Authorities

ECONOMIC AND ENVIRONMENTAL
PRINCIPLES AND GUIDELINES
FOR WATER AND RELATED LAND RESOURCES
IMPLEMENTATION STUDIES

March 10, 1983

This page is intentionally blank.

ii

Foreword

These Economic and Environmental Principles
and Guidelines for Water and Related Land
Resources Implementation Studies have been
developed to guide the formulation and
evaluation studies of the major Federal water
resources development agencies. This
document is the product of extensive work by
experts from a variety of professions and was
developed with the help of hundreds of
comments from the public. It contains the best
currently available methods for calculating the
benefits and costs of water resources
development alternatives accurately and
consistently, and is intended to ensure proper
and consistent planning by the covered Federal
agencies. I am confident that these Principles
and Guidelines will enhance our ability to identify
and recommend to the Congress economically
and environmentally sound water project
alternatives.

In accordance with section 103 of the Water
Resources Planning Act, as amended (42 U.S.C.
1962a-2), the Water Resources Council voted on
September 9, 1982, to repeal the existing
Principles, Standards and Procedures(18 CFR,
Parts711, 713, 714, and 716) and to establish
these Principles and Guidelines. The President
approved the Principles on February 3, 1983. In
accordance with Executive Order 11747 (38 FR
30993, November 7, 1973), I hereby approve the
new Standards (Chapter I) and Procedures
(Chapters II and III).

James G. Watt
Chairman
U.S. Water Resources Council

iii

Economic and Environmental Principles for Water and
Related Land Resources Implementation Studies
These Principles are established pursuant to the
Water Resources Planning Act of 1965 (Pub. L. 8980), as amended (42 U.S.C. 1962a-2 and d-1).
These Principles supersede the Principles established in connection with promulgation of principles,
standards and procedures at 18 CFR, Parts 711,
713, 714 and 716.

3. State and Local Concerns
Federal water resources planning is to be responsive to State and local concerns. Accordingly,
State and local participation is to be encouraged in all
aspects of water resources planning. Federal
agencies are to contact Governors or designated
State agencies for each affected State before initiating studies, and to provide appropriate opportunities
for State participation. It is recognized, however, that
water projects which are local, regional, statewide, or
even interstate in scope do not necessarily require a
major role for the Federal Government; non-Federal,
voluntary
arrangements
between
affected
jurisdictions may often be adequate. States and
localities are free to initiate planning and
implementation of water projects.

1. Purpose and Scope
These principles are intended to ensure proper
and consistent planning by Federal agencies in the
formulation and evaluation of water and related land
resources implementation studies.
Implementation studies of the following agency
activities are covered by these principles:
(a)
(b)

Corps of Engineers (Civil Works) water
resources project plans;

4. International Concerns

Bureau of Reclamation water resources project
plans;

Federal water resources planning is to take into
account international implications, including treaty
obligations. Timely consultations with the relevant
foreign government should be undertaken when a
Federal water project is likely to have a significant
impact on any land or water resources within its
territorial boundaries.

(c) Tennessee Valley Authority water resources
project plans;
(d)

Soil Conservation Service water resources project plans.

Implementation studies are pre- or post authorization project formulation or evaluation studies undertaken by Federal agencies.

5. Alternative Plans
Various alternative plans are to be formulated in
a systematic manner to ensure that all reasonable
alternatives are evaluated.

2. Federal Objective

(a) A plan that reasonably maximizes net national
economic development benefits, consistent with
the Federal objective, is to be formulated. This
plan is to be identified as the NED plan.

The Federal objective of water and related land
resources project planning is to contribute to national
economic development consistent with protecting the
Nation's environment, pursuant to national
environmental statutes, applicable executive orders,
and other Federal planning requirements.

(b) Other plans which reduce net NED benefits in
order to further address other Federal, State,
local, and international concerns not fully addressed by the NED plan should also be formulated.

(a) Water and related land resources project plans
shall be formulated to alleviate problems and
take advantage of opportunities in ways that
contribute to this objective.

(c) Plans may be formulated which require changes
in existing statutes, administrative regulations,
and established common law; such required
changes are to be identified.

(b) Contributions to national economic development
(NED) are increases in the net value of the national output of goods and services, expressed in
monetary units. Contributions to NED are the
direct net benefits that accrue in the planning
area and the rest of the Nation. Contributions to
NED include increases in the net value of those
goods and services that are marketed, and also
of those that may not be marketed.

(d) Each alternative plan is to be formulated in consideration of four criteria: completeness, effectiveness, efficiency, and acceptability. Appropriate mitigation of adverse effects is to be an integral part of each alternative plan.

iv

(e) Existing water and related land resources plans,
such as State water resources plans, are to be
considered as alternative plans if within the
scope of the planning effort.

10. Risk and Uncertainty
Planners shall identify areas of risk and uncertainty in their analysis and describe them clearly, so
that decisions can be made with knowledge of the
degree of reliability of the estimated benefits and
costs and of the effectiveness of alternative plans.

6. Plan Selection
A plan recommending Federal action is to be the
alternative plan with the greatest net economic
benefit consistent with protecting the Nation's environment (the NED plan), unless the Secretary of a
department or head of an independent agency grants
an exception to this rule. Exceptions may be made
when there are overriding reasons for recommending
another plan, based on other Federal, State, local
and international concerns.

11. Cost Allocation
For allocating total project financial costs among
the purposes served by a plan, separable costs will
be assigned to their respective purposes, and all joint
costs will be allocated to purposes for which the plan
was formulated. (Cost sharing policies for water
projects will be addressed separately.)
12. Planning Guidelines

7. Accounts

In order to ensure consistency of Federal agency
planning necessary for purposes of budget and policy
decisions and to aid States and the public in
evaluation of project alternatives, the Water Resources Council (WRC), in cooperation with the
Cabinet Council on Natural Resources and Environment, shall issue standards and procedures, in the
form of guidelines, implementing these Principles.
The head of each Federal agency subject to this
order will be responsible for consistent application of
the guidelines. An agency may propose agency
guidelines which differ from the guidelines issued by
WRC. Such agency guidelines and suggestions for
improvements in the WRC guidelines are to be
submitted to WRC for review and approval. The
WRC will forward all agency proposed guidelines
which represent changes in established policy to the
Cabinet Council on Natural Resources and Environment for its consideration.

Four accounts are established to facilitate evaluation and display of effects of alternative plans. The
national economic development account is required.
Other information that is required by law or that will
have a material bearing on the decision making
process should be included in the other accounts, or
in some other appropriate format used to organize
information on effects.
(a) The national economic development (NED) account displays changes in the economic value of
the national output of goods and services.
(b) The environmental quality (EQ) account displays
non monetary effects on significant natural and
cultural resources.
(c) The regional economic development (RED) account registers changes in the distribution of
regional economic activity that result from each
alternative plan. Evaluations of regional effects
are to be carried out using nationally consistent
projections of income, employment, output, and
population.

13. Effective Date
These Principles shall apply to implementation
studies completed more than 120 days after issuance
of the standards and procedures referenced in
Section 12, and concomitant repeal of 18 CFR, Parts
711, 713, 714, and 716.

(d) The other social effects (OSE) account registers
plan effects from perspectives that are relevant
to the planning process, but are not reflected in
the other three accounts.

These economic and environmental Principles are
hereby approved.

8. Discount Rate
Discounting is to be used to convert future monetary values to present values.

9. Period of Analysis
The period of analysis to be the same for each
alternative plan.

February 3, 1983

v

This page is intentionally blank.

vi

Economic and Environmental Guidelines for Water and
Related Land Resources Implementation Studies
Chapter I - Standards
Section I - Introduction

Section VII—Accounts

1.1.1 Purpose and Scope
1.1.2 Authority
1.1.3 Applicability

1.7.1
1.7.2
1.7.3
1.7.4
1.7.5

General.
National economic development account.
Environmental quality account.
Regional economic development account.
Other social effects account.

Section II - The Federal Objective
Section VIII—Displays
Section III - Summary of the Planning
Process
1.3.1
1.3.2
1.3.3
1.3.4
1.3.5.
1.3.6
1.3.7
1.3.8

1.8.1
1.8.2

Introduction
Major Steps
Specification of the problems and opportunities associated with
the Federal objective and specific State and local concerns.
Inventory and forecast of water and related land resources
conditions.
Formulation of alternative plans.
Evaluation of effects.
Comparison of alternative plans.
Plan selection.

1.4.1
1.4.2
1.4.3
1.4.4
1.4.5
1.4.6
1.4.7
1.4.8
1.4.9
1.4.10
1.4.11
1.4.12
1.4.13
1.4.14

Section IX—Cost Allocation
1.9.1
1.9.2
1.9.3
1.9.4

General
Definitions.
Cost allocation standard.
Allocation of constituent cost

Section X—Plan Selection
1.10.1
1.10.2

Section IV—General Planning Considerations

General.
Content and format.

General.
Selection.

Supplement I—Risk and Uncertainty

Federal-State relationship in planning.
International consultations.
General public participation
Review and consultation.
Interdisciplinary planning.
Agency decision making.
Planning area.
Scoping.
Forecasting.
Prices.
Discount rate.
Period of analysis.
Risk and uncertainty-sensitivity analysis.
Documentation.

S1
S2
S3

Concepts.
Application.
Report and display.

Chapter II—National Economic
Development (NED) Benefit
Evaluation Procedures
Section I—General

Section V—Inventory and Forecast of
Conditions Without a Plan
1.5.1
1.5.2

2.1.1
2.1.2
2.1.3

Resource conditions.
Problems and opportunities.

2.1.4

Purpose.
Conceptual basis.
Calculating net NED benefits in average annual equivalent
terms.
Definitions

Section VI—Alternative Plans
1.6.1
1.6.2
1.6.3
1.6.4

Section II—NED Benefit Evaluation
Procedure—Municipal and Industrial (M&I) Water
Supply

General.
Formulation.
The NED plan.
Other alternative plans.

2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.2.6

vii

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Identify study area.
Evaluation procedure: Estimate future M&I
water supplies.

2.2.7
2.2.8
2.2.9
2.2.11
2.2.12
2.2.13
2.2.14

Evaluation procedure: Project future M&I water
use.
Evaluation procedure: Identify the deficit
between future water supplies and use.
Evaluation procedure: Rank and display the alternative plans
based on least cost analysis.
Evaluation procedure: Identify the most likely alternative.
Evaluation procedure: Problems in application.
Evaluation procedure: Problems in application.
Report and display procedures.

2.5.8
2.5.9
2.5.10
2.5.11

Section VI—NED Benefit Evaluation
Procedures: Transportation (Inland
Navigation)
2.6.1
2.6.2
2.6.3
2.6.4
2.6.5
2.6.6
2.6.7

Section III—NED Benefit Evaluation
Procedures: Agriculture
2.3.1
2.3.2
2.3.3
2.3.4
2.3.5
2.3.6
2.3.7
2.3.8
2.3.9
2.3.10

Introduction.
Conceptual basis.
Evaluation components.
Planning setting.
Evaluation procedure: Crops.
Evaluation procedure: Damage reduction for other agricultural
properties and associated agricultural enterprises.
Evaluation procedure: Off-site sediment reduction.
Evaluation procedure: Problems in application.
Evaluation procedure: Data sources
Report and display procedures.

2.6.8
2.6.9
2.6.10
2.6.11
2.6.12

Section IV—NED Benefit Evaluation
Procedures: Urban Flood Damage
2.4.1
2.4.2
2.4.3
2.4.4
2.4.5
2.4.6
2.4.7
2.4.8
2.4.9
2.4.10
2.4.11
2.4.12
2.4.13
2.4.14
2.4.15
2.4.16
2.4.17

2.6.13
2.6.14
2.6.15
2.6.16

Introduction
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Step 1—delineate affected
area.
Evaluation procedure: Step 2—determine floodplain
characteristics.
Evaluation procedure: Step 3—project activities in affected
area.
Evaluation procedure: Step 4—estimate potential land use.
Evaluation procedure: Step 5—project land use.
Evaluation procedure: Step 6—determine existing flood
damages.
Evaluation procedure: Step 7—project future flood damages.
Evaluation procedure: Step 8—determine other costs of using
floodplain.
Evaluation procedure: Step 9—collect land market value and
related data.
Evaluation procedure: Step 10—compute NED benefits.
Evaluation procedure: Problems in application.
Evaluation procedure: Data sources.
Report and display procedures.

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Identify system for analysis.

2.5.6
2.5.7

Evaluation procedure: Determine need for future generation.
Evaluation procedure: Determine most likely non-Federal
alternative.

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Step 1—identify the commodity types.
Evaluation procedure: Step 2-identify the study area.
Evaluation procedure: Step 3—determine current commodity
flow.
Evaluation procedure: Step 4—determine current costs of
waterway use.
Evaluation procedure: Step 5—determine current cost of
alternative movement.
Evaluation procedure: Step 6—forecast potential waterway
traffic by commodity.
Evaluation procedure: Step 7—determine future cost of
alternative modes.
Evaluation procedure: Step 8—determine future costs of
waterway use.
Evaluation procedure: Step 9—determine waterway use, with
and without project.
Evaluation procedure: Step 10—compute NED benefits.
Evaluation procedure: Problems in application.
Report and display procedures.

Section VII—NED Benefit Evaluation
Procedures: Transportation (Deep-Draft
Navigation)
2.7.1
2.7.2
2.7.3
2.7.4
2.7.5
2.7.6

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedures.
Problems in application.
Report and display procedures.

Section VIII—NED Benefit Evaluation
Procedures: Recreation
2.8.1
2.8.2
2.8.3
2.8.4
2.8.5
2.8.6
2.8.7

Section V—NED Benefit Evaluation
Procedures: Power (Hydropower)
2.5.1
2.5.2
2.5.3
2.5.4
2.5.5

Evaluation procedure: Compute benefits.
Evaluation procedure: Data sources.
Alternative Procedure: Financial Evaluation.
Report and display procedures.

2.8.8
2.8.9
2.8.10
2.8.11
2.8.12
2.8.13

viii

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Define the study area.
Evaluation procedure: Estimate recreation resource.
Evaluation procedure: Forecast potential recreation use in the
study area.
Evaluation procedure: Determine the without-project condition.
Evaluation procedure: Forecast recreation use with project.
Evaluation procedure: Estimate value of use with the project.
Evaluation procedure: Forecast recreation use diminished with
the project.
Evaluation procedure: Estimate value of recreation use
diminished with the project.
Evaluation procedure: Compute net project benefits.

2.8.14
Report and display procedures.
Appendix 1—Travel Cost Method
Appendix 2—Contingent Valuation (Survey) Methods
Appendix 3—Unit Day Value Method

2.12.8
2.12.9
2.12.10

Chapter III—Environmental Quality (EQ)
Evaluation Procedures

Section IX—NED Benefit Evaluation Procedure:
Commercial Fishing
2.9.1
2.9.2
2.9.3
2.9.4
2.9.5
2.9.6
2.9.7
2.9.8
2.9.9
2.9.10
2.9.11

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General.
Evaluation procedure: Identify the affected areas.
Evaluation procedure: Determine the without-project
condition.
Evaluation procedure: Determine conditions that would
exist with an alternative plan.
Evaluation procedure: Estimate NED benefits.
Problems in application.
Data sources.
Report and display procedures.

Section I—Introduction
3.1.1
3.1.2

3.2.1
3.2.2
3.2.3

Definitions
References for terms
Abbreviations and acronyms

Section III—General Evaluation Requirements
3.3.1
3.3.2
3.3.3

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General
Evaluation procedure: Problems in application.
Evaluation procedure: Data sources.
Evaluation procedure: Risk and uncertainty.
Report and display procedures.

3.3.4
3.3.5

Interdisciplinary planning.
Public involvement.
Integration of other review, coordination, and consultation
requirements.
Documentation.
Performance objectives.

Section IV—EQ Evaluation Process
3.4.1
3.4.2
3.4.3
3.4.4
3.4.5
3.4.6
3.4.7
3.4.8
3.4.9
3.4.10
3.4.11
3.4.12
3.4.13
3.4.14
3.4.15

Section XI—NED Benefit Evaluation Procedures:
Unemployed or Underemployed Labor
Resources
2.11.1
Introduction.
2.11.2
Conceptual basis.
2.11.3
Planning setting.
2.11.4
Evaluation procedure.
2.11.5
Report and display procedures.
Appendix 1—Occupational Tables

Section XII—National Economic Development
(NED) Cost Evaluation Procedures.
2.12.1
2.12.2
2.12.3
2.12.4
2.12.5
2.12.6
2.12.7

Purpose
Limitations

Section II—Definitions

Section X—NED Benefit Evaluation Procedure:
Other Direct Benefits
2.10.1
2.10.2
2.10.3
2.10.4
2.10.5
2.10.6
2.10.7
2.10.8

Evaluation procedure: Problems in application.
Evaluation procedure: Data sources.
Report and display procedures.

Orientation
Define resources phase.
Identify resources activity.
Develop evaluation framework activity.
Inventory resources phase.
Survey existing conditions activity.
Forecast without-plans conditions activity.
Forecast with-plan conditions activity.
Assess effects phase.
Identify effects activity.
Describe effects activity.
Determine significant effects activity.
Appraise effects phase.
Appraise significant effects activity.
Judge net EQ effects activity.

Appendix A—Example Documentation
Formats

Introduction.
Conceptual basis.
Planning setting.
Evaluation procedure: General
Evaluation procedure: Implementation outlays
Evaluation procedure: Associated costs
Evaluation procedure: Other direct costs.

Appendix B—Relationships Between NEPA
Requirements for EIS Contents and the
requirements of these procedures.

ix

This page is intentionally blank.

x

CHAPTER I — STANDARDS
Section I — Introduction
1.1.1 Purpose and Scope.

1.1.3 Applicability.

(a) These Guidelines establish standards and
procedures for use by Federal agencies in formulating and evaluating alternative plans for water and
related land resources implementation studies.
These Guidelines implement the Principles for Water
and Related Land Resources Implementation
Studies.

(a) These Guidelines apply to implementation
studies completed more than 120 days after issuance of the Guidelines. Studies completed within 120
days should be concluded in accordance with the
guidance applicable to them prior to issuance of
these Guidelines.
(b) Preauthorization or postauthorization studies
are considered completed when the appropriate
planning documents have been approved by the responsible agency's field office.

(b) These Guidelines are for Federal administrative
purposes and shall not create any substantive or
procedural rights in private parties.
(c) Departures in an individual study from these
Guidelines are to be documented and justified in the
study report.

(c) In the case of reevaluation studies in which
there is no reformulation of the plan, the portions of
this chapter dealing with plan formulation do not
apply.

(d) Implementation studies are pre- or postauthorization project formulation or evaluation studies
undertaken by a Federal agency. Studies for the
following agency activities are covered:

(d) The administrator of each Federal or Federally
assisted program covered is responsible for applying
these Guidelines.

(1) Corps of Engineers (Civil Works) water resources project plans.

Section II —The Federal Objective.

(2) Bureau of Reclamation water resources project
plans.

(a) The Federal objective of water and related land
resources planning is to contribute to national
economic development consistent with protecting the
Nation's environment, pursuant to national environmental statutes, applicable executive orders, and
other Federal planning requirements.

(3) Tennessee Valley Authority water resources
project plans.
(4) Soil Conservation Service water resources
project plans.

(b) Contributions to national economic development (NED) are increases in the net value of the
national output of goods and services, expressed in
monetary units. Contributions to NED are the direct
net benefits that accrue in the planning area and the
rest of the nation. Contributions to NED include
increases in the net value of those goods and services that are marketed, and also of those that may
not be marketed.

(e) These Guidelines establish the basic process
for Federal agencies in carrying out implementation
studies. Activities conducted pursuant to the requirements of the National Environmental Policy Act
of 1969 (NEPA) (42 U.S.C. 4321, et. seq.) are to be
fully integrated with this process.
(f) The accounts described in these Guidelines
encompass and are consistent with the concept of
human environment as used in NEPA and the appropriate portions of the NEPA regulations established by the Council on Environmental Quality
(CEQ) in 40 CFR Parts 1500-1508.

(c)The Federal objective for the relevant planning
setting should be stated in terms of an expressed
desire to alleviate problems and realize opportunities
related to the output of goods and services or to
increased economic efficiency.

1.1.2 Authority.

(d) Each statement of a problem or opportunity
should be expressed in terms of a desired output.
Example statements are—

These Guidelines are established pursuant to
Section 103 of the Water Resources Planning Act
(Pub. L. 89-80) and Executive Order 11747.

(1) Reduce flood losses in the Red River floodplain
to increase agriculture production;
(2) Reduce the cost of agricultural production in
the irrigated sector of Tolland County; and

1

(3) Increase the value of the recreational experience
at Lake Zoar.

