VALUES AND COST ALLOCATIONS OF 

 SURFACE-WATER USE AND TREATMENT 

 An Application of Linear Programming to Water Resources Planning 



by 

 Richard A. Andrews and Richard R. Weyrick' 



PART L INTRODUCTION 



Water has ceased to be a free resource in almost all areas of organized human 

 activity. The cost of a glass of water served with a meal purchased in a restaurant 

 is not free. The cost of the water appears in the bill as a hidden cost of operating 

 the restaurant. This analogy is an excellent one in the economics of water use, 

 for there are at least social cost and benefits, if not always private costs and 

 benefits, associated with virtually ail surface-water use. These costs, although 

 sometimes priced as an independent item, are often hidden or associated with 

 some other resource- and water-using activity. In general, benefits and costs 

 associated with water-resource use are elusive. Concern for environmental quality, 

 particularly with respect to surface-water resources, has put pressure upon public 

 policy and group action. Knowledge of these elusive benefits and costs associated 

 with improved environmental quality and indicators of economic forces at work 

 aid in balancing the trade-off between environmental quality, costs, and benefits 

 derived. 



The objective of this study was to investigate means of evaluating costs and 

 benefits of use of surface waters. When one visualizes a given area of lakes and 

 at least one river, numerous alternatives exist as to how these resources may be 

 allocated and the water quality managed. For example, one firm may be able to 

 effectively treat its wastes at a lower cost than could be done in the municipal 

 treatment plant or by another firm by producing a different commodity or 

 employing different technologies. 



'Respectively, Professor of Resource Economics and Associate Professor of Forest 

 Resources, Institute of Natural and Environmental Resources, College of Life Sciences and 

 Agriculture, University of New Hampshire, Durham, New Hampshire. 



