Conclusions and Policy Implications 271 



of a site. However, unless the costs incurred for inclusion of these 

 public purposes are publicly borne, the costs would be shifted to 

 the customers of the utility. If the market for electrical services 

 were competitive, consumers of electricity would select their most 

 economical alternative supplier. But since the utility industry has 

 a captive clientele, the effect of providing nonmarketable project 

 services by the electric utility is to compel the power consumers to 

 finance the public benefits. This involves considerations of both 

 equity and efficiency. Should the consumer of utility services be 

 compelled to purchase flood protection for the community as a con- 

 dition of receiving electric service to meet his needs? Since utility 

 services are provided under monopoly conditions, his choice is 

 between doing without an essential service or paying through his 

 power bill a special assessment to reimburse the cost of protection 

 enjoyed in large part by a different clientele. On the efficiency side, 

 except under very special circumstances, the addition of such a 

 fee above the normal cost of providing power will adversely affect 

 the efficiency with which all commodities which the utility 

 customer purchases are exchanged in product markets. 



In neither the Hells Canyon nor the Coosa cases is the record 

 entirely clear as to who will ultimately bear the cost of providing 

 the nonmarketable project services for which public bodies have 

 been traditionally responsible. It would appear, however, that in 

 the typical case the cost of such services must be borne out of 

 public revenues, consistent with financing of other public services. 

 Otherwise, economically justified, but nonreimbursable, project 

 services would be either slighted in the planning of multiple pur- 

 pose projects under private development, or provided by some sort 

 of inefficient tie-in sale for a package including the marketable 

 project service. 



To summarize: If economic efficiency is to be realized through 

 partnership arrangements, four basic problems inherent in the 

 character of river basin development must be overcome. Our study 

 indicates these lines along which solutions may be found: 



1. Where the most efficient scale of development is too large to 

 permit marketing the output within the territory the most 

 eligible private developer is franchised to serve, special mar- 

 keting arrangements may be required. 



2. Developers of headwater storage may require compensation for 