1.3.3 Specification of the Problems and
Opportunities Associated With the Federal
Objective and Specific State and Local Concerns.

Section III — Summary of the Planning
Process

(a) The desire to alleviate problems and realize
opportunities should be specified for the planning area in
terms of the Federal objective and specific State and
local concerns. The problems and opportunities should
be defined so that their definition does not dictate a
narrow range of alternatives.

1.3.1 Introduction.
The planning process consists of a series of steps
that identifies or responds to problems and
opportunities associated with the Federal objective and
specific State and local concerns, and culminates in
the selection of a recommended plan. The process
involves an orderly and systematic approach to making
determinations and decisions at each step so that the
interested public and decisionmakers in the planning
organization can be fully aware of: the basic
assumptions employed; the data and information
analyzed; the areas of risk and uncertainty; the
reasons and rationales used; and the significant
implications of each alternative plan.
1.3.2 Major Steps.
(a) The planning process consists of the following
major steps:
(1) Specification of the water and related land resources problems and opportunities (relevant to the
planning setting) associated with the Federal objective
and specific State and local concerns.
(2) Inventory, forecast, and analysis of water and
related land resource conditions within the planning
area relevant to the identified problems and opportunities.
(3) Formulation of alternative plans.
(4) Evaluation of the effects of the alternative plans.
(5) Comparison of alternative plans.
(6) Selection of a recommended plan based upon
the comparison of alternative plans.
(b) Plan formulation is a dynamic process with
various steps that should be iterated one or more
times. This iteration process, which may occur at any
step, may sharpen the planning focus or change its
emphasis as new data are obtained or as the
specification of problems or opportunities changes or
becomes more clearly defined.

2

(b) The problems and opportunities should be defined
in such a way that meaningful levels of achievement can
be identified. This will facilitate the formulation of
alternative plans in cases in which there may be financial,
environmental, technical, legislative, or administrative
constraints on the total alleviation of a problem or
realization of an opportunity.
(c) The problems and opportunities should be stated
for both current and future conditions. Desired conditions
for the future should be explicitly stated.
(d) The problems and opportunities should reflect the
specific effects that are desired by groups and individuals
as well as the problems and opportunities declared to be
in the national interest by the Congress or the Executive
Branch. This identification and detailing of problems and
opportunities is the process of making explicit the range
of preferences and desires of those affected by resource
development. It should be understood that the initial
expressions of problems and opportunities may be
modified during the planning process.
1.3.4 Inventory and Forecast of Water and
Related Land Resource Conditions.
The potential for alleviating problems and realizing
opportunities is determined during inventorying and
forecasting. The inventory and forecast of resource
conditions should be related to the problems and
opportunities previously identified.
1.3.5 Formulation of Alternative Plans.
Alternative plans are to be formulated in a systematic
manner to insure that all reasonable alternatives are
evaluated. Usually, a number of alternative plans are
identified early in the planning process and become
more refined through additional development and
through subsequent iterations. Additional alternative
plans may be introduced at any time.

1.3.6 Evaluation of Effects.

defining the problems and opportunities, in
scoping the study, and in review and consultation.

(a) General. The evaluation of the effects of each
alternative plan consists of assessment and appraisal.

1.4.2 International Consultations.
When a Federal water project is likely to have a
significant impact on any land or resources
situated in a foreign country or to affect treaty
obligations, the responsible Federal planning
agency, through the Department of State, should
enter into consultations with the government of
the affected country, with a view to determining
the international implications of the project under
consideration.

(b) Assessment. Assessment is the process of
measuring or estimating the effects of an alternative
plan. Assessment determines the difference
between without-plan and with-plan conditions for
each of the categories of effects.
(c) Appraisal.
(1) Appraisal is the process of assigning social
values to the technical information gathered as part
of the assessment process.

1.4.3 General Public Participation.

(2) Since technical data concerning benefits and
costs in the NED account are expressed in monetary units, the NED account already contains a
weighting of effects; therefore, appraisal is applicable only to the EQ, RED, and OSE evaluations.

(a) Interested and affected agencies, groups,
and individuals should be provided opportunities
to participate throughout the planning process.
The responsible Federal planning agency should
contact and solicit participation of: other Federal
agencies; appropriate regional, State, and local
agencies; national, regional and local groups;
other appropriate groups such as affected Indian
tribes; and individuals. A coordinated public
participation program should be established with
willing agencies and groups.

(d) Displays. The results of the evaluation should
be displayed according to the directions provided in
Section Vlll—Displays.
1.3.7 Comparison of Alternative Plans.
(a) The comparison of plans focuses on the differences among the alternative plans as determined in the evaluation phase.

(b) Efforts to secure public participation should
be pursued through appropriate means such as
public hearings, public meetings, workshops,
information programs, and citizen committees.

(b) The differences should be organized on the
basis of the effects in the four accounts or on a
combination of the NED account and another appropriate format for other significant effects.

1.4.4 Review and Consultation.
1.3.8 Plan Selection.

Review and consultation with interested and affected agencies, groups, and individuals are
needed in the planning process. Reviews are to
be consistent with the requirements of applicable
Federal statutes and the CEQ NEPA regulations
(40 CFR Parts 1500-1508). The planning process
described in these Guidelines and the CEQ and
NEPA regulations are complementary.

After consideration of the various alternative
plans, their effects, and public comments, a plan is
selected following the general guidance in Section
X—Plan Selection.

Section IV—General Planning
Considerations

1.4.5 Interdisciplinary Planning.

1.4.1 Federal-State Relationship in Planning.
An interdisciplinary approach should be used in
planning to ensure the integrated use of the
natural and social sciences and the
environmental design arts. The disciplines of the
planners should be appropriate to the issues
identified in the scoping process. The planning
agency should supplement its available expertise,
as necessary, with knowledgeable experts from
cooperating agencies, universities, consultants,
etc.

(a) The responsible Federal planning agency is to
contact the Governor or designated agency for
each affected State before initiating a study and
enter into such agreements as are appropriate to
carry out a coordinated planning effort.
(b) The State agency or agencies responsible for
or concerned with water planning are to be provided
with appropriate opportunities to participate in

3

1.4.6 Agency Decisionmaking.

(2) Define the planning area based on the problems and opportunities and the geographic areas
likely to be affected by alternative plans.

Decisionmaking is a dynamic process that leads
to selection of a recommended plan. Decision
making begins at the field level and occurs at
differentlevels through subsequent reviews and
approvals as required by the agency until it reaches
the level having authority to approve the project
(final level). The individual in the responsible
planning agency making the decisions at each level
is referred to as the “agency decisionmaker.” The
identity of the agency decisionmaker depends upon
the level of project development and review. For
projects requiring congressional authorization, the
final agency decisionmaker is the Secretary of the
Department or head of the independent agency.
For projects that do not require congressional
approval, the final decisionmaker is the Secretary of
the Department, head of the agency, or such other
official as appropriately delegated.

(3) Identify and eliminate from detailed study
any issues that are not significant or that have
been adequately covered by prior study.
However, important issues, even though covered
by other studies, should still be considered in the
analysis.
(4) Identify any current or future planning that is
related to but not part of the study under
consideration.
(5)
Identify
review
and
consultation
requirements so that cooperating agencies (as
defined in 40 CFR 1508.5) may prepare required
analyses and studies concurrently with the study
under consideration.
(6) Indicate the tentative planning and decisionmaking schedule.
(7) The scoping process should be integrated
with other early planning activities.

1.4.7 Planning Area.

(c) Scoping may be used to combine or narrow
the number of problems and opportunities, measures, plans, effects, etc., under consideration so
that meaningful and efficient analysis and choice
among alternative plans can occur.

The planning area is a geographic space with an
identified boundary that includes:
(a) The area identified in the study's authorizing
document;
(b) The locations of alternative plans, often called
“project areas”; and

(d) Scoping should include consideration of
ground water problems and opportunities,
including conjunctive use of ground and surface
water, and in stream flow problems. Appropriate
consideration should be given to existing water
rights in scoping the planning effort.

(c) The locations of resources that would be directly, indirectly, or cumulatively affected by alternative plans, often called the “affected area.”
1.4.8 Scoping.

1.4.9 Forecasting.
(a) Formulation and evaluation of alternative
plans should be based on the most likely
conditions expected to exist in the future with and
without the plan. The without-plan condition is the
condition expected to prevail if no action is taken.
The with-plan condition is the condition expected
to prevail with the particular plan under
consideration.

(a) Planning should include an early and open
process termed "scoping" to identify both the likely
significant issues to be addressed and the range of
those issues. This process is complementary with
the scoping process described in the CEQ NEPA
regulations (40 CFR Parts 1500-1508). The agency
should begin scoping as soon as practicable after a
decision to begin planning. The scoping process
should include affected Federal, State, and local
agencies and other interested groups or persons.
Scoping should be used as appropriate throughout
planning to ensure that all significant decisionmaking factors are addressed and that
unneeded and extraneous studies are not
undertaken.

(b) The forecasts of with- and without-plan
conditions should use the inventory of existing
conditions as the baseline, and should be based
on consideration of the following (including direct,
indirect, and cumulative effects)—
(1) National regional projections of income, employment, output, and population prepared and
published by the Department of Commerce.

(b) As part of the scoping process, the agency
should:

(2) Other aggregate projections such as
exports, land use trends, and amounts of goods
and services likely to be demanded;

(1) Determine the extent to which the likely significant issues will be analyzed.

(3) Expected environmental conditions; and
4

(4) Specific, authoritative projections for small
areas.

present values using the discount rate established
annually for the formulation and economic
evaluation of plans for water and related land
resources plans.

Appropriate national and regional projections
should be used as an underlying forecasting
framework, and inconsistencies therewith, while
permissible, should be documented and justified.

1.4.12 Period of Analysis.

(c) National projections used in planning are to
be based on a full employment economy. In this
context, assumption of a full employment
economy establishes a rationale for general use of
market prices in estimating economic benefits and
costs, but does not preclude consideration of
special analyses of regions with high rates of
unemployment
and
underemployment
in
calculating benefits from using unemployed and
underemployed labor resources.

(a) The period of analysis is to be the same for
each alternative plan. The period of analysis is to
be the time required for implementation plus the
lesser of—
(1) The period of time over which any alternative
plan would have significant beneficial or adverse
effects; or
(2) A period not to exceed 100 years.
(b) Appropriate consideration should be given to
environmental factors that may extend beyond the
period of analysis.

(d) National and State environmental and health
standards and regulations should be recognized
and appropriately considered in scoping the planning effort. Standards and regulations concerning
water quality, air quality, public health, wetlands
protection, and floodplain management should be
given specific consideration in forecasting the withand without-plan condition.

1.4.13 Risk and Uncertainty—
Sensitivity Analysis.
(a) Plans and their effects should be examined
to determine the uncertainty inherent in the data or
various assumptions of future economic, demographic, social, attitudinal, environmental, and
technological trends. A limited number of
reasonable alternative forecasts that would, if
realized, appreciably affect plan design should be
considered.

(e) Other plans that have been adopted for the
planning area and other current planning efforts
should be considered.
(f) Forecasts should be made for selected years
over the period of analysis to indicate how changes
in economic and other conditions are likely to have
an impact on problems and opportunities.

(b) The planner's primary role in dealing with risk
and uncertainty is to identify the areas of sensitivity
and describe them clearly so that decisions can be
made with knowledge of the degree of reliability of
available information.

1.4.10 Prices.
(a) The prices of goods and services used for
evaluation should reflect the real exchange values
expected to prevail over the period of analysis. For
this purpose, relative price relationships of outputs
and inputs prevailing during, or immediately
preceding, the period of planning generally
represent the real price relationships expected
over the life of the plan, unless specific
considerations indicate real exchange values are
expected to change.

(c) Situations of risk are detained as those in
which the potential outcomes can be described in
reasonably well-known probability distributions
such as the probability of particular flood events.
Situations of uncertainty are defined as those in
which potential outcomes cannot be described in
objectively known probability distributions.
(d) Risk and uncertainty arise from
measurement errors and from the underlying
variability of complex natural, social. and economic
situations. Methods of dealing with risk and
uncertainty include:

(b) The general level of prices for outputs and
inputs prevailing during or immediately preceding
the period of planning is to be used for the entire
period of analysis. In the case of agricultural planning, normalized prices prepared by the Department of Agriculture should be used.

(1) Collecting more detailed data to reduce measurement error.
(2) Using more refined analytic techniques.
(3) Increasing safety factors in design.

1.4.11 Discount Rate.

(4) Selecting measures with better known performance characteristics.

Discounting is to be used to convert future
monetary values to present values. Calculate
5

(5) Reducing the irreversible or irretrievable
commitments of resources.
(6) Performing a sensitivity analysis of the estimated benefits and costs of alternative plans.

(b)Based on this analysis, an appraisal should
be made of the potential for alleviating the problems and realizing the opportunities. The appraisal
provides guidance on the possible scope and
magnitude of actions needed to address each
problem or opportunity. This appraisal should
identify
possibilities
for
management,
development, preservation, and other opportunities
for action. Resource inventories and forecasts may
suggest additional problems or opportunities.
These possibilities will indicate the resource
capabilities relative to specific commodities,
services, or environmental amenities desired by
the public. By proper selection of these
development or management possibilities, alternatives may be formulated for each problem or
opportunity.

(e) Reducing risk and uncertainty may involve increased costs or loss of benefits. The advantages
and costs of reducing risk and uncertainty should
be considered in the planning process. Additional
information on risk and uncertainty can be found in
Supplement I to this chapter.
1.4.14 Documentation.
Planning studies are to be documented in a
clear, concise manner that explains the basic assumptions and decisions that were made and the
reasons for them. The documentation should be
prepared in a manner to expedite review and decisionmaking.

Section Vl — Alternative Plans

Section V
—
Inventory and
Forecast of Conditions Without a
Plan

1.6.1 General.
(a) An alternative plan consists of a system of
structural and/or nonstructural measures, strategies, or programs formulated to alleviate specific
problems or take advantage of specific opportunities associated with water and related land resources in the planning area.

1.5.1 Resource Conditions.
(a) An inventory should be made to determine
the quantity and quality of water and related land
resources of the planning area and to identify opportunities for protection and enhancement of
those resources. The inventory should include
data appropriate to the identified problems and
opportunities, as determined by scoping, and the
potential for formulating and evaluating alternative
plans. The inventory does not necessarily include
an exhaustive listing of resources of the area. This
inventory should describe the existing conditions
and should be the baseline for forecasting withand without-plan conditions.

(b) Alternative plans should be significantly
differentiated from each other.
(c) Alternative plans should not be limited to
those the Federal planning agency could
implement directly under current authorities. Plans
that could be implemented under the authorities of
other Federal agencies, State and local entities,
and nongo-vernment interests should also be
considered.
(d) Alternative plans may either—

(b) The most likely future condition without a
plan should be used for evaluating the effects of
alternative plans.

(1) Be in compliance with existing statutes, administrative regulations, and established common
law; or

1.5.2 Problems and Opportunities.

(2) Propose necessary changes in such statutes,
regulations, or common law.
(e) A range of measures that can, over time, balance water demand for various purposes with
water availability should be considered, including
measures that will—

(a) Inventory and forecasting should include an
analysis of the identified problems and Opportunities and their implications for the planning setting.
Resource inventories should be limited to
resources affecting the problems and opportunities
or likely to be affected by the alternative plans. As
alternative plans are developed or refined, the
adequacy of these resource inventories should be
reassessed. This analysis should be used to
redefine the specific problems and opportunities
associated with the Federal objective and other
State and local concerns.

(1) Reduce the demand for water;
(2) Improve efficiency in use and reduce losses
and waste;
(3) Improve land management practices to con
serve water; and/or
(4) Increase the available supply of water.

6

(f) Nonstructural measures should be
considered as means for addressing problems
and opportunities.

formulated in order to allow the decisionmaker the
opportunity to judge whether these beneficial
effects outweigh the corresponding NED losses.

(1) Nonstructural measures are complete or
partial alternatives to traditional structural
measures. Nonstructural measures include
modifications in public policy, management
practice, regulatory policy, and pricing policy.

(b) In general, in the formulation of alternative
plans, an effort is made to include only increments
that provide net NED benefits after accounting for
appropiate mitigation costs. Include appropiate
mitigation of adverse environmental effects, as
required by law, in all alternative plans. Increments
that do not provide net NED benefits may be
included, except in the NED plan if they are costeffective measures for addressing specific
concerns.

(2) A nonstructural measure or measures may in
some cases offer a complete alternative to a
traditional structural measure or measures. In
other cases, nonstructural measures may be
combined with fewer or smaller traditional
structural measures to produce a complete
alternative plan.

(c) Alternative plans, including the NED plan,
should be formulated in consideration of four
criteria: Completeness; effectiveness; efficiency;
and acceptability.

(g) Protection of the Nation’s environment is to
be provided by mitigation (as defined in 40 CFR
1508.20) of the adverse effects (as defined in 40
CFR 1508.8) of each alternative plan. Accordingly,
each alternative plan should include mitigation
determined to be appropriate by the agency
decision- maker.

(1) Completeness is the extent to which a given
alternative plan provides and accounts for all
necessary investments or other actions to ensure
the realization of the planned effects. This may
require relating the plan to other types of public or
private plans if the other plans are crucial to
realization of the contributions to the objective.

(1) Appropiate mitigation to address effects on
fish and wildlife and their habitat should be
determined in consultation with Federal and State
fish and wildlife agencies in accordance with the
Fish and Wildlife Coordination Act of 1958 (16
U.S.C. 661-666(c)), or other appropiate authority.

(2) Effectiveness is the extent to which an
alternative plan alleviates the specified problems
and achieves the specified opportunities.
(3) Efficiency is the extent to which an alternative
plan is the most cost effective means of alleviating
the specified problems and realizing the specified
opportunities, consistent with protecting the
Nation’s environment.

(2) Appropiate mitigation to address other
adverse effects should be determined in
accordance with applicable laws, regulations, and
Executive Orders.
(3) Mitigation measures determined to be
appropriate should be planned for concurrent
implementation with other major project features,
where practical.

(4) Acceptability is the workability and viability of
the alternative plan with respect to acceptance by
State and local entities and the public and
compatibility with existing laws, regulations, and
public policies.

(h) Other existing water and related land
resource plans, such as State water resource
plans, should be considered as alternative plans if
within the scope of the planning effort.

1.6.3 The NED Plan

(I)
Various schedules, including staged
construction, for implementing alternative plans
should be considered.

A plan that reasonably maximizes net national
economic development benefits, consistent with
the Federal objective, is to be formulated. This
plan is to be identified as the national economic
development plan.

1.6.2 Formulation

1.6.4 Other Alternative Plans

(a) Alternative plans which contribute to the
Federal objective should be systematically
formulated, in addition to a plan which reasonably
maximizes contributions to NED, other plans may
be formulated which reduce net NED benefits in
order to further address other Federal, State, local,
and international concerns not fully addressed by
the NED plan. These additional plans should be

(a) Other alternative plans should be formulated
to adequately explore opportunities to address
other Federal, State, local, and international
concerns not fully addressed by the NED plan.
(b) The number and variety of alternative plans
should be governed by—
7

(1) The problems and opportunities associated
with the water and related land resources in the
study area;

hancement of long-term productivity should be displayed. Any irreversible or irretrievable commitments
of resources should be displayed.

(2) The overall resource capabilities of the study
area;

(e) Effects on the values and attributes of ground
water and instream flow should be displayed.

(3) The available alternative measures; and

(f) Effects of an alternative plan in the displays are
the differences between the forecasted conditions
with the plan and forecasted conditions without the
plan.

(4) Preferences of and conflicts among State and
local entities and different segments of the public.
(c) When institutional barriers would prevent implementation of an economically attractive plan, alternative plans which include removal of those barriers should be presented where such plans are implement able.

(g) Effects in the NED account are to be expressed
in monetary units. EQ effects are to be expressed in
appropriate numeric units or non-numeric terms.
RED and OSE effects are to be expressed in
monetary units, other numeric units, or non-numeric
terms.

Section Vll — Accounts

(h) Monetary values are to be expressed in average annual equivalents by appropriate discounting
and annualizing techniques using the applicable
discount rate.

1.7.1 General.
(a) Four accounts are established to facilitate
evaluation and display of the effects of alternative
plans. These accounts are: national economic development (NED), environmental quality (EQ), regional economic development (RED), and other
social effects (OSE). These four accounts encompass all significant effects of a plan on the human
environment as required by the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321
et seq.). They also encompass social well-being as
required by Section 122 of the Flood Control Act of
1970 (Pub. L. 91-611, 84 Stat. 1823). The EQ account shows effects on ecological, cultural, and
aesthetic attributes of significant natural and cultural
resources that cannot be measured in monetary
terms. The OSE account shows urban and community impacts and effects on life, health and safety.
The NED account shows effects on the national
economy. The RED account shows the regional incidence of NED effects, income transfers, and employment effects.

