| Either public or private entities may sponsor a water project. However, the sheer scale of many water projects requires public expenditures as a source of funding. Thus, the decision-making process used for a proposed water project has more than passing interest to public policy makers and their constituents. Large water projects require sophisticated evaluation techniques. Yet, decision makers often cannot conduct or obtain an adequate ex ante evaluation.; This dissertation investigates state-level applications of two economic tools commonly used in evaluating the economic efficiency of water projects. In particular, this research develops recommendations for the appropriate use of benefit-cost analysis and input-output analysis at the state level. Although the specific context of this dissertation addresses water projects, the analytical issues could apply to a variety of capital investments being considered by public or private decision makers.; A proposed expansion of the Columbia Basin Project in the state of Washington is evaluated from the perspective of Washington state decision makers. Sponsored by the U.S. Bureau of Reclamation, this project expansion would irrigate 87,000 acres. The expansion would primarily affect agricultural output and hydroelectricity production. Estimates of direct benefits and costs, economic growth impacts, and indirect benefits and costs provide an indication of the overall economic efficiency of the project.; Four alternative scenarios of future agricultural production are evaluated. The direct benefit-cost ratios for these scenarios range from 0 to 28. After construction, the economic growth impacts for the scenarios range from {dollar}-{dollar}{dollar}60 million per year to {dollar}100 million per year. The indirect net benefits for the scenarios range from {dollar}-{dollar}{dollar}9 million per year to {dollar}20 million per year. Overall economic efficiency of the expansion ranges from a benefit-cost ratio of 0 to 1.4, depending on the scenario. On the basis of economic efficiency, the state of Washington should not invest in the proposed expansion. |
