PART VIII. SENSITIVITY ANALYSIS 



Sensitivity analysis has been associated with cost changes resulting from in- 

 creasing the level of water quality. Kneese and Bower' indicate this to be an 

 advantage of the Davis study of the Delaware Estuary. Costs associated with four 

 different levels of dissolved oxygen are presented by Kneese and Bower. 



Through the programming method employed, sensitivity analysis can be 

 extended to cover implied prices, resource allocation, integration of basin areas, 

 and change in river classification. Although the sensitivity information is not 

 precise, general implications can be drawn from this type of information. 



8.1 Administrative Organization and Coordination 



Sensitivity to administrative structure has been encountered in previous parts 

 of this report, particularly in the central and southern areas of the Ashuelot. The 

 northern area will become more important in the integrating process as popula- 

 tion increases and as resources become developed. Of major importance in the 

 administrative structure is the achieving of the river classification of B level for 

 the central and, possibly, the southern areas. Reaching this water quality as 

 much as half the time (month of August) may be impossible without considerable 

 integrated effort. This is indicated by the inability to obtain feasible solutions 

 for the central and southern areas under low river-flow levels. 



The shadow price on BOD in the basin is an indicator of the impact of inte- 

 grated planning. These shadow prices for three flow levels and two quality levels 

 are as follows: 



Implied Price Per Pound BOD 

 Minimuin 

 Public and 



The cooperative efforts between communities and between industry and 

 community are often in debate. Grounds for many sides of the debate can be 

 found. For each of the three industries considered separately, public treatment 

 of industrial waste water was an optimal solution at one or more flow levels and 

 for both objectives of maximizing net benefits (REVOWAT) and minimizing 

 public and private cost (SOCCOST). The grounds for differences in optimal 



Kneese, A. V., and Bower, B. T. Managing Water Quality: Economics, Technology, 

 Institutions. Baltimore, The Johns Hopkins Press, 1968. 



53 