1.7.2 National Economic Development Account.
(a) General.
(1) The NED account describes that part of the
NEPA human environment, as defined in 40 CFR
1508.14, that identifies beneficial and adverse effects
on the economy.
(2) Beneficial effects in the NED account are increases in the economic value of the national output
of goods and services from a plan; the value of
output resulting from external economies caused by
a plan; and the value associated with the use of
otherwise unemployed or under-employed labor resources.
(3) Adverse effects in the NED account are the
opportunity costs of resources used in implementing
a plan. These adverse effects include: Implementation outlays, associated costs, and other direct
costs.

(b) The NED account is the only required account.
Other information that is required by law or that will
have a material bearing on the decisionmaking
process should be included in the other accounts
(EQ, RED, and OSE) or in some other appropriate
format used to organize information on effects.

(4) Procedures which should be used for evaluating NED effects are in Chapter ll of these Guidelines.
(i) When an alternative procedure provides a more
accurate estimate of a benefit, the alternative
estimate may also be shown if the procedure is
documented.

(c) The same effect may be shown only once
within a given account except that the OSE account
may show the incidence of an effect from more than
one point of view. Beyond this exception, claiming the
same benefit, cost, change in a resource attribute, or
effect more than once in a given account would
constitute double counting.

(ii) Steps in a procedure may be abbreviated by
reducing the extent of the analysis and amount of
data collected where greater accuracy or detail is
clearly not justified by the cost of the plan
components being analyzed. The steps abbreviated
and the reason for abbreviation should be
documented.

(d) Relationships between short-term use of the
human environment and the maintenance and en8

(iii) Proposals for additions to or changes in the
procedures in Chapter ll may be made when an
agency head determines that the new technique
will improve plan formulation and evaluation.
These proposals are to be submitted to the Water
Resources Council for review and approval for
inclusion in Chapter ll. Procedures which represent
changes in established policy are to be referred to
the Cabinet Council on Natural Resources and Environment for its consideration.

cannot be estimated from market price or change
in net income. This assumes, of course, that
society would in fact undertake the alternative
means. Estimates of benefit should be based on
the cost of the most likely alternative only if there is
evidence that the alternative would be
implemented. In determining the most likely
alternative, the planner should give adequate
consideration to nonstructural and demand management measures as well as structural
measures.

(b) Goods and services: General measurement
standard. The general measurement standard of
the value of goods and services is defined as the
willingness of users to pay for each increment of
output from a plan. Such a value would be
obtained if the ?seller” of the output were able to
apply a variable unit price and charge each user
an individual price to capture the full value of the
output to the user. Since it is not possible in most
instances for the planner to measure the actual
demand situation, four alternative techniques can
be used to obtain an estimate of the total value of
the output of a plan: Willingness to pay based on
actual or simulated market price; change in net
income; cost of the most likely alternative; and
administratively established values.

(4) Administratively established values. Administratively established values are proxy values for
specific goods and services cooperatively established by the water resources agencies. An example of administratively established values is the
range of unit-day values for recreation.
(c) Goods and services: Categories. The NED
account includes goods and services in the following categories:
(1) Municipal and industrial (M&l) water supply
(2) Agricultural floodwater, erosion and
sedimentation reduction
(3) Agricultural drainage
(4) Agricultural irrigation

(1) Actual or simulated market price. If the additional output from a plan is too small to have a significant effect on price, actual or simulated market
price will closely approximate the total value of the
output and may be used to estimate willingness to
pay. If the additional output is expected to have a
significant effect on market price and if the price
cannot be estimated for each increment of the
change in output, a price midway between the
price expected with and without the plan may be
used to estimate the total value.

(5) Urban flood damage reduction
(6) Power (hydropower)
(7) Transportation (inland navigation)
(8) Transportation (deep draft navigation)
(9) Recreation
(10) Commercial fishing
(11) Other categories of benefits for which
procedures are documented in the planning report
and which are in accordance with the general
measurement standards in paragraph (b) of this
section.

(2) Change in net income. The value of the
change in output of intermediate goods and services from a plan is measured by their total value as
inputs to producers. The total value of intermediate
goods or services to producers is properly measured as the net income received by producers with
a plan compared to net income received without a
plan. Net income is defined as the market value of
producers' outputs less the market value of
producers' inputs exclusive of the cost of the
intermediate goods or services from a plan.
Increased net income from reduced cost of
maintaining a given level of output is considered a
benefit since released resources will be available
for production of other goods and services.

(d) Other direct benefits. The other direct
benefits in the NED benefit evaluation are the
incidental direct effects of a project that increase
economic efficiency and are not otherwise
accounted for in the evaluation of the plan or
project. They are incidental to the purposes for
which the water resources plan is being
formulated. They include incidental increases in
output of goods and services and incidental
reductions in production costs. For example, a
project planned only for flood damage reduction
and hydropower purposes might reduce
downstream water treatment costs; this reduction
in costs would be shown as another direct benefit
in the NED account.

(3) Cost of the most likely alternative. The cost
of the most likely alternative may be used to
estimate NED benefits for a particular output if
non-Federal entities are likely to provide a similar
output in the absence of any of the alternative
plans under consideration and if NED benefits

(e) Use of otherwise unemployed or underemployed labor resources.
9

(1) The opportunity cost of employing otherwise
unemployed and underemployed workers is equal
to their earnings under the without plan conditions

(2) Associated costs. These are the costs in addition to implementation outlays for measures
needed to achieve the benefits claimed during the
period of analysis. For example, associated costs
would include the cost of irrigation water supply laterals if they are not accounted for in the benefit
estimate.

(2) Conceptually, the effects of the use of unemployed or underemployed labor resources should
be treated as an adjustment to the adverse effects
of a plan on national economic development.
Since this approach leads to difficulties in cost
allocation and cost sharing calculations, the
effects from the use of such labor resources are to
be treated as an addition to the benefits resulting
from a plan.

(3) Other direct costs. These are the costs of resources directly required for a project or plan, but
for which no implementation outlays are made.
These costs are uncompensated, unmitigated
NED losses caused by the installation, operation,
maintenance, or replacement of project or plan
measures. Examples of other direct costs include
increased downstream flood damages caused by
channel modifications, dikes, or the drainage of
wetlands, increased water supply treatment costs
caused by irrigation return flows, and displaced
public recreation.

(3) Beneficial effects from the use of
unemployed or underemployed labor resources
are limited to labor employed on site in the
construction or installation of a plan. This limitation
reflects identification and measurement problems
and the requirement that national projections are
to be based on a full employment economy.
(4) If the planning region has substantial and
persistent unemployment and these labor resources will be employed or more effectively employed in installation of the plan, the net additional
payments to the unemployed and underemployed
labor resources are defined as a benefit.

1.7.3 Environmental Quality Account.
(a) General
(1) The EQ account is a means of displaying and
integrating into water resources planning that information on the effects of alternative plans on significant EQ resources and attributes of the NEPA
human environment, as defined in 40 CFR
1507.14, that is essential to a reasoned choice
among alternative plans. Significant means likely
to have a material bearing on the decisionmaking
process.

(f) Adverse NED effects: Measurement standards.
(1) In evaluating NED costs, resource use is
broadly defined to include all aspects of the economic value of the resource. This broad definition
requires consideration of the direct private and
public uses that producers and consumers are
currently making of available resources or are
expected to make of them in the future.

(2) Beneficial effects in the EQ account are favorable changes in the ecological, aesthetic, and
cultural attributes of natural and cultural
resources.

(2) If market prices reflect the full economic
value of a resource to society, they are to be used
to determine NED costs. If market prices do not
reflect these values, then an estimate of the other
direct costs should be included in the NED costs.

(3) Adverse effects in the EQ account are unfavorable changes in the ecological, aesthetic, and
cultural attributes of natural and cultural
resources.

(3) NED costs may reflect allowance for the salvage value of land, equipment, and facilities that
would have value at the end of the period of analysis.

(4) A suggested procedure which may be used
for evaluating effects included in the EQ account
appears in Chapter lll of these Guidelines.

(g) NED cost categories. For convenience of
measurement and analysis, NED costs should be
classified as implementation outlays, associated
costs and other direct costs.

(b) Significant EQ resources and attributes.
(1) An EQ resource is a natural or cultural form,
process, system, or other phenomenon that—

(1) Implementation outlays. These are the financial outlays (including operation, maintenance and
replacement costs) incurred by the responsible
Federal entity and by other Federal or non-Federal
entities for implementation of the plan in accordance with sound management principles. These
costs do not include transfer payments such as replacement housing assistance payments as specified in 42 U.S.C. 4623 and 4624.

(i) Is related to land, water, atmosphere, plants,
animals, or historic or cultural objects.
(ii) Has one or more EQ attributes (ecological,
cultural, aesthetic).
(2) EQ attributes are the ecological, cultural, and
aesthetic properties of natural and cultural resources that sustain and enrich human life.

10

(i) Ecological attributes are components of the
environment and the interactions among all its living
(including people) and nonliving components that
directly or indirectly sustain dynamic, diverse, viable
ecosystems. In this category are functional and
structural aspects that require special consideration
because of their unusual characteristics.

(3) Effects that cannot be satisfactorily quantified
or described with available methods, data, and information or that will not have a material bearing
on the decisionmaking process may be excluded
from the RED account.

(ii) Cultural attributes are evidence of past and
present habitation that can be used to reconstruct
or preserve human lifeways. Included in this category are structures, sites, artifacts, environments,
and other relevant information, and the physical
contexts in which these occur.

(i) Regional income. The positive effects of a
plan on a region's income are equal to the sum of
the NED benefits that accrue to that region, plus
transfers of income to the region from outside the
region.

(b) Positive effects on regional economic
development.

(ii) Regional incidence of NED benefits. Because
of the definition of region used for the RED account, all or almost all of the NED benefits for the
plan will accrue to that region, plus transfers of
income to the region from outside the region.

(iii) Aesthetic attributes are perceptual stimuli that
provide diverse and pleasant surroundings for
human enjoyment and appreciation. Included in this
category are sights, sounds, scents, tastes, and
tactile impressions and the interactions of these
sensations, of natural and cultural resources.

(ii) Transfers. Income transfers to a region as a
result of a plan include income from: Implementation outlays, transfers of basic economic activity,
indirect effects, and induced effects. In each case
income transfers refer to increases in net income
within the region rather than to increases in total
expenditure.

(3) Significant EQ resources and attributes should
be identified based on institutional, public, and
technical recognition.
(c) Significant effects.
(1) An effect on an EQ resource occurs whenever
estimates of future with- and without-plan conditions
of the resource are different.

(A) Income from implementation outlays is that
portion of project outlays that becomes net income
in the regional economy, exclusive of NED benefits
from use of otherwise unemployed or underemployed labor resources.

(2) An effect may be described in terms of duration, frequency, location, magnitude, and other
characteristics, such as reversibility, retrievability.
and the relationships to long-term productivity,
where their description is relevant and useful to
decisionmaking.

(B) Income from transfers of basic economic activity is net income from economic activity that locates in the region as a direct result of differences
between the with- and without-plan conditions.

(3) The significance of an effect may be established based on institutional, public, and technical
recognition.

(C) Income from indirect effects is regional net
income resulting from expansion in the production
of inputs to industries supplying increased final
products and regional exports.

(d) Summary. There should be an overall summary of significant beneficial and adverse effects on
EQ resources.

(D) Income from induced effects is regional net
income resulting from changes in consumption expenditures generated by increases in personal
income.

1.7.4 Regional Economic Development Account.

(2) Regional employment.

(a) General

(i) The positive effects of a plan on regional employment are directly parallel to the positive effects
on regional income, so that analysis of regional
employment effects should be organized in the
same categories using the same conceptual bases
as the analysis of positive regional income effects.
Regional employment associated with each of the
regional income categories should be calculated
and listed accordingly.

(1) The RED account registers changes in the
distribution of regional economic activity that result
from each alternative plan. Two measures of the
effects of the plan on regional economies are used
in the account: Regional income and regional employment
(2) The regions used for RED analysis are those
regions with in which the plan will have particularly
significant income and employment effects. Effects
of a plan not occurring in the significantly affected
regions are to be placed in a ”rest of nation" category.

(ii) To the extent practical, planning reports
should provide reasonable estimates of the
composition of increased employment according
to relevant service, trade, and industrial sectors,
11

including a separate estimate for agriculture. The
nature of the employment increase to each sector
should be classified as to the level of skill
required—unskilled, semiskilled, and highly skilled.

(1) The OSE account is a means of displaying
and integrating into water resource planning information on alternative plan effects from perspectives that are not reflected in the other three accounts. The categories of effects in the OSE account include the following: Urban and community
impacts; life, health, and safety factors; displacement; long-term productivity; and energy requirements and energy conservation.

(c) Negative effects on regional economic development.
(1) Regional income. The negative effects of a
plan on a region's net income are equal to the sum
of the NED costs of the plan that are borne by the
region, plus transfers of income from the region to
the rest of the Nation.

(2) Effects may be evaluated in terms of their impacts on the separate regions and communities affected.

(i) Regional incidence of NED costs. The NED
costs of a plan that are borne by a region should be
organized in the same categories used in the cost
section of the NED account. Information from the
cost allocation and cost sharing analysis undertaken as a part of the planning process will be
needed to estimate these direct expenditures.

(3) Effects on income, employment, and population distribution, fiscal condition, energy requirements, and energy conservation may be reported
on a positive or negative basis. Effects on life,
health, and safety may be reported as either beneficial or adverse. Other effects may be reported on
either a positive negative basis or a beneficial
adverse basis.

(ii) Transfers. Income transfers from the region
include net income losses from plan-induced shifts
of economic activity from the region to the rest of
the Nation and losses in existing transfer payments,
plus any impacts that may affect the region as a
result of NED costs or transfers from the region.

(4) Effects that cannot be satisfactorily quantified
or described with available methods, data, and information or that will not have a material bearing
on the decisionmaking process may be excluded
from the OSE account.

(2) Regional employment.

(b) Urban and community impacts.

(i) The negative effects of a plan on regional employment should be organized and analyzed using
the same categories and conceptual bases used for
negative regional income effects (paragraph (c)(1)
of this section).

(1) A formal treatment of urban related impacts
is not required for implementation studies.
However, types and locations of significant
impacts, broken down by salient population groups
and geographic areas, may be reported in the
OSE account.

(ii) The incidence of negative regional employment effects should be shown in a manner similar
to that required for the positive regional employment effects.

(2) The principal types of urban and community
impacts are—
(i) Income distribution;

(d) Relationship between RED and NED effects.
Income information in the RED account should be
organized in the same categories as the NED effects. The relationship between the affected regional economies and the national economy should be
recognized. Since the NED account registers all effects on the national economy, any differences between the regional and national economic effects of
a plan take the form of transfers from the rest of
Nation. The effects of these transfers should be
listed in a ?rest of Nation” category. The effects in
the rest of Nation category are equal to the difference between the RED effects and NED effects of
a plan. This rest of nation category should be displayed in the RED account together with the RED
and NED effects.

(ii) Employment distribution, especially the share
to minorities;
(iii) Population distribution and composition;
(iv) The fiscal condition of the State and local
governments; and
(v) The quality of community life.
(c) Life, health, and safety. Effects in this category include such items as risk of flood, drought, or
other disaster affecting the security of life, health,
and safety; potential loss of life, property, and essential public services due to structural failure; and
other environmental effects such as changes in air
or water quality not reported in the NED and EQ
accounts.
(d) Displacement. Effects in this category include
the displacement of people, businesses, and
farms.

1.7.5 Other Social Effects Account.
(a) General.

(e) Long-term productivity. Effects in this category include maintenance and enhancement of the
12

productivity of resources, such as agricultural land,
for use by future generations.

.Table 1.8.2.—Effects of the Recommended Plan
on Natural and Cultural Resources
Types of Resources

Section Vlll—Displays

Endangered Species
Act of 1973, as
amended (16 U.S.C.
1531 et seq.).

(Enter list of species
affected and area of
each critical habitat
type gained and lost
in acres.)

Fish and Wildlife
habitat

Fish and Wildlife
Coordination Act (16
U.S.C. 661 et seq.)

(Enter area of each
habitat type gained
and lost, in acres.)

Floodplains................ Executive Order
11988, Floodplain
Management.

(b) Displays should facilitate the evaluation and
comparison of alternative plans necessary to make
the following determination:
(1) The effectiveness of given plans in solving the
problems and taking advantage of the opportunities
identified in the planning process.

National Historic
(Enter number and
Preservation Act of
type of National
1966, as amended (16 Register [listed or
U.S.C. 470 et seq.). eligible] properties
affected.)

Prime and Unique
farmland

CEQ Memorandum of(Enter area of each
August 1, 1980:
farmland type gained
Analysis of Impacts onand lost, in acres.)
Prime or Unique
Agricultural lands in
implementing the
National
Environmental Policy
Act.

Water quality............

Clean Water Act of
(Enter length in
1977, as amended (42 miles of water
U.S.C. 1857h-7 et
course, and area in
acres for water
seq.).
bodies, where state
water quality
classifications would
change for each
classification.)

(3) The differences among alternative plans.
1.8.2 Content and Format.
The content and format of the displays should be
determined by the planning agency according to the
following guidance:

Wetlands.................. Executive Order
Enter area of each
11990, Protection of wetland type gained
Wetlands: Clean
and lost, in acres.)
Water Act of 1977, as
amended (42 U.S.C.
1857h-7 et seq.).
Wild and Scenic
Rivers

Table 1.8.2.—Effects of the Recommended Plan
on Natural and Cultural Resources
Types of resources

Authorities

1

Clean Air Act, as
amended (42
U.S.C. 1857h-7 et
seq.).

Enter area in
square miles where
State air quality
classifications
would change for
each affected
classification.

Areas of particular
concern within the
costal zone.

Costal Zone
Management Act of
1972, as amended
(16 U.S.C. 1451 et
seq.)

Enter gains and
losses in
appropriate units.

Wild and Scenic
(Enter length of each
Rivers Act, as
river type gained and
amended (16 U.S.C. lost, in miles.)
1271 et seq.).

If a type of resource is not present in the planning area, enter
“Not present in planning area.” If a type of resource is not
affected, enter “No effect.”

Measurement
of
effects1

Air
Quality................

(Enter area gained
and lost, in acres.)

Historic and Cultural
properties

(2) What must be given up in monetary and non
monetary terms to enjoy the benefits of the various
alternative plans.

(a) Existing and forecasted resource conditions
without any of the alternative plans and the problems and opportunities related to the planning setting should be reported.

Measurement of
effects1

Endangered and
threatened species

1.8.1 General.
(a) Displays are graphs, tables, drawings, photographs, summary statements, and other graphics in
a format that facilitates the analysis and comparison
of alternative plans. Concise, understandable
displays are helpful during the planning process
and provide documentation in compliance with
NEPA.

Authorities

13

(2) Reductions in the financial cost of measures
serving multiple purposes. In some cases removal of
a purpose would result in selection of different
measures to address the remaining purposes.

(b) Displays regarding reasonable alternatives, including those required by NEPA, should include the
following items:
(1) Measures in each plan.

(b) Joint cost is the total financial cost for a plan
minus the sum of separable financial costs for all
purposes.

(2) Effects in the NED account.
(3) Other effects, when shown in either the EQ,
RED, and OSE accounts, or in some other appropriate format.

(c) Alternative cost for each purpose is the financial cost of achieving the same or equivalent benefits with a single-purpose plan.

(c) For the recommended plan, an aggregate display of effects on natural and cultural resources, in
the format of Table 1.8.2, should be included.

(d) Remaining benefit for each purpose is the
amount, if any, by which the NED benefit or, when
appropriate, the alternative financial cost exceeds
the separable financial cost for that purpose. The
use of alternative cost is appropriate when alternative financial cost for the purpose is less than the
NED benefit, or when there are project purposes that
do not address the NED objective.

(d) A matrix should be included which shows existing or planned Federal and non-Federal projects
or facilities having significant economic, environmental, or physical interactions with the recommended plan together with a brief narrative description of these interactions.
(e) Alternative actions that were considered but
were not developed into plans should be described
briefly. The descriptions should include the measures and effects and the reasons for not proceeding
further.

1.9.3 Cost Allocation Standard.
Costs allocated to each purpose are the sum of
the separable cost for the purpose and a share of
joint cost as specified below:
(a) Joint cost may be allocated among purposes
in proportion to remaining benefits.

