266 MULTIPLE PURPOSE RIVER DEVELOPMENT 



at almost any cost. On the other are those who have a deep and 

 abiding belief that natural resources are a property of the entire 

 community and only through public development can society's 

 interest be protected. 



Even a superficial examination of the national effort to conserve 

 and develop our water resources reveals that the foregoing factors 

 have been significant — and, at times, of overriding importance — in 

 determining what project or program should be undertaken. Yet 

 values which are susceptible of economic evaluation are also of 

 great importance, because major aspects of national well-being 

 can be measured in economic terms. With a full recognition of 

 the significance of noneconomic considerations, we feel that our 

 study contributes to information in this area in two important 

 respects. First, we have clarified to a substantial degree the factors 

 which must be taken into account to achieve economic efficiency, 

 a relevant consideration in public decisions relating to water 

 resources development. Second, where "higher criteria" are given 

 major weight, the type of analysis which we have illustrated pro- 

 vides a means of determining what is the economic cost to society 

 of realizing such intangible values. 



The first part of this study reviewed the conditions that would 

 have to prevail in the economy for the free play of market forces 

 to achieve the maximum economic output consistent with prefer- 

 ences of consumers making up a free society. We noted, however, 

 that the market was not sufficiently comprehensive in its scope to 

 provide every variety of economic good. Various goods or services 

 — such as national defense, police protection, and, in the water 

 field, flood control, pollution abatement, etc. — are traditionally 

 regarded as collective goods. If such services are to be provided, 

 public funds must be employed, because private developmental 

 costs cannot be recovered for what are essentially nonmarketable 

 commodities or services. We noted also certain technical conditions 

 which lead to natural monopoly, and therefore require interven- 

 tion of public authority in the interest of the consumer. Finally, 

 the presence of external economies and diseconomies requires the 

 intervention of public authority to ensure that uncompensated 

 costs and gains are somehow taken into account and worked into 

 the scheme of efficient production and distribution. For example, 

 the cost inflicted on the anadromous fishing industry by the con- 



