are five times variable costs, the total value of 1,000 gallons is raised from five 

 to twenty-five cents. These figures may be extrapolated for the number of low- 

 flow months over a period of years when low-flow augmentation may be useful 

 in maintaining water quality. This benefit could be added to other estimated 

 benefits of a dam. A reahstic look at the above results, however, indicates that 

 flow augmentation benefits tend to be rather small in view of other alternatives. 



Most benefits of flow augmentation would accrue in months of low-river 

 flow. An analysis of Ashuelot River flows for 36 years indicates that months of 

 flow below August low-flow occurred only 1 percent of the time, and months of 

 flow below August median flow occurred only 15 percent of the time. 



5.6 Change in Net Marginal Benefits from a Change in Resource Use 



The changes in net marginal benefits from a change in resource use are 

 listed in Table 5.6. 



In the rural residential sector, the reduction of one house would increase 

 net benefits by $19.75 in low-flow years. Put another way, the addition of one 

 house to the rural sector would add $19.75 in cost to the area. The incremental 

 change in water use in the rural residential sector was associated with $1.11 cost 

 per 1,000 gallons of water supply and $2.23 per 1,000 gallons of waste-water 

 disposal. The cost per 1,000 gallons of water for domestic use in intensive 

 residential areas (towns) and urban (Keene) was somewhat lower, around $0.60 

 and $0.40 per 1,000 gallons, respectively. 



Biochemical oxygen demand (BOD) is a major water-quahty constituent and 

 is of particular interest. At high-flow levels, due to dilution factors, there is no 

 cost or benefit associated with a small change in quantity in the river. At median- 

 flow levels, a one-pound change in BOD would change variable costs $0.56 in 

 the same direction. The value would reach $7.08 per pound under low-flow 

 condition but, under low-flow condition, marginal net benefits are somewhat 

 exaggerated. This is emphasized in the agricultural sector where under median 

 and high flow, the contribution is a net marginal contribution to the area econ- 

 omy. In low-flow years, however, the contribution is a detriment due to BOD 

 created by the dairy farm unit. 



In the urban sector, water supply source plays an important role in marginal 

 benefits. Groundwater, which needs no treatment, dominates lake supply, which 

 must be treated. The reduction of reservoir supply would result in an expansion 

 of groundwater supply that would add to the net benefit in the basin. 



Industrial water use in the urban sector represents a negative influence be- 

 cause value added by the urban industry has a net cost of about $0.65 per 

 1,000 gallons for median-flow conditions and $1.68 for low-flow conditions. 



5.7 Summary 



Direct discharge of industrial and household untreated waste water directly 

 into rivers is economically optimal under certain conditions. These conditions 

 include society's tolerance to such activity, large assimilative capacity of the 

 receiving body, and no discharge of toxic materials. Low-flow augmentation to 

 increase assimilative capacity by itself may have low value in terms of alter- 

 natives and their cost. Optimal allocation differs with objectives optimized and 

 river-flow level. Perverse behavior of optimal resource use may appear in some 

 sector due to river-flow level, but overall behavior is consistent. 



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