Section IX — Cost Allocation

(b) Joint cost may be allocated in proportion to
the use of facilities, provided that the sum of allocated joint cost and separable cost for any purpose
does not exceed the lesser of the benefit or the alternative cost for that purpose.

1.9.1 General.
(a) The need for cost allocation stems from pricing and cost-sharing policies that vary among purposes. Cost allocation is the process of apportioning
total project financial costs among purposes served
by a plan.

1.9.4 Allocation of Constituent Cost.
Cost-sharing policies for some purposes pertain
to cost constituents such as construction costs, and
operation and maintenance costs. Costs for each
cost constituent specified in the relevant cost sharing
policy should be allocated among purposes.

(b) Financial costs are implementation outlays,
transfer payments such as replacement housing assistance payments as specified in 42 U.S.C. 4623
and 4624, and the market value of contributions in
kind, e.g., lands.
(c) Financial costs are to be allocated to those
purposes for which the plan is formulated. These
purposes do not include other direct benefits (see
Section 1.7.2(d)) and use of otherwise unemployed
or underemployed labor resources. All purposes are
to be treated comparably

Section X — Plan Selection
1.10.1 General.

1.9.2 Definitions.

The planning process leads to the identification
of alternative plans that could be recommended or
selected. The culmination of the planning process is
the selection of the recommended plan or the
decision to take no action. The selection should be
based on a comparison of the effects of alternative
plans. (See Section 1.6.2—Alternative Plans, Formulation.)

(a) Separable cost for each purpose in a plan is
the reduction in financial cost that would result if that
purpose were excluded from the plan. This reduction
in cost includes—
(1) The financial cost of measures serving only
the excluded purpose; and

14

1.10.2 Selection.

20 years, a situation of risk, rather than uncertainty,
exists.

(a) The alternative plan with the greatest net economic benefit consistent with protecting the Nation's
environment (the NED plan) is to be selected unless
the Secretary of a department or head of an
independent agency grants an exception when there
is some overriding reason for selecting another plan,
based upon other Federal, State, local, and
international concerns.

(b) Uncertainty. In situations of uncertainty, potential outcomes cannot be described in objectively
known probability distributions. Uncertainty is characteristic of many aspects of water resources planning. Because there are no known probability distributions to describe uncertain outcomes, uncertainty
is substantially more difficult to analyze than risk.
(c) Sources of risk and uncertainty. (1) Risk and
uncertainty arise from measurement errors and from
the underlying variability of complex natural, social,
and economic situations. If the analyst is uncertain
because the data are imperfect or the analytical
tools crude, the plan is subject to measurement
errors. Improved data and refined analytic
techniques will obviously help minimize measurement errors.

(b) The alternative of taking no action, i.e., selecting none of the alternative plans, should be fully
considered.
(c) Plan selection is made by the agency decisionmaker for Federal and Federally-assisted
plans. Agency officials and State and local sponsors
may recommend selection of a plan other than the
NED plan. The agency decisionmaker (the Secretary
of a department or the head of an independent
agency) will determine whether the reasons for
selecting a plan other than the NED plan merit the
granting of an exception.

(2) Some future demographic, economic,
hydrologic, and meteorological events are essentially
unpredictable because they are subject to random
influences. The question for the analyst is whether
the randomness can be described by some probability distribution. If there is an historical data base
that is applicable to the future, distributions can be
described or approximated by objective techniques.

(d) The basis for selection of the recommended
plan should be fully reported, including considerations used in the selection process.
(e) Plans should not be recommended for Federal development if they would physically or economically preclude non-Federal plans that would likely be
undertaken in the absence of the Federal plan and
that would more effectively contribute to the Federal
objective when comparably evaluated.

(3) If there is no such historical data base, the
probability distribution of random future events can
be described subjectively, based upon the best
available insight and judgment.
(d) Degrees of risk and uncertainty. The degree
of risk and uncertainty generally differs among various aspects of a project. It also differs over time,
because benefits from a particular purpose or costs
in a particular category may be relatively certain
during one time period and uncertain during another.
Finally, the degree of uncertainty differs at different
stages of the analysis—for example, between rough
screening and final detailed design, when more
precise analytic methods can be applied.

Supplement I
Risk and uncertainty—Sensitivity analysis
Uncertainty and variability are inherent in water
resources planning. For example, there is uncertainty in projecting such factors as stream flows,
population growth, and the demand for water.
Therefore, the consideration of risk and uncertainty is
important in water resources planning.

(e) Attitudes. The attitudes of decisionmakers
toward risk and uncertainty will govern the final selection of projects and of adjustments in design to
accommodate risk and uncertainty. In principle, the
government can be neutral toward risk and uncertainty, but the private sector may not be. These differences in attitudes should be taken into account in
estimating the potential success of projects.

This supplement provides guidance for the evaluation of risk and uncertainty in the formulation of
water resources management and development
plans.
S1 Concepts.

S2 Application.
(a) Risk. Situations of risk are conventionally defined as those in which the potential outcomes can
be described in reasonably well known probability
distributions. For example, if it is known that a river
will flood to a specific level on the average of once in

(a) The role of the planner. (1) The planner's primary role in dealing with risk and uncertainty is to
characterize to the extent possible the different degrees of risk and uncertainty and to describe them
clearly so that decisions can be based on the best
15

available information. The planner should also suggest adjustments in design to reflect various attitudes
of decisionmakers toward risk and uncertainty. If the
planner can identify in qualitative terms the
uncertainty inherent in important design, economic,
and environmental variables, these judgments can
be transformed into or assigned subjective probability distributions. A formal model characterizing the
relationship of these and other relevant variables
may be used to transform such distributions to exhibit
the uncertainty in the final outcome, which again is
represented by a probability distribution.

project or specific aspects of it are uncertain, as well
as the time periods in which different degrees of
uncertainty are likely. A range of reasonably likely
outcomes can then be described by using sensitivity
analysis—the technique of varying assumptions as to
alternative economic, demographic, environmental,
and other factors, and examining the effects of these
varying assumptions on outcomes of benefits and
costs. In some cases and in some stages of
planning, this approach, when accompanied by a
careful description of the dimensions of uncertainty,
will be sufficient. It can be accompanied by
descriptions of design adjustments representing
various attitudes toward uncertainty.

(2) At all stages of the planning process, the
planning can incorporate any changes in project
features that, as a result of information gained at that
stage, could lead to a reduction in risk and uncertainty at a cost consistent with improvement in
project performance.

(g) It may be appropriate in some cases to characterize the range of outcomes with a set of subjective probability estimates, but the project report
should make clear that the numerical estimates are
subjective. Moreover, subjective probability distributions should be chosen and justified case by case,
and some description of the impact on design of
other subjective distributions should be given. Design
alternatives reflecting various attitudes toward
uncertainty may be suggested.

(b) Some risk and uncertainty are assumed in
nearly every aspect of a water resources project.
Some types of risk and uncertainty are dealt with in
terms of national planning parameters—for example,
ranges of population projections and other principal
economic and demographic variables. Other types of
risk and uncertainty are dealt with in terms of project
or regional estimates and forecasts. When projects
are related to other projects and programs in their
risk and uncertainty aspects (e.g., interrelated
hydrologic systems), reasonable attempts should be
made to see that the same analyses and presumed
probability distributions are used for all of them.

(h) Utility functions may be used in conjunction
with assessments of uncertainty to explore design
adaptations reflecting specific preferences. Public
preferences, if well known, may be used to illustrate
to decisionmakers what the best design would be,
given the uncertainties and preferences in a
particular case. If public preferences are not well
known, justification could be given for the selection
of various utility functions, which can be used only to
illustrate the effects on design of various preferences.

(c) The risk and uncertainty aspects of projects
are likely to be seen and analyzed differently as
planning proceeds from rough screening to detailed
project proposals. An effort should be made, therefore, to relate the techniques used in characterizing
and dealing with risk and uncertainty to the stage of
the planning process.

(i) At each level of analysis, the planner should
take into account the differences in risk and uncertainty among project purposes and costs, among
various time periods, and among different stages of
planning.

(d) The resources available for analyzing aspects
of risk and uncertainty should be allocated to those
assessments that appear to be the most important in
their effects on project and program design. Rather
than assuming in advance that one or another
variable is a more important source of risk and
uncertainty, the planner should make a thorough
effort to determine which variables will be most
useful in dealing with measurement errors and
natural sources of risk and uncertainty.

(j) Adjustments to risk and uncertainty in project
evaluation can be characterized as general or specific. General adjustments include the addition of a
premium rate to the interest, overestimation of costs,
underestimation of benefits, and limitations on the
period of analysis. Such general adjustments are
usually inappropriate for public investment decisions
because they tend to obscure the different degrees
of uncertainty in different aspects of projects and
programs. Specific adjustments—including explicit
assessments of different degrees of risk and
uncertainty in specific aspects of a project or
program and specific adjustments to them—are
preferable. Additional information on methods of
dealing with risk and uncertainty can be found in
Section 1.4.13(d) of Chapter 1.

(e) The aspects of project evaluation that can be
characterized by a probability distribution based on
reasonably firm data, such as hydrologic risk, can be
treated by standard methods of risk evaluation
developed by Federal agencies and others.
(f) Most risk and uncertainty aspects of projects
cannot be characterized by probability distributions
based on well established empirical data. A first step
in dealing with this problem is to describe why the
16

(k) One guide to the use of the techniques discussed here is displayed in Table S-2. In general,
more complex techniques are appropriate as planning proceeds from the initial development and the
screening of alternatives to the analysis and presentation of the final set of alternative plans. For example, sensitivity analysis—testing the sensitivity of
the outcome of project evaluation to variation in the
magnitude of key parameters—may be most useful
and applicable in the early stages of planning, when
the concern is to understand single factors or
relatively general multiple-factor relationships. Multiple-factor sensitivity analysis, in which the joint effects
or correlations among underlying parameters are
studied in greater depth, may be more appropriate in
the detailed analytic stage than in the screening stage.

Table S-2 — Planning Task and Approaches to Risk
and Uncertainty

(l) Similarly, analysis of risk and uncertainty based
on objective or subjective probability distributions
would be more appropriate in the detailed analytic
stage than in the early screening stage. Although
hydrologic and economic probabilities may be used in
the screening stage, the full use of independent and
joint probability distributions, possibly developed from
computer simulation methods, to describe expected
values and variances, is more appropriately reserved
for the detailed stage.

( m) Although decisionmakers' attitudes and decision rules can be used to give perspective on alternative designs throughout the planning process, they
are more appropriate at the stage of displaying
alternative designs.

Planning Tasks
Final
Screen- Detailed
presening
analysis
tation of
alternaof
alternatives
projects
tives
Sensitivity analysis.....................

X

X

X

Use of objective and subjective
probability distributions...............

X

X

Illustrative application of public
preferences and decisionmakers’ attitudes.........................

X

X

(n) The differences among the underlying degrees
of risk and uncertainty, the design adaptations to them,
and the preferences of decisionmakers should be kept
clear throughout the analysis. The first two depend
primarily on technical expertise; the last is the set of
preferences based on various attitudes toward risk and
uncertainty.
S3 Report and display.
The assessment of risk and uncertainty in project
evaluation should be reported and displayed in a
manner that makes clear to the decisionmaker the
types and degrees of risk and uncertainty believed to
characterize the benefits and costs of the alternative
plans considered.

17

This page is intentionally left blank.

18

Chapter II—National Economic Development (NED)
Procedures
period not to exceed 100 years. Appropriate
consideration should be given to environmental
factors that may extend beyond the period of analysis.

Section I—General
2.1.1 Purpose.
(a) The NED procedures in this chapter are for
Federal administrative purposes and do not create
any substantive or procedural rights in private parties.

(d) Benefit stream--the pattern of expected benefits
over the period of analysis.
(e) OM&R costs--the expected costs over the
period of analysis for operation, maintenance, and
replacement necessary to maintain the benefit
stream and agreed-upon levels of mitigation of
losses to fish and wildlife habitats.

(b) This chapter provides procedures for evaluating NED effects of alternative plans.
(1) When an alternative procedure provides a
more accurate estimate of a benefit, the alternative
estimate may also be shown if the procedure is
documented.

(f) Discount rate--the rate established annually for
use in evaluating Federal water projects.

(2) Steps in a procedure may be abbreviated by
reducing the extent of the analysis and amount of
data collected where greater accuracy or detail is
clearly not justified by the cost of the plan components being analyzed. The steps abbreviated and the
reason for abbreviation should be documented.

2.1.3 Calculating net NED benefits in average
annual equivalent terms.
Net NED benefits of the plan are calculated in
average annual equivalent terms. To perform this
calculation, discount the benefit stream, deferred
installation costs, and OM&R costs to the beginning
of the period of analysis using the applicable project
discount rate. Installation expenditures are brought
forward to the end of the period of installation by
charging compound interest at the project discount
rate from the date the costs are incurred. Use the
project discount rate to convert the present worth
values to average annual equivalent terms.

(3) Proposals for additions to or changes in the
procedures in Chapter ll may be made when an
agency head determines that the new technique will
improve plan formulation and evaluation. These
proposals are to be submitted to the Water Resources Council for review and approval for inclusion
in Chapter ll. Procedures that represent changes in
established policy are to be referred to the Cabinet
Council on Natural Resources and Environment for
its consideration.

2.1.4 Definitions.
2.1.2 Conceptual basis.
Terms used in these guidelines are defined as
follows:

Compare project NED benefits and costs at a
common point in time. Present the following information:

Agricultural drainage. (1) The rehabilitation and
improvement of existing drainage systems or the
construction of new drainage systems to improve the
efficiency of cropland, woodland, and grassland by
lowering the water level in areas in which agricultural
production has been limited by naturally high water
tables, normal precipitation or normal tide action,
seepage, or excess irrigation water.

(a) Installation period--the number of years required for installation of the plan. If staged installation is proposed over an extended period of time, the
installation period is the time needed to install the
first phase.
(b) Installation expenditures--the dollar expenses
expected to be incurred during each year of the Installation period.

(2) Drainage projects include measures for surface drainage, the removal of excess water above
the surface of the ground; and subsurface drainage,
the removal of excess water below the surface of the
ground. Drainage projects involve watershed or sub
watershed areas composed in whole or in part of
lands drained or proposed to be drained. The
boundaries of the water problem area may consist of
artificial barriers that prevent the inflow of water
originating outside of the area.

(c) Period of analysis--the time horizon for project
benefits, deferred installation costs, and operation,
maintenance, and replacement (OM&R) costs. Use
the same period of analysis for all alternative plans.
The period of analysis is the time required for
implementation plus the lesser of (1) the period of
time over which any alternative plan would have
significant beneficial or adverse effects; or (2) a
19

Agricultural flood damage reduction. The adjustment in land use and the structural and nonstructural
measures designed to reduce hazard from
floodwater, erosion, and/or sediment. Reduction of
sediment on agricultural land will normally serve the
single purpose of flood damage reduction. Reduction of sediment in channels or reservoirs may serve
other purposes as well (i.e., navigation, water supply,
power) and should be identified accordingly. To
differentiate flood damage reduction from agricultural and rural drainage of flatlands, flood
damage reduction is defined as any measure undertaken to reduce or prevent damages from surface water caused by abnormally high direct precipitation, stream overflow. or floods caused or aggravated by wind or tidal effects.

normally dry land from the overflow of rivers and
streams or from abnormally high coastal waters
due to severe storms.
Water supply. The water that becomes
available for consumptive and nonconsumptive
uses either through increases in quantity or
improvements in quality of existing supplies.

Section II—NED Benefit Evaluation
Procedures—Municipal
and
Industrial (M&I) Water Supply
2.2.1 Introduction.

Flood. A general and temporary condition of partial
or complete inundation of normally dry land from the
overflow of inland or tidal waters, or the unusual and
rapid accumulation or runoff of surface waters from
any source.

This section provides procedures for the
evaluation of NED benefits of municipal and
industrial (M&I) water supply features of water
resource plans. The procedures presented apply
to both structural and nonstructural elements of
such plans.

Nonstructural measure. A modification in public
policy, an alteration in management practice, a regulatory change, or a modification in pricing policy that
provides a complete or partial alternative for
addressing water resources problems and opportunities.

2.2.2 Conceptual basis.
(a) The conceptual basis for evaluating the
benefits from municipal and industrial water
supply is society's willingness to pay for the
increase in the value of goods and services
attributable to the water supply. Where the price
of water reflects its marginal cost, use that price
to calculate willingness to pay for additional water
supply. In the absence of such direct measures of
marginal willingness to pay, the benefits from a
water supply plan are measured instead by the
resource cost of the alternative most likely to be
implemented in the absence of that plan.

Separable feature. A project element that can be
implemented or constructed independently of other
features and that does not depend on other features
for its structural (or other) viability.
Urban drainage. (1) The adjustment in land use
and storm sewer systems designed to collect runoff
from rainfall or snow melt in an urban area and
convey it to natural water courses or to previously
modified natural waterways. Storm sewer systems
include storm drains, inlets, manholes, pipes, culverts, conduits, sewers, and sewer appurtenances,
onsite storage and detention basins, curbs and gutters, and other small drainageways that remove or
help to manage runoff in urban areas.

(b) The benefits from nonstructural measures
are also computed by using the cost of the most
likely alternative. However, the net benefits of
certain nonstructural measures that alter water
use cannot be measured effectively by the
alternative cost procedure for the following
reasons: (1) Structural measures and many
nonstructural measures (except those that alter
use) result in similar plan outputs, whereas
use-altering measures (e.g., revised rate
structures) may change levels of output; and (2)
use-altering measures may have fewer direct
resource costs than measures based on higher
levels of output. Because of this lack of
comparability, the benefit from such use-altering
nonstructural measures should not be based on
the cost of the most likely alternative. Attempts to
measure
the
benefits
of
use-altering
nonstructural measures on the basis of

(2) Storm sewer systems are designed to solve
urban storm drainage problems. which are typified by
excessive accumulations of runoff in depressions,
overland sheet flow resulting from rapid snowmelt or
rainfall, and excessive accumulation of water in one
or more components of a storm sewer system.
Urban flood damage reduction. The adjustment in
land use and the structural and nonstructural measures designed to reduce flood damages in urban
areas from overflow or backwater due to major
storms and snowmelt. The measures include structural and other engineering modifications to natural
streams or to previously modified natural waterways.
Urban flood damage reduction is accomplished by
modifying temporary conditions of inundation of
20

willingness to pay are encouraged, although the
display of such benefits is not required.

(6) Nonstructural measures and conservation.
The without-project condition includes the effects
of implementing all reasonably expected
nonstructural and conservation measures. These
measures include:

2.2.3 Planning setting.

(1) Reducing the level and/or altering the time
pattern of demand by metering, leak detection
and repair, rate structure changes, regulations on
use (e.g., plumbing codes), education programs,
drought contingency planning;

(a) Without-project condition. The without-project
condition is the most likely condition expected to exist
in the future in the absence of the proposed water
supply plan, including any known changes in law or
public policy. Several specific elements are included
in the without-project condition:

(2) Modifying management of existing water development and supplies by recycling, reuse, and
pressure reduction; and

(1) Existing water supplies. Existing water supplies
are included in the without-project condition. Make
adjustments to account for anticipated changes in
water supply availability because of the age of
facilities or changed environmental requirements.

(3)
Increasing
upstream
watershed
management and conjunctive use of ground and
surface waters.
(b) With-project condition. The with-project
condition is the most likely condition expected to
exist in the future with the Federal water supply
plan under consideration. The six elements and
assumptions addressed in the without-project
condition should also be addressed in the
with-project condition. Nonstructural water supply
measures may be used alone or in Combination
with structural measures. If the proposed
measures are already in the process of
implementation, they are part of the without-project condition.

(2) Institutional arrangements. Existing and expected future water systems and water monument
contracts and operating criteria are considered part
of the without-project condition unless revision of
these systems, contracts, or criteria is one of the
alternative plans being studied.
(3) Additional water supplies. The without-project
condition includes water supplies that are under
construction or authorized and likely to be constructed during the forecast period.
(4) Probability of water supply. Include calculation
and specification of the probability of delivery for
each source of water supply in the analysis.

2.2.4 Evaluation procedure: General.

(5) Water quality. Water use is based on both the
quantity and the quality of water supply. Different
uses may require different qualities as well as quantities of water. Supplies also vary according to quality
and quantity. Because water quality is a critical factor
in water supply, it should be specified in any
consideration or presentation related to water quantity. The degree of detail used to describe water
quality should be suitable to permit differentiation
among water sectors or available water supply
sources.

Follow the steps described in 2.2.5 through
2.2.13 to estimate NED benefits that would
accrue to one or more alternative plans for
providing an M&l water supply (see Figure 2.2.4).
The level of effort expended on each step
depends on the nature of the proposed
development, the state of the art for accurately
refining the estimate, and the sensitivity of project
formulation and justification to the estimate.

