Conclusions and Policy Implications 267 



struction of hydroelectric generating facilities (in the absence of 

 public intervention to ensure safeguards for migratory fish) is a 

 real cost, despite its failure to appear on the financial accounts of 

 the electric generating operation. The gains to those whose water 

 supply is improved by the repulsion of salinity through maintain- 

 ing minimum channel depth for navigation purposes, is a real gain, 

 even though it does not appear as an increase in financial returns 

 to the river development enterprise. Unless some corrective adjust- 

 ment is provided, the private cost-gain calculus based only on 

 market transactions will understate costs in the first instance and 

 understate real economic gains in the second. 



If the market institution, which is so admirably suited to indi- 

 vidualistic action, is not sufficiently comprehensive to minister to 

 every variety of economic want, or serves others only in an eco- 

 nomically inefficient manner, then complementary institutions for 

 group decisions and collective action are required to meet ade- 

 quately the needs of the members of a free society. Historically, 

 various instrumentalities — from the conservancy district and 

 municipality throughout the entire range to the federal level of 

 government, on the one hand, and public assistance to private 

 enterprise, on the other — have represented the forms of collective 

 action through the political process. Examples of all of these are 

 to be found in the water resources field. 



But while public participation in the water field is required if 

 efficiency is to be achieved, the degree and forms of participation 

 pose another question. There is a strong sentiment in favor of 

 the idea that some combination of public and private efforts can 

 overcome the limitations of purely private development, while 

 utilizing private institutions to the extent that they can be effec- 

 tive. Our effort has been to lay the basis for a better understanding 

 of the range of possibilities for achieving efficient co-operative 

 arrangements in the water resources field. And, since hydroelec- 

 tricity is a marketable project service, we have ddvoted our analysis 

 to the development of multiple purpose projects which include 

 hydroelectric power. 



Our analysis of the market mechanism, illustrated by examples 

 drawn from actual cases, identified certain conditions which would 

 have to be met for efficient development of water resources under 

 private auspices. In summary, these are: (1) The hydroelectric 



