ECONOMIC CONSIDERATIONS IN PLANNING WATER RESOURCES SYSTEMS

Abstract

The old concept of deciding the feasibility of water resources project on the basis of direct revenue returns to the Government is not in line with the welfare objectives of the present day Governments. The new concepts require that all economic benefits meeting the desired objective should be considered. The projects can be constructed to maximise the benefits to the nation or to achieve a better redistribution of incomes in the economy. The economic objectives are also used as a tool for planning water resources systems. These systems however are very complex because of the numerous decision variables, existence of many alternative projects, possibilities of phasing the development and uncertainties. Uptil now, the optimisation was being done by Conventional Methods,in which, by using judgement in the form 'of constraints, only a few alternatives would be considered, i ith the developments in systems engineering and operational research techniques and by using computers, it is now possible to consider a wider spectrum of possibilities and to reach nearer to the optimum. The present work reviews how the economic considerations can be used in planning the water resources systems. As a pre-requisite to system planning, the engineer will have to identify the economic objectives m d frame the ranking function., the optimal conditions of which can be inter-preted in economic terms. Different water resources projects can compete for an insufficient fund. Various methods suggested for solving this problem have been reviewed and the preferred method is indicated The particular problems of developing countries have also been discussed. Problems of cost evaluation have been studied. Benefit: in using unemployed labour, it is shown, can be evacuated instead of stating this as an intangible benefit. Measurements of benefits involve more complications. The basis of benefit measurement and the relevance of indirect benefits have been discussed. Differences in practices as also the methods preferred have been of indicated for each type of water use. The measurementslredistribution benefits have also been studied. The proper choice of interest rate is important. Various approaches suggested have been reviewed in detail, and some general conclusions have been drawn. The long lasting water resources projects have to operate of under the growthZdemand, population, technology and economy. This requires a dynamic approach to planning. Also due to the uncertainties about growth, demand, price fluctuations and hydrologic inputs etc. the benefit streams are uncertain and unsteady. For judging their present worths, we have to use the methods -under the decision theory. All these aspects are critically reviewed. The short-comings of the conventional methods, as presently used for economic optimisation, have been briefly stated. Simple analytical methods which can be used for simple sub-systems are discussed. For the complicated storage systems, solution can be obtained by simulating the system and checking its response to different well chosen input combinations. The method and its short-comings have been indicated. A few problems have been solved to illustrate the simple analytical techniques.