21

Figure 2.2.4 -- Flowchart of M&I Benefit Evaluation Procedures

Identify the study area

Estimate future
M&I water supply

Project future
M&I water use

Project future M&I water use

Identify deficit between
future water supply and use

Identify alternatives without
Federal plan

Rank and display alternative plans

Identify the most likely alternative

Compute M&I benefit

22

2.2.5 Evaluation procedure: Identify study area.

nants to project alternative future water use by sector
and explain the choice of the particular forecast used.

The study area is the area within which significant
project impacts will accrue from the use of M&I water
supplies, including areas that will receive direct benefits
and/or incur costs from the provision of M&I water
supply.

(d) Aggregation of projections. Aggregate separate
projections for each sector to a single projection by time
period. (This should not, however, be viewed as a
deterrent to meeting the needs of each sector by
separate alternatives.)

2.2.6 Evaluation procedure: Estimate future M&I
water supplies.

2.2.8 Evaluation procedure: Identify the deficit
between future water supplies and use.

Prepare an analysis of all sources of supply expected
to be available to the M&I water user. Data may be
obtained from various sources, including water utilities,
State and local planning agencies, and State water
resources agencies. This analysis should be by time
period and include existing water supplies. institutional
arrangements, additional water supplies, probability of
water supply, and water quality.

Compare projected water use with future water
supplies to determine whether any deficits exist in the
study area. Make an analysis of the intensity, frequency,
and duration of the expected deficits. Address deficits in
three basic options: (a) reduce protected water use by
implementation of nonstructural or conservation
measures that are not part of the without-project
condition; (b) increase and/or more efficiently use water
supplies through structural measures; and (c) accept
and plan to manage water supply shortages. Plans
generally are formulated to include some or all of these
options.

2.2.7 Evaluation procedure: Project future M&l
water use.
Project future water use by sector in consideration of
seasonal variation. Base projections on an analysis of
those factors that may determine variables in levels of
water use.
(a) Sector analysis. Project future water use for the
same time periods as for the supply projections for
each of the following sectors: Residential (include
indoor use and outdoor uses such as lawn irrigation
and car washing); commercial (include water use for
retail and wholesale trade, offices, hospitals, schools,
medical laboratories. restaurants, service industries,
etc.); industrial (include all water used by
manufacturing industries as an input in the production
process); and additional uses (include public service
use--for example, fire protection--and unaccounted-for
losses).
(b) Analysis by time of use. Identify seasonal variations in use for each of the above sectors and
maximum day use for the system for each season.
(c) Related factors analysis. (1) Identify the determinants of demand for each sector. Use such determinants as price of water and sewer service;
income; number and type of housing units and population per unit; industrial mix; and level of economic
activity. Explain the variable projection of these factors
as well as the extent to which they influence projection
of water use in various sectors.
(2) Determine the relationship expected to exist
between future levels of water use and the relevant
determinants of water demand. Develop and use a
forecast or forecasts of future levels of the determi-

23

2.2.9 Evaluation procedure: Identify alternative
without Federal plan.
Identify alternative plans that are likely to be implemented by communities and/or industries in the
absence of any Federal alternative. Test various alternatives to the Federal plans for acceptability, effectiveness, efficiency, and completeness as defined in
Chapter I, section 6.2(c). These plans should be
identified through analysis of the total water resources of
the region, allowing for present and expected competing
uses.
(a) Consideration of alternative plans is not limited to
those that would completely eliminate the projected gap
between supply and demand. Plans that do not
completely satisfy water supply objectives should also
be considered. Include in such plans measures to
minimize and allocate shortages when they occur
(drought management measures). Balance the
increased risk of occasional shortages against the
savings from lesser investments that would increase the
probability of occasional shortages. The costs of
shortages include the costs of implementing drought
management measures and the costs of related public
health and safety measures.
(b) Alternative plans need not be based on the
development of a single source of supply at one time.
They may consist of the development of a single source
or the conjunctive development of several sources with
increments phased to match anticipated growth in water
use.

(c) If institutional obstacles to implementation
are noted, the plan should still be considered if the
barriers are substantially within the power of the
affected water users to correct. Inched a detailed
description of the institutional obstacles. with a discussion of the basis for any conclusion that the obstacles cannot be overcome.

Federal water supply plan. In this case, the benefit
may be considered equal to the cost of the
separable M&I facilities plus an appropriate share of
the remaining joint cost of the project. Provide
documentation of the without-project condition.
2.2.13 Evaluation procedure: Problems in the
application.

2.2.10 Evaluation procedure: Rank and display
the alternative plans based on least cost
analysis.

(a) Two major problems exist in the application of
this procedure. The first is identification of the value
of conservation and other nonstructural measures.
Examples of evaluation of conservation strategies.
pricing methods, and drought management measures are available in technical publications.

(a) Rank all of the alternatives in order from the
highest cost alternative to the lowest. Calculate the
annualized costs of the alternatives on the basis of
the service (depreciable) life of the facility or the
paroled of analysis. whichever is less.

(b) A second major problem will arise over the
desegregation of water use by sectors. Some communities do not collect water use data by sectors.
Where the system is fully metered, such data can
be obtained by coding customer accounts and accumulating data on use for at least one year. Water
use by unmetered customers may be estimated by
extrapolating experience with similar metered systems, recognizing that unmetered customers face a
price of zero. Verify that data and/or forecasts obtained from all sources are reliable and reasonable.

(b) Calculate costs of the alternatives on the following basis: (1) Annualize all costs charged to the
alternative on the basis of the Federal discount
rate; (2) no costs for taxes or insurance should be
charged to the alternative; and (3) all other assumptions and procedures used in calculating the
costs of the alternatives, including external
diseconomies, should be parallel to those
employed in calculating the costs for the proposed
Federal project.

2.2.14 Report and display procedures.
2.2.11 Evaluation procedure: Identify the most
likely alternative

Tables 2.2.14-1, 2, and 3 are suggested
presentations for reports that include municipal and
industrial water supplies.
Tables 1 and 2
summarize by time period (and season, if
applicable) the projected use by sector. projected
supply by source, and the difference between the
two for average day and maximum day,
respectively. Table 3 shows the costs of alternative
plans and the quantity supplied under each
alternative by time period (and season, if
applicable).

Begin identification of the most likely alternative
with the least costly. If an alternative with a lesser
cost is passed over for a more expansive one,
present the justification for not selecting the lower
cost plan.

2.2.12 Evaluation procedure: Compute M&l
water supply annualized benefits
(a) Annualized benefits of the Federal water
supply plan are equal to the annualized cost of the
most likely alternative. When applicable, the
evaluation should reflect differences in treatment,
distribution, and other costs compared to the most
likely alternative.
(b) The alternative cost of providing a water
supply for smaller communities (population of
10,000 or less) may be extremely expensive on a
per capita basis because these communities lack
the efficiencies of large-scale development. If such
communities are not able to afford an alternative
water supply comparable to the Federal water
supply plan as identified in the procedure
described above. that alternative should not be
used as the basis for evaluating the benefits of the

Table 2.2.14-1—M&I Water Supplies—Without
Project Condition—Average Day Use and
Capacity
2

Projected average
1 day water use
Residential (mgd) ..................
Commercial (mgd)..................
Industrial (mgd) .....................
Additional (includes public
services and unaccounted for
losses) (mgd).......................
Total ............................
Average day water supply
capacity without a plan:
Source 1 (mgd) ....................
Source 2 (mgd) ....................

24

Time period
P1
P2
P3
PN
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........
......... ........ ........ ........

Table 2.2.14-1. M&I Water Supplies -Without Project
Condition-Average Day Use and Capacity (continued)
1

Projected average day water use

P1

Source 3 (mgd) ......................
Source X (mgd).......................

[Period of analysis, price level, discount rate]
Annualized
Quantity supplied1 (mgd)
time period
cost (in
Alternatives
thousands of
PN
P2
P3
P 1
dollars)
Most likely alternative .................... ............ ........................ ............

2

PN

......... ......... ......... .........
......... ......... ......... .........
......... ......... ......... .........

Total ...........................
Difference between projected
average day water use and
supply without a plan (mgd) .....
1
2

Time period
P2
P3

Table 2.2.14-3—M&I Water Supply Alternatives

Recommended plan

.................... ............ ........................ ............

Other plans
.................... ............ ........................ ............
1
Show by time period and season where there are seasonal
variations

......... ......... ......... .........

Include effects of nonstructural and conservative measures.

Show by time period and season where there are
seasonal variations, e.g.

Section III—NED Benefit Evaluation
Procedures: Agriculture

P1
W

S

S

F

2.3.1 Introduction.

Table 2.2.14-2. M&I Water Supplies -Without Project
Condition- Maximum Day Use and Capacity
Projected average day water use

Time period

1

.................
Commercial (mgd).................
Industrial (mgd) ...................
Residential (mgd)

Additional (includes public
services and unaccounted for
losses) (mgd).......................
Total ........................
Average day water supply capacity
without a plan:
Source 1 (mgd) ....................
Source 2 (mgd) ....................
Source 3 (mgd) ....................
Source X (mgd) ...................
Total
Difference between projected
average day water use and supply
without a plan (mgd) ....

P1

P2

P3

2

PN

........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........
........... ......... ......... .........

........... ......... ......... .........

1

Include effects of nonstructural and conservative measures.
Show by time period and season where there are seasonal
variations, e.g.
2

P1
W

S

S

F

This section provides procedures for the evaluation of agricultural benefits from water resources
plans. The benefits attributable to flood damage reduction, drainage, irrigation, erosion control and
sediment reduction should be evaluated separately
to the extent practical.
2.3.2 Conceptual basis.
(a)NED Benefits. The NED benefits are the value
of increases in the agricultural output of the Nation
and the cost savings in maintaining a given level of
output. The benefits include reductions in production
costs and in associated costs; reduction in damage
costs from floods, erosion, sedimentation,
inadequate drainage, or inadequate water supply;
the value of increased production of crops; and the
economic efficiency of increasing the production of
crops in the project area.
(b) Basic and Other Crops. (1) Basic crops (rice,
cotton, corn, soybeans, wheat, milo, barley, oats,
hay, and pasture) are crops that are grown throughout the United States in quantities such that no water
resources project would affect the price and thus
cause transfers of crop production from one area to
another. The production of basic crops is limited
primarily by the availability of suitable land.
(2) On a national basis, production of crops other
than basic crops is seldom limited by the availability
of suitable land. Rather, production is generally limited by market demand, risk aversion, and supply
factors other than suitable land. Thus, production
from increased acreage of crops other than basic
crops in the project area would be offset by a
decrease in production elsewhere. In some parts of
the Nation analysis of local conditions may indicate
that the production of other crops is limited by the
availability of suitable land. (Suitable land is land on
which crops can be grown profitably under prevailing

25

market conditions.) In this case, crops other than
basic crops listed above may also be treated as
basic crops when measuring intensification
benefits by farm budget analysis. (See Section
2.3.5(d) to determine when other crops may be
treated as basic crops.)

that are identical except for the provision of improved
water conditions reflects the present value of the
additional net income (i.e., the intensification benefit)
that can be attributed to improved water
management or supply. (See Section 2.3.5(i).)

(c) Benefit categories. Agricultural benefits are
divided into two mutually exclusive categories, depending on whether there is a change in cropping
pattern:

2.3.3 Evaluation Components.
Evaluation of the impact of water management
practices or control measures should consider the
following components:

(1) damage reduction benefits, that is, benefits
that accrue on lands where there is no change in
cropping pattern between the with- and
without-project conditions; and

(a) Cropping patterns. Project the most probable
cropping patterns expected to exist with and without
the project. If project measures are designed to
reduce damage or associated cost problems without
changing cropping patterns, project the current
cropping pattern into the future for both with- and
without-project conditions.

(2) intensification benefits, that is, benefits that
accrue on lands where there is no change in
cropping pattern. There is also a subcategory of
intensification benefits called efficiency benefits,
which accrue from reduced costs of production.

(b) Prices. Use normalized crop prices issued by
the Department of Agriculture to evaluate NED agricultural benefits; adjustments may be made to reflect quality changes caused by floods or drought.
For crops not covered above, statewide average
prices over the three previous years may be used.

(d) Measurement of NED benefits. (1) Damage
reduction benefits. Damage reduction benefits are
the increases in net income due to the plan, as
measured by farm budget analysis. These income
increases may result from increased crop yields
and decreased production costs.

(c) Production costs. (i) Analyze production costs
that can be expected to vary between the with- and
without-project conditions. These may include the
costs of equipment ownership and operation; production materials; labor and management; system
operation, maintenance, and replacement (OM&R);
and interest payments. If costs associated with project measures (e.g., on-farm drainage or water distribution costs) are included in the project cost
analysis, exclude them from production costs.

(2) Intensification benefits. Intensification benefits
are measured either by farm budget analysis or by
land value analysis. Intensification benefits from increased acreage of basic crops and other crops
that are constrained by the availability of suitable
land in the WRC assessment subarea (ASA) are
measured as the net value of the increased
production. Intensification benefits from increased
acreage of other crops (except for acreage of
crops to be treated as basic crops because they
are land constrained) result when there are
production cost savings. These production cost
savings are called efficiency benefits and are
measured as the difference between production
costs in the project area and production costs on
land elsewhere in the ASA.

(ii) Value purchased inputs at current market
prices. Compute interest at the project discount rate.
Value all labor, whether operator, family, or hired, at
prevailing farm labor rates. Estimate management
cost on the basis of the type of farming operation.
The estimate normally is expected to be at least six
percent of the variable production cost (the cost of
equipment ownership and operation, production
materials and labor, but excluding the cost of land
and added capital improvements).

(i) Farm budget analysis. On land where the intensification benefit is solely from increased acreage of basic crops (and crops to be treated as
basic crops), benefits are measured as the change
in net income (see Section 2.3.5(d) through (g)).
On land where the intensification benefit is from increased acreage of other crops, use the efficiency
procedure found in section 2.3.5(h).

(d) Crop yields. Project current yields with average
management in the project area to selected time
periods. Adjust future yields to reflect relevant
physical changes (e.g., erosion, drainage, water
supply, and floodwater runoff) in soil and water
management conditions. Increases In yields due to
future improvements in technology may be included
in the evaluation when realization of these benefits is
dependent upon installation of the project. The costs
associated with these improvements in technology
should be accounted for in the analysis. Changes in
yields, both with and without the project, should be

(ii) Land value analysis. Intensification benefits
alternatively may be measured as the difference in
the value of benefiting lands with and without the
plan. The market value of a parcel of land reflects
the capitalized value of the expected net income
that can be derived from the land. Therefore, the
difference in market value of two parcels of land
26

projected consistently with the water management
and production practices accounted for in the
production cost analysis.

ated will depend on the number of alternative plans
selected for analysis.

(e) Livestock production. In geographically
isolated areas increased livestock production may
depend on installation of the water resources project. Where this can be demonstrated, net income
from additional livestock production may be included as a benefit. The test for dependency is
whether the livestock feeds can economically be
transported into or out of the area. Benefits cannot
exceed the delivered cost of the livestock feed if it
were purchased for use in the project area. Such
purchase prices would automatically include the
costs of transporting the feeds into the area.

2.3.5 Evaluation procedure: Crops
This procedure is for the evaluation of benefits to
crop production that would accrue from an alternative plan. Steps in this procedure are summarized in
Figure 2.3.5.
(a) Step 1. Identify land use and cropping patterns
with and without a plan. This information is generally
developed for segments of the plan area with
significantly different characteristics. Collect
appropriate data about the current and historic
cropping patterns and yields in the project area.
When appropriate, collect similar data on other
areas with comparable soils to determine conditions
expected with alternative plans. Analyze trends and
expected changes for without-project conditions.
Project future cropping patterns and yields under
without-plan conditions. Include the effects of
conservation and structural and nonstructural
measures expected under existing programs. Project
future cropping patterns and yields for each
alternative plan. For analytical purposes, separate
land in the project area into two categories: lands on
which the cropping pattern is the same with and
without the plan; and lands on which there would be
a change in cropping pattern with the plan. To
estimate crop production benefits on lands where
there would be a change in cropping pattern, go to
Step 3. To estimate crop production benefits on
lands where there would not be a change in cropping
pattern, proceed with Step 2.

(f) Comparable lands. Comparable lands are
lands that have climate, aspect, slope, soil properties and water conditions similar to those of a given
category of lands benefiting from a plan.
(g) Land values. The market value of lands
method for estimating the economic benefits of alternative plans requires the involvement of
qualified land appraisers with local experience.
Use of this procedure is appropriate when:
(1) lands to be affected by the proposed alternative plan are comparable to lands elsewhere which
can be appraised;
(2) water resources conditions on comparable
lands are similar to those to be provided on lands
affected by an alternative plan, and they can be
identified and evaluated;

(b) Step 2. Determine damage reduction benefit.
For land on which the cropping pattern would not
change, determine the change in net income with
and without a plan. This is the damage reduction
benefit. Income increases may result from increased
crop yields and decreased production costs. They
are measured as reduced damage to crops from
excessive soil moisture, water inundation, drought
and erosion, and reduced costs associated with
using water and land resources for the production of
crops.

(3) current market data are used to determine
the value of capital improvements and other
factors when making adjustments for these factors
on comparable lands; and
(4) the estimated value of lands to be affected
by the plan is not changed by speculation that
Federal action is anticipated.
2.3.4 Planning setting.

(i) Estimate reduced damage to crops from excessive soil moisture on the basis of the change in
frequency and duration of excessive soil moisture.
Estimate reduced damage to crops from water inundation on the basis of the change in frequency,
depth, and duration of inundation. Estimate reduced
damage from drought on the basis of the change in
frequency and duration of inadequate soil moisture
during the growing season. Estimate reduced
damage from erosion on the basis of the change in
land voiding from gully and stream bank erosion and
on the basis of the change in productivity losses from
floodplain scour, sheet erosion, over bank deposition, and swamping.

(a) The without-project condition, including conservation measures, is the condition expected to
exist in the absence of an alternative plan.
(b) The with-project condition is the condition expected to exist with each alternative plan under
consideration.
(c) Agricultural income and production costs
should be determined for various conditions or
levels of land and water quantity and/or quality
use. (Include other resources associated with
changes in land and water quantity and/or quality.)
The level of use to be evaluated initially is the without-plan condition. Other levels of use to be evalu-

27

(ii) Estimate reduced costs associated with using
water and land resources for the production of
crops on the basis of the changes in the costs of
equipment ownership and operation; production
materials; labor and management; and system operation, maintenance, and replacement.

by the availability of suitable land in the ASA and,
therefore, treated as basic crops. Otherwise it can be
inferred that production of other crops is not land
constrained in the ASA. When the crops are not land
constrained, go to Step 8; otherwise, proceed with
Step 5.

(iii) Use farm budget analysis to measure
changes in net income from reduced damage to
crops and reduced costs of production.

(e) Step 5. Determine limit on acreage of other
crops that may be treated as basic crop acreage. If
the production of the other crops is found to be
constrained by availability of suitable land in the ASA,
then multiply the acreage of comparable land in the
project area by the optimal proportion found in Step
4(1). This is the maximum acreage of other crops
that may be analyzed using the steps that apply to
basic crops (Steps 6 and 7). To analyze benefits for
any acreage of other crops in excess of this
maximum acreage, go to Step 8.

(c) Step 3. Select evaluation method for estimating intensification benefits. For land on which the
cropping pattern would change, select either farm
budget analysis or land value analysis as the
method for measuring intensification benefits. If
land value analysis is selected, go to Step 9. If
farm budget analysis is selected, proceed with
Step 4.

(f) Step 6. Project net value of agricultural production with and without the plan. Use information
from farm budget analysis to estimate the net value
of agricultural production under without-plan conditions. Estimate the net value of agricultural production associated with each of the alternative plans.
Account for variable costs related to production. Include non-project OM&R costs and associated costs
for each alternative plan.

(d) Step 4. Determine whether other crops are
to be treated as basic crops. If the change in
cropping pattern increases the acreage in
production of other crops and if it is believed that
the production of other crops is constrained by the
availability of suitable land, the following test may
be applied to determine whether these crops
should be treated as basic crops in the benefit
analysis. If the test is not applied, go to Step 8.

(g) Step 7. Compute intensification benefits for
acreage of basic crops and other crops to be treated
as basic crops. Compute intensification benefits as
the change in net income between the
without-project condition and conditions with an alternative plan. Express these intensification benefits
in average annual equivalent terms. This completes
the analysis of benefits for lands with increased
acreage of basic crops and other crops that are to be
treated as basic crops.

