production likely to be achieved in the absence of a 

 plan. 



(b) With-project condition. Future conditions ex- 

 pected to exist when the plan is fully implemented. 

 The with-project condition is the projection of 

 output and production levels and the costs of pro- 

 duction likely to be achieved with the plan. 



2.10.4 Evaluation procedure: General. 



(a) When applicable, compute other direct bene- 

 fits according to the procedures for measuring 

 benefits in this chapter. Some benefits, such as re- 

 duced water supply treatment costs, can be com- 

 puted on the basis of reduced costs to consumers. 



(b) Improvement in production possibilities of the 

 private market sector as well as the nonmarket 

 sector recreation are other direct benefits. The fol- 

 lowing are examples: a large water storage project 

 is to be located upstream on a main tributary of a 

 river system that enters the ocean by a delta 

 through an estuary. The direct output of the project 

 is flood control for communities residing on flood- 

 plains along upper valleys of the tributary. One 

 effect of regulating flow— reducing winter high and 

 summer low flows — is to increase the recreational 

 potential of land and water in the lower reaches of 

 the river system. A cooling of water temperatures 

 and increased flow during summer increases fish 

 and wildlife productivity; riparian habitats along 

 lower water courses expand and increase in densi- 

 ty; salt water marshland receives less saline water 

 in summer. As a result, there is an increase in dove 

 and pheasant hunting as these wildlife populations 

 increase. Opportunities for sport-angling also in- 

 crease as game fish productivity rises. Shrimp pro- 

 duction benefits from the change to less saline 

 water in the marshland, and commercial shrimp 

 harvest increases, resulting in greater output at 

 lower unit total cost to shrimp fishermen. An inci- 

 dental effect is the improvement in water quality to 

 downstream users; turbidity is reduced in winter 

 and water hardness is reduced in summer. Treat- 

 ment costs are lower for firms and households. If 

 the impoundment causes the recharge of ground- 

 water basins in the vicinity of the dam site or along 

 the stream course, these incidental effects are 

 other direct benefits. Pumping costs could be re- 

 duced. 



2.10.5 Evaluation procedure: Problems in 

 application. 



The major problems encountered in the estima- 

 tion of other direct NED benefits are the identifica- 

 tion of the firms, industries, and consumers who will 

 be subject to these incidental effects caused by 



projects and plans. It must be emphasized that it is 

 not practical or economic to trace out all direct ef- 

 fects. 



(a) Determining the "context" or system within 

 which the major incidental impacts might be experi- 

 enced is a useful first step in identifying likely direct 

 benefits worth measuring. The immediate water- 

 shed or the subsystem of a river system would con- 

 stitute a relevant context. The delineation of geo- 

 graphical and economic market regions in which 

 impacts are likely to be felt cannot usually encom- 

 pass the whole regional economy in a highly indus- 

 trialized area. Nevertheless, it is important to avoid 

 delineating too small an area in which to search for 

 possible effects. 



(b) Another procedure for identifying likely im- 

 pacts is tracing the hydrologic changes that will 

 occur as a result of the project. For example, flows 

 downstream and in other parts of a river system 

 can be changed in quantities and qualities; the 

 water's chemical and physical characteristics — oxy- 

 genation, turbidity, temperature, etc. — can undergo 

 change that may impact on fish and wildlife re- 

 sources and on the production functions of firms 

 and the satisfaction of consumers. 



2.10.6 Evaluation procedure: Data sources. 



An assessment of the current situation and the 

 economic efficiency of potentially affected firms 

 and individuals usually entails the collection from 

 primary sources of data on cost, production func- 

 tion, and firm capacity. Studies of industrial struc- 

 ture and the interdependence of firms in the supply 

 of various inputs and the use of outputs can pro- 

 vide valuable supplemental information. 



2.10.7 Evaluation procedure: Risk and 

 uncertainty. 



Other direct benefits are unique to each project 

 design and its location, so the historical record of 

 data is of limited usefulness. The risk and uncer- 

 tainty attached to the hypothesized outcomes can 

 be reduced by clearly revealing areas of uncertain- 

 ty. A physical description of other direct benefits, 

 together with assessment of their relative (major or 

 minor) significance, is an integral part of such a 

 procedure. Nevertheless, these estimates may in- 

 volve high degrees of risk and relative uncertainty, 

 based as they are on the total mix of project out- 

 puts and the effect these mixes would have on 

 stimulating increased productivity. 



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