate value to all beneficiaries considered 

 collectively.^ 



In order to provide protection economically for a single occupant 

 of an exposed reach of the flood plain, a given irreducible dose of 

 investment — which may at times be very large — is required. If a 

 project is undertaken at all, it will also gratify the needs of the 

 remaining occupants. In the case of the system of tributary reser- 

 voirs, in addition to the indivisibility attending the construction 

 of dams,^ there is a functional interdependence among the several 

 storage units for achieving a given objective. For example: 



Regulation of floods by the TVA system can be considered as a 

 four-pronged effort: First, the acceleration of flood-threatening 

 flows through the system; second, the impounding of the bulk 

 of the contributing flow from tributary streams; third, a flatten- 

 ing of flood crests by impoundage at projects close to the point 

 of flood hazard; and last, the gradual release of stored water 

 following the flood crest to regain storage capacity. The first of 

 these functions is accomplished largely by the chain of main stem 

 projects. The second is accomplished by tributary projects having 

 substantial reservoir capacity, while the third makes use of both 

 tributary and main-river storage.^ 



This interdependence among units of the flood control system 

 contributes to an investment indivisibility, since the system func- 

 tions as a set of complementary facilities. 



The combination of collective demand and large initial invest- 

 ment militates against satisfying this group want by means of 

 private marketing arrangements. Even if the large original outlay 

 would be small if divided equally among all beneficiaries, each 

 individual might decide that it would be in his interest to avoid 

 a commitment to pay on the chance that the contribution of 

 others would make it unnecessary. Simultaneously, each might also 



^ Hoyt and Langbein, op. cit., pp. 229-30. 



° The average cost per acre-foot of storage at any given site tends to decrease, 

 within a range, as the capacity of reservoir storage increases. This results from 

 the fact that costs of spillways, as an example, remain constant (and in some 

 cases may diminish) with increases in the storage to be provided. See Luna B. 

 Leopold and Thomas Maddock, Jr., The Flood Control Controversy (New York: 

 Ronald Press, 1955), pp. 34, 54. 



' Reed A. Elliott, "TVA Experience in Multiple Purpose River Development," 

 paper presented at the National Convention of the American Society of Civil 

 Engineers, Knoxville, Tennessee, June 1956, p. 12. 