(1) Select a representative sample of farm operations on lands comparable to lands benefiting
from the project under with-project conditions.
(i) For each farm operation determine the
respective acreage of basic and other crops.
(ii) Use these data to compute the proportion of
other crop acreage to total crop acreage for each
farm.
(iii) Use farm budget analysis to identify the top
25 percent of farms in the representative sample in
terms of expected net income per acre.

(h) Step 8. Determine efficiency benefits. Compute efficiency benefits for acreage producing other
crops not treated as basic crops as the sum of:

(iv) The average of the proportions of other crop
acreage to total crop acreage for the top 25 percent of farm operations is defined as the ‘optimal
proportion.’ The optimal proportion for these farm
operations will reflect risk and uncertainty, returns
to management, and prevailing market conditions.

(1) the difference between the cost of producing
the crops in the project area and the cost of producing them on other lands in the ASA; and
(2) the net income that would accrue from production of an appropriate mix of basic crops on those
other lands. Express this efficiency benefit in average
annual equivalent terms.

(2) If it can be demonstrated through standard
statistical tests that the optimal proportion is not
statistically different from the proportion computed
as the average of individual farm operation proportions for the complete sample, then the production
of other crops can be considered to be constrained

(i) Step 9. Land value analysis. When estimating
intensification benefits on the basis of land value
analysis, base appraisals on market values, not on
capitalized income values.

28

Figure 2.3.5 -- Flowchart of Agricultural Benefit
Evaluation Procedure: Crops

Identify land use and cropping pattern
with and without plan (Step 1)

For land where cropping pattern
does not change with plan.

For land where cropping pattern
changes with plan.

Determine damage reduction
benefits (Step 2)

Select evaluation method for
intensification benefits (Step 3)

Use farm budget analysis to determine
intensification benefits (Steps 4-8)
(OR)
Use land value analysis to determine
intensification benefits (Step 9)

Determine total
crop benefit

29

(1) Obtain appraisals of the current market value
of lands that would benefit from the plan. These
lands should be divided into various categories
where values differ significantly.

(ii) Determine damage to improvements. Gather
historical data on damages to other agricultural
properties, such as equipment, improvements, and
agricultural enterprises.

(2) Obtain and appropriately adjust appraisals of
non-project lands in the ASA that are comparable
to lands in each category of project lands and that
have water conditions comparable to those that
would result from each alternative plan.

(iii) Determine average annual equivalent
damage to improvements. Use appropriate data to
determine average annual equivalent damage to
improvements. For example, use depth-damage
relationships for each reach, integrated with
hydrologic data, to develop average annual flood
damages with and without the plan. Include
consideration of the frequency and duration of the
damage.

(i) Adjust the value of these comparable lands
for facilities and other capital improvements that
are not present on project lands. For example,
subtract the current market value of improvements
such as investments in orchards.

(b) Determine damage reduction benefits for associated agricultural enterprises. Associated
agricultural enterprises are economic activities that
may be affected by changed water supply or water
management conditions. Evaluate damages of this
type as reduced net income under without-project
and with-project conditions. An example of this type
of damage is delay in spring planting on flood free
lands because of flooding of access roads.

(ii) In the case of irrigation projects, add to the
appraised value of comparable lands the present
value of water costs incurred by the operator.
These water costs include both payments to outside suppliers and the cost of self-supplied water
Use the project discount rate to calculate the present value of these costs.
(iii) control for other factors that may affect the
value of land, such as kinds of crops grown, distance-to urban areas, availability of transportation
facilities, presence of utilities, zoning regulations,
and special property tax rates. This control may be
achieved by using totally comparable parcels of
lands; by collecting a sample large enough so that
differences will be averaged out; or by a statistical
means such as regression analysis.

(c) Calculate average annual equivalent
benefits. The damage reduction benefit is the
difference between average annual equivalent
damages with and without the plan.

2.3.7 Evaluation procedure: Off-site sediment
reduction.
Determine average annual equivalent sediment
damages by adding the costs in constant dollars of
removing sediment from roads, culverts, channels,
etc., over a representative period of time and dividing by the years of record. The difference in damages with and without the project is the benefit. Extending the useful life of an existing reservoir is another type of sediment reduction benefit. Discount
the net value of the extension to present values,
and amortize it over the project life. The increased
cost of providing goods and services (e.g., additional treatment costs for removing sediment from municipal water) can also be used to evaluate damages. Reductions in the costs of sediment removal
or water treatment provide the basis for assessing
benefits with the plan.

(3) Subtract the value in (1) from the adjusted
value in (2). This is the intensification benefit.
(4) Annualize the intensification benefit found in
(3) at the project discount rate.
2.3.6 Evaluation procedure: Damage reduction
for other agricultural properties and
associated agricultural enterprises.
(a) Determine damage reduction for other
agricultural properties. The term ‘other agricultural
properties’ includes physical improvements
associated with various farm enterprises and the
agricultural community. Measure benefits to such
properties as reduction in damages in the future
with the project compared to without the project.
The following discussion identifies key analytical
steps in the evaluation. Benefits accrue through
alterations in water conditions or in altering the
susceptibility of the property to damage (e.g.,
flood-proofing).

2.3.8 Evaluation procedures: Problems in
application.
(a) Damage reduction benefits. Damage reduction benefits are measured by farm budget
analysis. Proper measurement of such benefits
requires accurate estimates of with- and
without-plan soil,. water, and land use conditions.
Changes in physical conditions take place at
different rates and over different time periods.
Analysis can be improved by projecting changes in

(i) Inventory damageable improvements. Identify
the location, type, number, and value of other agricultural properties within the area that are subject
to damage. This information is most easily obtained
through interviews of farmers and field reconnaissance.
30

physical conditions to selected time periods,
analyzing net income for the time periods, and
converting net income for the time periods to an
average annual equivalent value. In farm budget
analysis, double counting can be avoided by taking
a holistic approach (including all soil, water and
land use conditions in a single farm budget
analysis).

damages, that is, damages that would still occur
with implementation of the plan.
(e) Land value analysis. Because proper land
value analysis is dependent on accurate appraisals,
the appraisals on which this analysis is based
Should be performed by qualified land appraisers.
Adjustment of appraised values of lands comparable to project lands to account for capital improvements, costs of water supply, and other factors affecting the values requires detailed knowledge of
local physical and financial conditions.

(b) Determination of land constraint. Intensification benefits for other crops are measured either as
a change in net income or as an efficiency gain depending on whether there is an adequate supply of
suitable land in the region for growing crops other
than basic crops (that is, whether production is land
constrained). This determination requires a regional
(ASA) analysis of comparable lands. In order to
make this determination properly, care must be exercised to ensure that lands being evaluated are
fully comparable. Care must also be exercised in
order to obtain the proper determination of aggregate acreages of basic and other crops for the top
25 percent of the farms. (See Section 2.3.5(d) (1).)

2.3.9 Evaluation procedure: Data sources.
(a) Interviews. Interviews with farmers and other
area residents are important for most of the categories of benefits to be evaluated. Interviews should
not be confined to farmers in the project area. Data
collected outside the project area serves as a
comparative basis for estimating damages and
yields in the project area. Use only interview forms
approved by the Office of Management and
Budget. In the project report, the questionnaire and
a summary of responses should be compiled and
displayed in such a way as to prevent the disclosure of individual sources.

(c) Benefit attribution. In flatland watersheds,
drainage and flood damage reduction benefits
cannot be separated analytically. Therefore, they
are arbitrarily allocated on a 50/50 basis. The value
of benefits in other categories is determined on the
basis of changes in physical conditions with and
without the plan. The benefits are assigned according to the following: the proportion of the change in
net income attributed to changes in soil moisture,
water inundation, drought and erosion; the proportion of land use changes attributed to each of the
above; and changes in production costs attributed
to each of the above. Except for the problem with
drainage and flood damage reduction in flatland
watersheds, benefits can be measured independently if proper assumptions are made to avoid
double counting. Double counting can be avoided
by making sure that total benefits measured independently do not exceed total benefits from a holistic farm budget analysis.

(b) Physical specialists. Agronomists and soil
scientists can provide data to establish yield
estimates by soil type and the effects on production
of soil depletion or sediment deposition.
(c) Universities and Federal agencies. Many universities and the Department of Agriculture have
developed typical enterprise budgets that can be
modified to reflect conditions in the area being
studied.
(d) Land appraisers. Market values of project
lands and comparable lands should be provided by
qualified land appraisers.
2.3.10 Report and display procedures.
A clear presentation of the study results will facilitate review. Tables 2.3.10-1 and 2 are suggested
presentations.

(d) Residual damages. In evaluating with-plan
conditions, care must be taken to consider residual

Table 2.3.10-1 Summary of Crop Benefits
(Farm Budget Analysis Method)

Item
Without Plan........................................
Acres:...........................................
basic crops.............................
other crops.............................
Value of agriculture production....

Current
Year
.............
.............
.............
.............
.............

Base
Year
..............
..............
..............
..............
..............

31

Yeara Yeara Yeara Yeara Yeara
...........
...........
...........
...........
...........

...........
...........
...........
...........
...........

...........
...........
...........
...........
...........

...........
...........
...........
...........
...........

...........
...........
...........
...........
...........

Annualized
Valueb
....................
....................
....................
....................
....................

Table 2.3.10-1 Summary of Crop Benefits - Continued
(Farm Budget Analysis Method)
Current
Base
Yeara
Yeara
Year
Year

Item

Yeara

Yeara

Yeara

Annualized
Valueb

Agricultural production costs...............
With Plan
Acres:
basic crops ............................
other crops ............................
Value of agricultural production
Agricultural production costs ..............

............. ..............

........... ........... ........... ........... ........... ....................

.............
.............
.............
.............

...........
...........
...........
...........

NED BENEFITS .........

............. ..............

..............
..............
..............
..............

...........
...........
...........
...........

...........
...........
...........
...........

...........
...........
...........
...........

...........
...........
...........
...........

....................
....................
....................
....................

........... ........... ........... ........... ........... ....................

a Annual value at the given year
b Annualized at - - percent discount rate

Table 2.3.10-2 Intensification Benefits
(Land Value Analysis Method)
Current Year
Item
With Plan
Value of agricultural land .......
With plan
Value of agricultural land .......
INTENSIFICATION BENEFIT .....

Annualizeda

................

................

................

................

................

................

benefit is realized only to the extent that removal of
the activity increases the net income of other activities in the economy.
(2) Intensification benefit. If the type of
floodplain use is unchanged but the method of
operation is modified because of the plan, the
benefit is the increased net income generated by
the floodplain activity.

a Annualized at -- percent discount rate.

(3) Location benefit. If an activity is added to the
floodplain because of a plan, the benefit is the difference between aggregate net incomes (including
economic rent) in the economically affected area
with and without the plan.

Section IV—NED Benefit Evaluation
Procedures: Urban Flood Damage

(c) Types of flood damage. Flood damages are
classified as physical damages or losses, income
losses, and emergency costs. Each activity affected
by a flood experiences losses in one or more of
these classes.

2.4.1 Introduction.
This chapter presents the procedure for measuring the beneficial contributions to national economic development (NED) associated with the urban
flood hazard reduction features of water resource
plans and projects.

(1) Physical damages. Physical damages
include damages to or total loss of buildings or
parts of buildings; loss of contents, including
furnishings, equipment, decorations, raw materials,
materials in process, and completed products; loss
of roads, sewers, bridges, power lines, etc.

2.4.2 Conceptual basis.

(b) Benefit categories. While there is only one
benefit standard, there are three benefit categories,
reflecting three different responses to a flood
hazard reduction plan.

(2) Income loss. Loss of wages or net profits to
business over and above physical flood damages
usually results from a disruption of normal activities.
Estimates of this loss must be derived from specific
independent economic data for the interests and
properties affected. Prevention of income loss results in a contribution to national economic development only to the extent that such loss cannot be
compensated for by postponement of an activity or
transfer of the activity to other establishments.

(1) Inundation reduction benefit. If floodplain use
is the same with and without the plan, the benefit is
the increased net income generated by that use. If
an activity is removed from the floodplain, this

(3) Emergency costs. Emergency costs include
those expenses resulting from a flood that would not
otherwise be incurred, such as the costs of
evacuation and reoccupation, flood fighting, and

(a) General. Benefits from plans for reducing
flood hazards accrue primarily through the reduction in actual or potential damages associated with
land use.

32

disaster relief; increased costs of normal operations
during the flood; and increased costs of police, fire,
or military patrol. Emergency costs should be determined by specific survey or research and should not
be estimated by applying arbitrary percentages to the
physical damage estimates.

(3) Executive Orders. Compliance with E.O.
11988, Floodplain Management and E.O. 11990,
Protection of Wetlands, is assumed.
(4) Individual actions. In addition to the three
assumptions stated in paragraphs (b) (1), (2), and
(3) of this section, the analyst shall consider the
likelihood that individuals will undertake certain flood
hazard reduction measures, such as flood proofing,
when the cost of such measures is reasonable
compared to the costs of potential flood damages.

2.4.3 Planning setting.
(a) General. The benefit of flood hazard reduction
plans is determined by comparison of the with- and
without-project conditions.

(c) With-project condition. The with-project
condition is the most likely condition expected to exist
in the future if a specific project is undertaken. There
are as many with-project conditions as there are alternative projects.

(b) Without-project condition. The without-project
condition is the land use and related conditions likely
to occur under existing improvements, laws, and
policies. There are three significant assumptions
inherent in this definition:

(1) In projecting a with-project condition, the analyst must be sensitive to the relationship between
land use and the characteristics of the flood hazard
for the alternative project being analyzed.

(1) Existing and authorized plans. Existing flood
hazard reduction plans are considered to be in
place, with careful consideration given to the actual
remaining economic life of existing structures. Flood
hazard plans authorized for implementation but not
yet constructed are evaluated according to the
relative likelihood of actual construction. If there is a
high likelihood of construction, the authorized plan is
considered to be in place.

(2) The same assumptions underlie the with-project and without-project conditions.
(3) Consideration should be given to both structural and nonstructural alternatives and to alternatives incorporating a mix of structural and nonstructural measures. Nonstructural measures include:

(2) Flood Disaster Protection Act. The adoption
and enforcement of land use regulations pursuant to
the Flood Disaster Protection Act of 1973 (Pub. L.
93-234) is assumed.

(i) Reducing susceptibility to flood damage by
land use regulations, redevelopment and relocation
policies, disaster preparedness, flood proofing, flood
forecasting and warning systems, floodplain
information, floodplain acquisition and easements;
and

(i) Regulation certified or near certification. If the
local land use regulation has been or will be
certified, partially waived, or adjusted by the Flood
Insurance Administration (FIA) as adequate under 24
CFR 1910.3 (c) and/or (d) and 24 CFR 1910.5, that
regulation defines the without-project condition.

(ii) On-site detention of flood waters by protection
of natural storage areas such as wetlands or in
manmade areas such as building roofs and parking
lots.
(4) Since project alternatives can differ in their
timing as well as in their physical characteristics, the
optimal timing of projects and of individual project
features should be considered in project formulation.

(ii) Regulation not yet certified. It is assumed that
the local jurisdiction will adopt in the near future land
use regulations certifiable to FIA under the
without-project condition as a datum and under the
with-project condition if a residual hazard will remain.
This applies to floodplains regulated under 24 CFR
1910.3 (a) and (b); to floodplains regulated by local
ordinances independent of FIA; and to floodplains
with no flood regulation in effect. For revenue
situations, the following two crucial features are
included: no future confinement or obstruction of the
regulatory floodway; and no future occupancy of the
flood fringe unless residences are elevated to or
above the 100-year flood level and nonresidences
are floodproofed to that level.

2.4.4 Evaluation procedure: General.
Ten steps are involved in computing benefits (see
Figure 2.4.4). The steps are designed primarily to
determine land use and to relate use to the flood
hazard from a NED perspective. The level of effort
expended on each step depends on the nature of the
proposed improvement and on the sensitivity of
project formulation and justification to further refinement. The first five steps result in a determination of
future land use; emphasis is on evaluating the
overall reasonableness of local land use plans with
respect to (a) OBERS and other larger area data,
and (b) recognition of the flood hazard.

(iii) Application. It is assumed that floodproofing
costs will be incurred if an activity decides to locate in
the floodplain.

33

Figure 2.4.4—Flowchart of Urban Flood
Damage Benefit Evaluation Procedures

Delineate the affected area

Determine floodplain characteristics

Forecast activities in affected area

Determine existing flood damages

Estimate other flood-related costs

Estimate potential land use

Estimate future flood damages

Allocate land use

Collect market value data

Compute benefits

34

2.4.5 Evaluation procedure: Step 1—Delineate
affected area.

water supply, waste disposal, and sand, mineral, and
gravel deposits.
(b) Physical characteristics. Describe
pertinent physical characteristics, including slope,
soil types, and water table.

The area affected by a proposed plan consists of
the floodplain plus all other nearby areas likely to
serve as alternative sites for any major type of activity
that might use the floodplain if it were protected; one
example of a major activity-type is commercial. If the
potential use of the floodplain includes industrial use
within a standard metropolitan statistical area
(SMSA), the entire SMSA is the affected area; for
residential use, even within an SMSA, a much
smaller area may be designated the affected area.

(c) Available services. Most activities require
some or all of the following services: transportation
(highway and rail), power, sewerage, water, labor,
and access to markets. Indicate the availability of
such services in or near the floodplain, including
comparisons with similar services available in other
portions of the affected area.
(d) Existing activities. Include in the inventory
of the floodplain a list of existing activity types, the
number of acres, and the density, age, and value of
structure for each activity-type by flood hazard zone.

2.4.6 Evaluation procedure: Step 2—Determine
floodplain characteristics.
The existing characteristics of the floodplain must
be determined before its actual use can be estimated; therefore, undertake an inventory of the floodplain to determine those characteristics that make it
attractive or unattractive for the land use demands
established in steps 3 and 4, with emphasis on
those characteristics that distinguish the floodplain
from other portions of the affected area. Use the
following categorizations as a guide:

2.4.7 Evaluation procedure: Step 3—Project
activities in affected area.
Base economic and demographic projections
on the most recent available studies and include the
following: population, personal income, recreation
demand, and manufacturing, employment, and
output. Additional projections may be necessary for
any given area, depending on the potential uses of
the floodplain and the sensitivity of the plan to these
projections. Base projections on assessment of
trends in larger areas and appropriate data (e.g.,
OBERS); the relationship of historical data for the
affected area to trends projected for larger areas;
and consultation with knowledgeable local officials,
planners, and others. The basis for the projections
should be clearly specified in the report.

(a) Inherent characteristics of a floodplain. Floodplain characteristics may include:
(1) Flooding. Describe the flood situation, including
a designation of high hazard areas. The description
should include characteristics of the flooding, such
as depths, velocity, duration, and debris content;
area flooded by floods of selected frequencies,
including 100-year frequency; historical floods, and,
where applicable, larger floods.
(2) Floodway, natural storage. Describe and delineate those areas which, if urbanized or structurally
protected, would affect natural storage, velocity, or
stage, or would affect flood flows elsewhere.

2.4.8 Evaluation procedure: Step 4—Estimate
potential land use.
Estimate potential land use within the affected
area by converting demographic projections to
acres. The conversion factors can normally be derived from published secondary sources, from
agency studies of similar areas, or from empirical
and secondary data available in the affected area.
The categories of potential land use need be only as
detailed as necessary to reflect the incidence of the
flood hazard and to establish the benefits derived
from a plan.

(3) Natural and beneficial values, including open
space, recreation, wildlife, and wetlands. Many
floodplains, particularly those near urban areas, are
potential recreation, open space, wetland, or wildlife
preserves. The potential of the floodplain for these
purposes should be recognized and present
(4) Transportation. Floodplains near navigable
streams have inherent attractiveness for industries
that demand water-oriented transportation. Floodplains also serve as sites for railroads, highways,
pipelines, and related facilities that are not susceptible to serious flood damage but have a tendency to
attract Industry to the area.

2.4.9 Evaluation procedure:
land use.

Step 5—Project

Allocate land use demand to floodplain and nonfloodplain lands for the without-project condition and
for each alternative floodplain management plan.

(5) Other attributes. Other Inherent attributes of
floodplains may include soil fertility, reliability of

35

(a) Basic factors. Base the allocation on a comparison of the floodplain characteristics, the characteristics sought by potential occupants, and the
availability of sought-after characteristics in the
non-floodplain portions of the affected area.

determine land use and associated damages for
each future with-project and without-project
condition. “Future” is any time period after the year in
which the study is completed; in order to relate costs
ultimately to benefits, however, future damages must
be discounted to the base year. Determine future
flood damages on the basis of losses sustained both
by the floodplain occupant and by others through
insurance subsidies, tax deductions for casualty
losses, disaster relief, etc.

(b) Criteria. The floodplain should not be used
unless it has characteristics that give it a significant
economic advantage to the potential user over all
other available sites within the affected area. If such
advantages exist, determine whether they overcome
potential flood losses, potential flood proofing costs,
and the costs of other related hazards. Flood losses
and costs should be specific to the zone of the
floodplain being considered.

(a) Hydrologic changes. Changes in basin land
use may result in major alteration of drainage characteristics, particularly surface runoff; project such
hydrologic changes for the planning period. Average
future hydrologic conditions should not be used,
since they obscure situations in which the level of
protection afforded by a project may be significantly
different from average conditions by the end of the
planning period.

2.4.10 Evaluation procedure: Step 6—Determine
existing flood damages.
Existing flood damages are the potential average
annual dollar damages to activities affected by
flooding at the time of the study. Existing damages
are those expressed for a given magnitude of flooding or computed in the damage frequency process.
No projection is involved. The basis for the determination of existing damages is losses actually sustained in historical floods; therefore, specify the year
and month of all significant recorded discharges
above zero point of damage and indicate the
damages actually sustained by reach or zone and
type of property and activity. Historical data are often
incomplete; urbanization and other changes will
have occurred over the years. Many streams and
reaches do not have gaging stations. Therefore, data
on historical flood losses should be carefully
scrutinized and supplemented by appraisals, use of
area depth-damage curves, and an inventory of
capital investment within the floodplain. Further,
estimates of damages under existing conditions
should be computed for floods of magnitude that
have not historically occurred. Estimate average
annual losses by using standard damage-frequency
integration techniques and computer programs that
relate hydrologic flood variables such as discharge
and stage to damages and to the probability of occurrence of such variables. Annual hydrologic data
are normally sufficient for urban drainage estimates.
Access flood damages by activity-type and by
whether they are borne by the owner or by the public
at large.

(b) Economic changes. Economic changes can
be expected to result in a change in the level of
future flood losses. A benefit-cost ratio for the existing condition should always be shown. If the ratio is
greater than 1:1, the projection of future benefits
may be accomplished in abbreviated form unless it
would distort the comparison of alternative projects
or the cost allocation and cost sharing in multiple
purpose projects. In the latter situation, the detail and
accuracy of the estimates of flood control benefits
should be comparable to the estimates of benefits
for other water resources purposes.
(c) Projection of physical damages. Base measurement and projection of flood damages on the
establishment of actual, observed relationships between damages, flood characteristics, and those indicators used for measurement and projection.
These relationships should be modified as appropriate by consideration of constraints that change the
historically derived relationship between flood damages and a given indicator. The relationships should
be made explicit in the report and their accuracy and
representativeness supported, to the extent possible,
by empirical evidence. Use three steps in measuring
flood damages for a future year: estimate the
number and size of physical units; estimate the
future value of units; and determine the damage
susceptibility of units.
(1) Physical units. The first step in measuring
flood damages for a future year is to determine from
step 2 (2.4.6) the number and size of physical units
with potential to use the floodplain by hazard zones
for each activity type. Care must be taken to
determine whether existing structures will continue to
occupy the floodplain over the period of analysis
and, if not, the future land use and damage potential
of new structures.

2.4.11 Evaluation procedure: Step 7—Project
future flood damages.
Future flood damages are the dollar damages to
economic activities identified in step 3 that might use
the floodplain in the future in the absence of a plan.
Use this step in combination with step 5 (land use) to
36

(2) Value per physical unit. This step involves estimating future unit value. Increases in the value of
property in the floodplain may result from the expansion of existing facilities or the construction of
new units. The following guidance applying to content value is derived from an empirical study of
flood-prone property:

2.4.12 Evaluation procedure: Step 8—
Determine other costs of using the floodplain.
The impact of flooding on existing and
potential future occupants is not limited to flood
losses. Some of the impacts are intangible but
others can be translated into NED losses. These
latter include the following:

(i) Existing development. Use the OBERS
regional growth rate for per capita income as the
basis for increasing the real value of residential
contents in the future.

(a) Flood proofing costs. High flood hazards
lead to high flood costs. Therefore, compute the
flood proofing costs of different activity-types and
different flood hazard zones.

(ii) Future development. Project the value of contents within new residential structures from the
year each unit is added.

(b) National flood insurance costs. A national
cost of the flood insurance program is its administration. The cost of servicing flood insurance policies in effect at the time of the study is the average
cost per policy, including agent commission, and
the costs of servicing and claims adjusting. FIA
should be contacted to obtain these costs.

(iii) Translation to future flood damages. Use the
projected rate of increase in the value of flood-susceptible household contents as the basis for increasing the future unit flood damage to
household contents.

(c) Modified use. In some cases, the flood
hazard has caused structures to be used less
efficiently than they would be with a project. For
example, the first floor of garden apartments may
not be rented because of a flood hazard, or
property may be configured in a different way with
the plan compared to without a plan.

(iv) Limit. The value of contents should not
exceed 75 percent of the structural value of the
residence unless an empirical study proves that a
special case exists (e.g., trailer parks), nor should
the increase in value of household contents be
projected beyond project year 50.
(v) Commercial and industrial property. The procedure described for residential contents does not
apply to commercial and industrial categories.

2.4.13 Evaluation procedure: Step 9—Collect
land market value and related data.

(3) Damage susceptibility. The third step in
measuring future flood damages is to determine
the damage susceptibility of units. Once the
number of physical units and the value associated
with each unit are known, examine possible future
changes, if any, in damage susceptibility
relationships as a function of the total value of
each physical unit and the stream's flood
characteristics. such as velocity, depth, duration,
volume, debris load, and salinity. Some of the
determinants of damage susceptibility are type of
activity, vertical development, location within the
floodplain, nature of flood proofing, construction
material used, and individual response.

If land use is different with and without the
project, compute the difference in income for the
land. This is generally accomplished by using land
market value data. Provide supporting data in the
situations described in paragraphs (a) through (d)
of this section.
(a) Land use is different with project. If land
use is different with compared to without the
project, collect the following data as appropriate to
complete step 10.
(1) Comparable value. If the plan does not
result in a major addition to the supply of land in
the area, the value with protection is the market
value of comparable flood-free land. If the plan
results in a major addition to the supply of land, the
effect on the price of land should be taken into
account in estimating the value of floodplain lands
with protection. The flood-free land should be
comparable in terms of physical and infrastructural
characteristics.

(d) Projection of income losses. Income losses
may be projected to increase on the basis of projected land use. Increases in physical losses
should not be used to project income losses.
(e) Projection of emergency costs. Emergency
costs encompass a wide variety of programs.
Some, such as emergency shelter and food, are
primarily a function of occupancy of the floodplain
but not of the value of development in the floodplain. Emergency costs should not be projected to
increase as a direct function of physical losses.

37

(2) Existing value. Use the value of nearby
floodplain sites or, as appropriate, the current value
of the floodplain. In either case, report the current
and, if available, past market values of the floodplain.
Use actual market values, not capitalized income
values. Therefore, it should not be assumed that the
value of land being used for agriculture in an urban or
urbanizing situation is the capitalized value of
agricultural returns or that any value higher than that
is due to speculation that a Federal program will be
constructed or lack of knowledge. On the contrary,
without-project land values in excess of agricultural
land values should be expected, reflecting the
probability of future use as well as existing and
anticipated infrastructural investments.

because the current market value of land
theoretically captures the expected stream of income
over time.
2.4.14 Evaluation procedure: Step 10—Compute
NED benefits.
At this point in the analysis, enough information
is available to compute NED benefits for structural
and nonstructural measures. Table 2.4.14 displays
the types of benefits claimable for three of the major
flood hazard reduction measures and the steps in
this procedure that provide the necessary data. The
table applies generally; specific cases may vary.
Discount and annualize all benefits at the appropriate
discount rate to the beginning of the period of
analysis. Benefits are categorized in the following
way:

(3) Net income data. The net income (earned) with
a project may be estimated directly based on an
analysis of a specific land use with the project. This
approach would be used, for example, for lands to
be developed for recreation; the projected recreation
benefits would constitute the gross income earned on
the floodplain and would be shown as a project
benefit.

Table 2.4.14— Guide to Types of Benefits
Type of benefit
(And step)
Inundation
Incidental flood
damages
(step 6)
Primary flood
damages
(step 6)
Floodproofing
costs reduced
(step 7)
Reduction in
insurance
overhead
(step 7)
Restoration of
land value
(step 9)
Intensification
(steps 7 and 9)
Location
Difference in use
(step 9)
New use
(step 9)
Encumbered title
(step 9)
Open space
(step 9)

(4) Encumbered title market value. Estimate the
market value of land with an encumbered title for
inclusion as a benefit in step 10 in situations in which
the floodplain is to be evacuated, no specific public
use is planned, and the land could be resold with an
encumbered title (which would ensure that future
uses would be consistent with Executive Order
11988— Floodplain Management, May 24, 1977).
(b) Land use is same but more intense with project. If land use is the same but more intense, as
when an activity's use of the floodplain is modified as
a result of the project, base determination of the
increase in income on increased land values or direct
computation of costs and revenues.
(c) Evacuation plan. In the case of an evacuation
plan, changes in market value of properties adjacent
to a restored floodplain may reflect recreation or
open-space benefits to occupants of those properties. Document such an NED benefit by empirical
evidence. Care must be taken to avoid double
counting of benefits.
(d) Market value is lowered by flood hazard. If the
market value of existing structures and land is lower
because of the flood hazard, restoration of the
market value represents a quantification of otherwise
intangible benefits. In such cases, the benefit is the
difference between increased market value and that
portion of increased market value attributable to
reductions in flood damages. Careful attention should
be given to ensuring that factors not related to the
flood hazard are not included as project benefits.

Structural

Floodproofing

Evacuation

Claimable

Claimable

Claimable

Claimable

Claimable

Not
claimable

Claimable

Not
claimable

Not
claimable

Claimable

Claimable

Claimable

Claimable

Claimable

Not
claimable

Claimable

Claimable

Not
claimable

Claimable

Claimable

Not
claimable
Not
claimable
Not
claimable

Not
claimable
Not
claimable
Not
claimable

Not
claimable
Claimable
Claimable
Claimable

(a) Inundation reduction benefits. To the extent
that step 5 indicates that land use is the same with
and without the project, the benefit is the difference
in flood damages with and without the project (step
7), plus the reduction in flood proofing costs (step 8),
plus the reduction in insurance overhead (step 8),
plus the restoration of land values in certain circumstances (step 9). To the extent that step 5 indicates a difference in land use for an evacuation
plan the benefit is the reduction in externalized

(e) No projected increase in market value. Projected increase in the market value of land over the
project life with and without a plan should not be
used to measure flood hazard reduction benefits

38

costs of floodplain occupancy that are typically
borne by taxpayers or firms providing services to
floodplain activities. Examples of such costs are
subsidized flood insurance; casualty income tax
deductions; flood emergency costs; and flood
damages
to
utility,
transportation,
and
communication systems. Reduction of costs not
borne by the floodplain activities may be a major
benefit of projects to evacuate or relocate
floodplain activities. Reduction of flood damages
borne by floodplain activities should not be claimed
as a benefit of evacuation or relocation because
they are already accounted for in the fair market
value of floodplain properties.

2.4.15 Evaluation procedure: Problems in
application.
There are four major problem areas in
computing flood hazard reduction benefits:
(a) Income losses. The loss of income by
commercial, industrial, and other business firms is
difficult to measure because of the complexity
involved in determining whether the loss is
recovered by the firm at another location or at a
later time. Direct interview and empirical post-flood
studies are the most appropriate data sources for
analyzing whether a real resource loss, such as
idle capital or decaying inventories. is involved.
The loss of income because of idle labor may be
measured from the point of view of the firm or the
household, but care must be taken to avoid
double-counting. Loss of income because of idle
labor must be net of income to labor employed in
cleanup and repair of damages; unemployment
compensation and other transfer payments to idle
labor are not income from an NED perspective.

(1) Benefit from saving insurance costs. One
category of costs that can be avoided by a removal
plan is public compensation for private flood damages through the subsidized Federal Flood Insurance Program. Expressing savings in these externalized costs as project benefits is appropriate for
properties in communities that participate in the
Federal Flood Insurance Program or are expected
to participate under the without-project condition.
This benefit is the reduction of insurable flood
damages projected over the life of the project with
careful attention to the projected without-project
condition.

(b) Intensification benefits. This category
of benefits is theoretically applicable to urban
situations, but there are to date few documented
case studies. This benefit cannot exceed the
increased flood damage potential when the
existing activity is compared to the intensified
activity (without the proposed plan).

(2) Insurable flood damages. Base the projection
of insurable flood damages on traditional depth
damage-frequency relationships used in projecting
total flood damages. Then reduce projected total
damages by subtracting: losses that are non insurable either because they are in non insurance loss
categories or because they exceed the coverage
limits of the subsidized program; the deductible
portion of each expected flood damage event; and
the annual cost of the insurance premium paid by
the policyholders. For this benefit calculation,
assume that all eligible parties purchase
subsidized insurance. This assumption is
appropriate because the market value of
properties, which determines project costs. reflects
the availability of the program, not the extent of its
utilization by current floodplain occupants.

(c) Risk. The analysis of response to a
flood hazard is based on a probability weighting of
floods of various magnitude. This implies that
floodplain occupants are risk-neutral, but many
occupants, individually or as a group, either avert
or accept risk. Therefore, responses to actual and
potential flood damages should be viewed broadly
in determining land use, mode of conducting
business, and even benefits. Explain any
significant deviations from expected behavior
based on actual or potential flood damages
computed on a risk-neutral basis.
(d) Sensitivity analyses. The report should
contain sensitivity analyses that present a range of
benefit levels representing data and assumptions
about which reasonable persons might differ.
Report the benefit level that is most probable;
present other levels for public information. If
increases in damages are based on increases in
value, conduct a sensitivity analysis of value per
structure under the alternate assumption that there
is no increase in the average value of structure or
contents and that increases in damages are due
solely to increases in the number of structures
and/or shifts from one type of structure to another.

(b) Intensification benefits. If step 5 indicates that
land uses are the same with and without the project but activity is more intense with the Project,
measure the benefit as the increase in market
value of land from step 9 or changes in direct
income from step 6. Care must be taken to avoid
double counting.
(c) Location benefits. If step 5 indicates that land
use is different with and without the project, measure the benefit by the change in the net income or
market value of the floodplain land and certain adjacent land where. for example, the plan creates
open space (step 9).

39

2.4.16 Evaluation procedure: Data sources.
The following summarizes problems associated with
two key data sources:
(a) Interviews. The primary use of personal interviews
is to collect flood damage data, but interviews may also
be used to collect other necessary data not available
from secondary sources. Use only interview forms
approved by the Office of Management and Budget. Use
statistically sound techniques for selecting the interview
sample and for devising the questions. The questionnaire
and a summary of responses should be compiled and
displayed in the final report in a way that protects the
source of individual disclosures. Describe the errors and
uncertainty inherent in the sampling methods and
responses.
(b) Local land use plans. Local land use plans and
zoning ordinances are valuable guides to future land use
in the floodplains but caution must be exercised in the
use of such plans and ordinances. First, the
demographic implications of local plans and ordinances
must be consistent with, or convincingly distinguished
from, trends in a larger area, e.g., OBERS. Second, a
local plan is not an acceptable projection for the
without-project condition if it ignores the flood hazard.
Third, the status, date, and likelihood of change of local
plans vary. Finally, local plans may not contain
sufficiently detailed information to be of direct use in
benefit analysis.
2.4.17 Report and display procedures.
Include in the report enough data to enable the
reviewer to follow the key steps above and, more
important, the underlying rationale for the project.
(a) Report procedures for risk and uncertainty. To
assist reviewers in assessing response to risk, summarize the following separately and display the information in tabular form:
(1) Remaining flood damage situations: Categorizations. The remaining damages are those expected to
occur even with a floodplain management plan in
operation. Remaining damages include:
(i) Damages to activities that would occupy the
floodplain with as well as without the plan;
(ii) Damages to activities that would occupy the
floodplain only with the plan; and
(iii) Increased damages to activities outside the
protected area with and without the plan. This includes
downstream flooding, if any, caused by the plan or
project.
(2) Flood with two-tenths of 1 percent of occurrence.
Fully describe the flood with two-tenths of 1 percent
chance of occurrence (500-year frequency) with and
without the plan. The report should contain, for example,
two-tenths of 1 percent flood damages; the number of
people and towns affected; the number of structures and
40

acres by land-use type; disruption of essential services
(e.g., water, power, fire protection, and sanitary services)
and distance to unaffected essential services; anticipated
warning time; flood depths, velocity, duration, debris
content, etc.; and other indicators pertinent to catastrophic
flooding.
(b) Summary tables. Summary tables 2.4.17-1 through
4 are suggested presentations for all reports that include
flood hazard reduction as a purpose. Other summary
tables. such as the displays presented in 2.4.5 through
2.4.15, may be necessary and pertinent. The summary
tables should include pertinent land use data for
computing not only NED benefits, but also environmental,
social, and regional impacts. Also present other floodplain
data pertinent to the evaluation on one or more maps:
Flood limits and depths with and without the project;
current and future land use; and 100-year and other flood
limits and depths.
Table 2.4.17—1 Summary of Annualized NED
Benefits and Costs for Alternative Projects
[Applicable discount rate: ——]
Project benefits and costs
Alternatives
1
2
3
X
Flood hazard reduction
benefits:
Inundation:
Physical ............................. ......... ......... ......... .........
Income ............................... ......... ......... ......... .........
Emergency ........................ ......... ......... ......... .........
Total ................................... ......... ......... ......... .........
Intensification
......... ......... ......... .........
Location:
Floodplain ............................. ......... ......... ......... .........
Off floodplain ......................... ......... ......... ......... .........
Total ................................... ......... ......... ......... .........
Total Flood Benefits ................. ......... ......... ......... .........
Benefits from other purposes ......... ......... ......... .........
Total project benefits ............... ......... ......... ......... .........
Project costs ............................ ......... ......... ......... .........
Net benefits ............................. ......... ......... ......... .........

Table 2.4.17—2 Flood Damages by Decade, Alternative Projects
[Applicable discount rate: — —]
1

Time Period
2
P20,
P0
P10
AAE
etc.
No. 1 ...................................................................................................................................................... ............ ............ .............. ..............
No. 2 ...................................................................................................................................................... ............ ............ .............. ..............
No. 3 ...................................................................................................................................................... ............ ............ .............. ..............
Project

1
2

The designation P10 and P20 identify the 10th and 20th years, respectively, of project life.
Average annual equivalent

Table 2.4.17—3 Flood Damages by Decade Without Project
[Applicable discount rate: — —]
Property type

Time Period1
P-50

P-40, etc.

Existing

P0

P10

PN

2

AAE

Residential:
a (Subclassification of residential) ................... ................ .................. .................. ................. ................ ................. ................
b ........................................................................ ................ .................. .................. ................. ................ ................. ................
c ........................................................................ ................ .................. .................. ................. ................ ................. ................
Commercial ........................................................... ................ .................. .................. ................ ................ ................. ................
Industrial ............................................................... ................ .................. .................. ................ ................ ................. ................
Other .................................................................... ................ .................. .................. ................ ................ ................. ................
Total .............................................................. ................ .................. .................. ................ ................ ................. ................
1
The designation P10 and P20 identify the tenth and twentieth years, respectively, of project life. P-50 is 1932, P-40 is 1942, etc.
2
Average annual equivalent

Table 2.4.17-4 Number of, Floodplain Without Project

1

Acres
Property type

Existing

Time Period2
P30
P40

P50

P100

............

............

............

............
............
............
............
............
............

............
............
............
............
............
............

............
............
............
............
............
............

P0
P10
P20
Residential:
a (Subclassification of rate residential
............. ........... ............ ............ ............
units)
b ............................................................................ ............. ........... ............ ............ ............
c ............................................................................ ............. ........... ............ ............ ............
Commercial ............................................................... ............. ........... ............ ............ ............
Industrial .................................................................... ............. ........... ............ ............ ............
Semipublic.................................................................. ............. ........... ............ ............ ............
Transportation ........................................................... ............. ........... ............ ............ ............
1
Comparable tables may be made for all alternatives, if pertinent.
2
The designations P10 and P20 identify the 10th and 20th years, respectively, of project life.

a function in new multipurpose projects, addition of
power-generating facilities to existing water resource
projects, and expansion of existing hydropower
plants.

Section V—NED Benefit Evaluation
Procedures: Power (Hydropower)
2.5.1 Introduction.
This section describes procedures for the evaluation of national economic development (NED)
benefits of hydropower features of water resources
projects and plans. These features include single-purpose hydropower, the inclusion of hydropower as
41

2.5.2 Conceptual basis.
(a) The conceptual basis for evaluating the
benefits from energy produced by hydroelectric
power plants is society's willingness to pay for these
outputs. If this is not possible or cost effective, benefit
information may sometimes be obtained through
examination of market prices. Although utility pricing
of electricity is complex and usually based on
average cost rather than marginal cost, in cases
where it can be determined that market price to the
final consumer is based on marginal production
costs, this may be used as a measure of benefits.
When using market price as a measure of benefits
the increment in supply should ordinarily be relatively
small compared to the total (i.e., little change would
be expected in market price due to the incremental
supply). Continued movement of retail electricity
pricing towards marginal cost approximations (e.g.,
seasonal rates. time of day rates. etc.) may make
market Prices more relevant for benefit evaluation in
the future. In the absence of such direct measures of
marginal willingness to pay, the benefit from energy
produced by hydroelectric power plants is measured
by the resource cost of the most likely alternative to
be implemented in the absence of the alternatives
under consideration. Non-federal investment
analysis generally does not provide an adequate
basis for evaluation of potential investments of
Federal resources in hydroelectric power. This is
because non-federal investments reflect financial
conditions, insurance, and tax incentives that differ
from those applying to Federal investments. The
procedure that follows allows the planner to
construct an NED benefit estimate based on real
resource cost of the most likely non-federal alternative. Simplifications are encouraged for small
scale hydropower projects. An alternative hydropower benefit evaluation procedure is provided for
single-purpose projects that are to be 100 percent
non federally financed, provided that there are no
significant incidental costs.

measures on the basis of direct willingness to pay
are encouraged.

2.5.3 Planning setting.
(a) Without-project condition. The without-project
condition is the most likely condition expected to exist
in the future in the absence of a project, including
any known changes in law or public policy. The
without-project condition includes the following
specific assumptions:
(1) Existing resources. Existing generating resources are part of the without-project condition.
Make adjustments to account for anticipated plant
retirements and changes in plant output due to age
or environmental restrictions associated with existing
policy and regulations.
(2) Existing Institutional arrangements. Existing
and reasonably expected future power system and
water management contracts, treaties, and non
power river operating criteria are part of the without-project condition. If revision of these arrangements is part of an alternative plan, the new arrangement (revised contract, criteria, etc.) would be
considered in the with-project condition.
(3) Alternative actions anticipated or under way.
The without-project condition includes those generating resources that can reasonably be expected to
be available in the forecast period.
(4) Nonstructural measures and conservation. The
without-project condition includes the effects of
implementing all reasonably expected nonstructural
and conservation measures.
(b) With-project condition. (1) The with-project
condition is the most likely condition expected to exist
in the future with the plan under consideration.
Examples of alternative plans include: alternative
combinations of projects in a basin study; alternative
sites in a reach study; alternative plant sizes at a
specific site; alternative reservoir sizes at a reservoir
site; use of reregulation and/or pump back to
increase firm capacity; and reallocation of storage to
increase firm energy output.

(b) The real resource cost of the most likely alternative can also be used to compute benefits from
nonstructural measures. However, the net benefits of
certain nonstructural measures that alter the electric
power load cannot be measured effectively by the
alternative cost procedures for the following reasons:
(1) structural measures and many nonstructural
measures (except those that alter the load) result in
similar plan outputs, whereas load-altering measures
(e.g., revised rate structures) may change levels of
output; and (2) load-altering measures may have
fewer direct resource costs than measures based on
higher levels of output. Because of this lack of
comparability. the benefits from such load-altering
nonstructural measures should not be based on the
cost of the most likely alternative. Attempts to
measure the Benefits of load-altering nonstructural

(2) Nonstructural alternatives to hydropower may
be used alone or in combination with structural
measures. Nonstructural measures include but are
not limited to reducing the level and/or time pattern
of demand by time-of-day pricing; utility-sponsored
loans for insulation; appliance efficiency standards;
education programs: inter-regional power transfers;
and increased transmission efficiency.

42

2.5.4 Evaluation procedure: General.
the estimate, and the likely effect of further refinement on project formulation and justification.

(a) Follow these steps to estimate NED benefits
that would accrue whenever the plan would not be
100 percent nonfederally financed. When single
purpose hydropower alternatives being studied
would be 100 percent nonfederally financed, the
market-based procedure specified in Section 2.5.10
may be used. Nonfederally financed means that all
construction and operation costs would be financed
entirely from sources other than federally appropriated funds. The level of effort expended on each
step depends upon the nature of the proposed development, the state of the art for accurately refining

(b) For the purpose of ensuring efficiency in the
use of planning resources, simplifications of the
procedures set forth in this section are encouraged
in the case of single-purpose, small scale hydropower projects (25 MW or less), if these simplifications lead to reasonable approximations of NED
benefits and costs. In addition, an analysis of marketability may be substituted for determination of
need for future generation for hydropower projects
up to 80 MW at existing Federal facilities.

43

Figure 2.5.4 -- Flowchart of Hydropower Benefit
Evaluation Procedures

Identify system for analysis

Estimate future demand
for electric power

Define base system
generating resources

Evaluate load/resource difference

Determine most likely
nonfederal alternative

Compute benefits

44

2.5.5 Evaluation procedure: Identify system for
analysis.

plants as well as the reduction of output of some
plants due to age or environmental constraints.

Because of the trend toward interconnection and
coordination among utilities and power systems, it is
most appropriate to evaluate NED benefits for
hydropower on a system basis, rather than on the
needs of an individual utility or local area. The size
of the system would depend on the situation but
could consist of a power pool, a National Electric
Reliability Council (NERC) regional area, the marketing area of a Federal power marketing administration, or other geographic region.
In some cases, physical or institutional constraints
may limit the analysis to a smaller area, but care
must be taken to ensure that benefits are not
misstated by such analysis.

(c) Evaluate load/resource difference. Compare
the loads identified under 2.5.6(a) with the resources identified under 2.5.6(b) to determine: (1)
when generating resource deficits will occur, (2) the
magnitude of these deficits, and (3) what portion of
these deficits could be met by the hydropower project. If nonstructural measures are components of
an alternative plan and these measures reduce
system loads, the amount of such reduction lessens
system deficits. Hydropower sites can be developed
to provide either a base load, mid-range, or peaking
service. Evaluate the system demand for each
class of hydropower generation. Simple tabulation
of annual peak and energy loads and resources is
generally adequate for preliminary studies. Use
system load-resource models that account for load
characteristics and generating plant operating
capabilities, if available, to evaluate accurately the
usability of specific projects.

2.5.6 Evaluation procedure: Determine need for
future generation.
(a) Estimate future demand for electric power.
Forecast electric power loads in terms of the annual
peak demand period. When a high proportion of the
generation is from hydropower, a forecast of annual
energy demand should be made. Also forecast
weekly load shapes to represent a minimum of
three periods in the year (e.g., typical summer,
winter, and spring/fall days) to assist in determining
the type of load that a hydropower project could
carry. Load forecasts should reflect the effects of all
load management and conservation measures that,
on the basis of present and future public and private
programs, can reasonably be expected to be
implemented during the forecast period. Load
forecasts should be made and analyzed by sectoral
use (e.g. residential, commercial, industrial).
Estimate loads at increments of no more than 10
years from the present to a time when the proposed
plant will be operating in a state representative of
the majority of its project life. In the case of staged
hydropower development or where generation
system resource mixes may change markedly, load
forecasts may be appropriate for 20 years or more
beyond the initial operation date. Account for
system exports and reserve requirements.

2.5.7 Evaluation procedure: Determine the most
likely non-federal alternative.
(a) General. Select the one alternative most likely
to be implemented in the absence of the proposed
Federal project. Begin identification of the most
likely alternative to the plan being considered with
the least costly alternative. If an alternative with a
lesser cost is passed over for a more expensive
one, justify not selecting the lower cost plan.
(b) Screen alternatives. The alternatives to a specific hydropower project must be viable in terms of
engineering, environmental quality, and other national policy considerations. Engineering viability
limits thermal alternatives to commercially available
electric power plants. Environmental viability implies
that plant costs include all equipment required to
meet environmental quality criteria. National policy
considerations include factors such as legal limitations on the use of oil, natural gas, and other
‘scarce’ fuels for electric power generation. Each
alternative need not in itself deliver service similar in
kind to the hydropower project, but the total power
system with the alternative must deliver service
similar in kind to the system with the hydropower
project. If nonstructural measures or conservation
are components of an alternative plan and these
measures reduce the need for additional capacity
or for additional power, the amount of such
reduction constitutes provision of service similar in
kind; this ensures that evaluation procedures will
not be biased against the selection of an alternative
that utilizes nonstructural measures.

(b) Define base system generating resources.
Project future generating resources and imports at
various points in time without the proposed plan or
any alternative plan. Estimate resources for the
time periods stated in 2.5.6(a). Provide information
on peak capacity and on average annual energy
production where a high proportion of the systems
generation is hydropower. Data are readily available
on projected system resources for about 10 years.
Base projected resource additions beyond that time
on system studies. Account for retirement of older

(c) Identify the most likely alternative. (1) Compare the system with the hydropower project under
45

consideration to alternatives capable of meeting
system loads within established criteria of system
reliability. Base the comparison on the basis of cost
and other factors to determine the most likely alternative, i.e., the structural and/or nonstructural
measures that will be implemented if the project
under consideration is not implemented.

(iv) Occasionally, the initial output of a hydropower project is large compared to annual growth
in system load; two or more years may be recolored
to fully absorb its output into the load. In these
cases adjust the credit (benefit) to reflect the generating capacity and energy actually used in the
load in the early years of project life.

(2) If institutional obstacles to implementation are
noted, an alternative plan should still be considered
the most likely if the barriers are substantially within
the power of the affected users to correct. A detailed description of the institutional obstacles
should be included, with a discussion of the basis
for the conclusion that the obstacles cannot be
overcome.

(2) Energy value adjustment. Account for the
effect on system production expenses when computing the value of hydroelectric power. Adding
structural or nonstructural measures of a plan to a
system instead of adding an alternative power
source may result in greater or lesser system production expenses than if a particular thermal capacity were added; the effect on production expenses
can be determined by performing a system analysis. If there is a difference in system production expenses, adjust the energy value in the economic
analysis of the plan. If the alternative plan would
lower system production costs, the adjustment
would be negative. If the alternative plan would increase system production expenses, the adjustment would be positive. Consider system production expenses in determining the most likely alternative.

(3) If the most likely alternative includes new
thermal plants, use those plants' capacity costs (including amortized investment costs, transmission
costs, and fixed operating and maintenance (O&M)
costs) as the measure of the value of the hydropower project's generating capacity, and use the
thermal plants' energy costs (primarily variable
O&M costs and fuel costs) as the measure of the
value of the hydropower project's energy production.

(3) Capacity value adjustment. The physical operating characteristics of hydropower projects differ
significantly from alternative thermal plants. Appropriate credit may be given to hydropower projects to
reflect their greater reliability and operating flexibility. When the value of these characteristics
cannot otherwise be quantified, an adjustment can
be made to the alternative plant capacity costs.
Typically, the adjustment per kilowatt of capacity
ranges from 5 to 10 percent of the cost per kilowatt
of thermal capacity, depending on the operating
characteristics of the hydropower project and alternatives that include thermal capacity. The adjustment may be applied by increasing the capacity
cost of the most likely alternative by the appropriate
percentage determined by the Federal Energy
Regulatory Commission (FERC).

2.5.8 Evaluation procedure: Compute benefits.
(a) Compute hydropower plant annual benefits.
Compute annualized benefits based on the costs of
the most likely alternative for each hydropower development and installation component.
(1) Alternative costs. (i) Base the calculation of
alternative costs to be used as a measure of NED
benefits on the following: (A) calculate all interest
and amortization costs charged to the alternative on
the basis of the Federal discount rate; (B) charge
no costs for taxes or insurance to the alternative;
and (C) in calculating costs of the most likely
alternative, use assumptions and procedures that
parallel those used to calculate the costs of the
plan being evaluated.

(4) Intermittent capacity adjustment. The dependable capacity of a hydropower project is based on
the load-carrying capability of the project under the
most adverse combination of system loads, hydrologic conditions, and plant capabilities. This value,
conservative approach is unrelated to the dependable capacity of a hydropower project's alternative if
thermal capacity is included and given no credit for
the value of capacity that is available a substantial
amount of the time. When power system operation
studies show that there is an intermittent capacity
value to the system, a capacity adjustment should
be made.

(ii) In many cases, benefits may vary over the life
of a project. This may be due to such factors as
staged development of the hydropower project,
changes in operation of the hydropower project resulting from changes in the resource mix in the total
generating system, and real escalation in fuel costs
(if the most likely alternative system includes a
thermal plant). Compute project benefits by time
intervals and discount these values to derive annualized power benefits.
(iii) When applicable, the evaluation shall reflect
differences in the cost of transmission, distribution,
and other facilities compared to the most likely alternative.

(5) Price relationships. Assume relative price relationships and the general level of prices prevailing
46

during the planning study to hold generally for the
future, unless specified studies and considerations
indicate otherwise. Examples of the latter include
escalation of relative fuel cost (e.g., due to increasing scarcity) or increased capital costs expected to
result from changed environmental or safety criteria. Fuel costs used in the analysis should reflect
economic prices (market clearing) rather than regulated prices.

plans are evaluated in a consistent way, the most
financially attractive plan can be identified as the
NED plan.
(b) Industry long-run wholesale prices. The
market approach must be carefully applied to
ensure that the long-term (10 or more years) contract prices reflect the energy and capacity characteristics of the proposed hydropower project. In
screening contracts for applicability, a number of
factors should be examined, including: term of contract, power and energy availability (daily, weekly,
seasonally), geographic relationship, delivery voltage, power factor, point(s) of delivery (busbar, high
voltage grid, load center), interconnecting facilities,
reliability standards and emergency backup. Information on long-term wholesale power contracts
may be obtained from the Federal Energy Regulatory Commission, State public service commissions,
the Federal power marketing administrations, and
electric generating and distribution utilities.

(b) Compute benefits of nonstructural measures.
Compute the average annual benefits of nonstructural measures, based on the cost of the most likely
alternative identified above, except as specified in
2.5.2(b).

2.5.9 Evaluation procedure: Data sources.
Data on existing and planned resources, loads,
marketability criteria; and alternative costs are available from various agencies and groups, including
the Department of Energy, NERC regional councils,
FERC regional offices, Federal power marketing
administrations, State energy agencies, utility
companies, and regional planning groups. If
specific operating characteristics of individual plants
are not available, generalized data can be obtained
from other sources, including the Electric Power
Research Institute. Load-resources models based
on simulated system operation may be used if
available. Some of these models are available from
various sources, including FERC, Federal power
marketing administrations, and a number of
consulting services.

2.5.10
Alternative
Evaluation.

Procedure:

2.5.11 Report and display procedures.
(a) Tables 2.5.11-1 through 2.5.11-3 are suggested for presentation for reports that include federally financed hydropower measures. Table
2.5.11-1 summarizes the output of all plans by
peaking capacity and system load factor, and presents the costs of each alternative plan. Tables
2.5.11-2 and 3 summarize the output of the structural component of each alternative, the benefits of
the structural components, and the resource costs
of all structural and nonstructural components of
each alternative plan. The number of benefit categories included will vary from project to project. Not
all projects will have intermittent capacity, for example, and in some cases it will be appropriate to account separately for firm and secondary energy.
System energy costs are sometimes included in the
unit energy values; in those cases such costs would
not have to be accounted for separately.

Financial

(a) General. This section provides an alternative
hydropower benefit evaluation procedure that may
be used for evaluating single-purpose projects that
are to be 100 percent nonfederally financed, provided that there are no significant incidental costs.
This approach employs market data based on long
run (10 or more years) utility wholesale prices as an
estimate of the cost of producing equivalent power
from the most likely alternative. These prices may
be used to evaluate and compare the financial
feasibility of alternative plans, provided that they are
consistently applied to all of the alternatives. The
formulation of alternative plans under this procedure is subject to the provisions of chapter 1, including evaluation of incidental benefits and costs,
compliance with environmental laws, and inclusion
of appropriate mitigation. Through this process, the
most financially attractive alternative is identified.
Because the benefits and costs of all alternative

(b) Table 2.5.11-3 is suggested if the nature or
magnitude of hydropower benefits changes substantially over time. Examples are: staged construction of the hydropower project; change in the role of
hydropower in the system over time; and situations
in which several years are required to absorb a
large project into the system.
(c) When the alternative financial evaluation
procedure is used to evaluate financial feasibility of
plans that are to be 100 percent nonfederally financed (see Section 2.5.10), physical data similar
to that found in tables 2.5.11-1 through 3 should be
displayed. Capacity and energy values, as developed through the financial analysis, should also be
displayed in a manner facilitating comparison
47

among alternatives. These displays are in lieu of the
standard presentation of hydropower benefits and
project costs in the NED account. Also display any
incidental benefits and costs of the alternatives.

However, no benefit-cost ratio can be presented,
because the analysis of the hydropower project's
financial feasibility is not comparable to economic
analysis.

Table 2.5.11-1—Electric Power Supply Alternatives
[Period of analysis, price level, discount rate]

Alternatives

Peak power supplied, conserved,
and system
2
3
load factor (MW) by time period
P1
P2
P3
PN

Annualized
1
cost ($1,000)

Most likely
alternative.............................................
................................
..................... ...................
.................
..................
Recommended
plan...............................................
................................
..................... ...................
.................
..................
Other plans
analyzed.............................................
................................
..................... ...................
.................
..................
1
2 Annual equivalent cost includes system adjustment costs.
For example, for the summer season, an entry “90 10 6” would represent meeting the 100 MW deficit in the summer peak use identified
in the without-project condition by supplying 90 MW and reducing the quantity used by 10 MW, the system load factor for the entire system
for3the summer would be .6.
Show by time period and season where there are seasonal variations.

Table 2.5.11-2 Summary of Annualized NED Benefits for Structural1Measures and NED Costs for Structural
and Nonstructural Measures

[(Thousands of month, year dollars) Applicable discount rate:— —]
1
Plant data:
Installed capacity, MW..................................................................................................................
Dependable capacity, MW.............................................................................................................
Intermittent capacity, MW.............................................................................................................
Average annual energy, gWh........................................................................................................
Average annual capacity factor (percent).....................................................................................
Benefits:
Unit capacity and value ($/kW-yr).................................................................................................
Dependable capacity benefits.......................................................................................................
Intermittent capacity benefits........................................................................................................
Unit energy value (mills/kWh).......................................................................................................
Energy benefits.............................................................................................................................
Unit system energy adjustment (mills/kWh)..................................................................................
System energy cost adjustment....................................................................................................
Real fuel cost escalation rate (percent).........................................................................................
Period of real fuel cost adjustment (years)...................................................................................
Real fuel cost adjustment.............................................................................................................

Alternative
2
3

X

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
------------------------------(---------)
----------(---------)
(---------)
-----------

Total hydro benefits.................................................................................................................
Other purpose benefits (list).........................................................................................................
Annualized cost............................................................................................................................
Structural measures.....................................................................................................................
Nonstructural measures...............................................................................................................

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

Net annualized benefits...........................................................................................................

-----------

-----------

----------- -----------

1

Note that benefits from load-altering nonstructural measures are excluded. This table may be used for displaying the benefits of
nonstructural measures that do not alter the load (see 2.5.2 (b)).

48

Table 2.5.11—3 Time Distribution of NED Electric Power
Benefits for structural Measures of Alternative —
1
—
[Applicable discount rate:——]

Plant data:
Installed capacity, MW..............................................................................................
Dependable capacity, MW.........................................................................................
Intermittent capacity, MW.........................................................................................
Average annual energy, gWh....................................................................................
Average annual capacity factor (percent)..................................................................
Benefits:
Unit capacity and value ($/kW-yr)..............................................................................
Dependable capacity benefits....................................................................................
Intermittent capacity benefits.....................................................................................
Unit energy value (mills/kWh)....................................................................................
Energy benefits..........................................................................................................
Unit system energy adjustment (mills/kWh)...............................................................
System energy cost adjustment.................................................................................
Real fuel cost escalation rate (percent).....................................................................
Period of real fuel cost adjustment (years)................................................................
Real fuel cost adjustment..........................................................................................
Annualized benefits..............................................................................................

Time period 2
P1

P1

P1

---------------------------------------------------

---------------------------------------------------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

P1

AAE3

---------------------------------------------------

---------------------------------------------------

---------------------------------------------------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
--------------------(---------)
----------(---------)
----------(---------)
(---------)
-----------

(---------)
------------------------------(---------)
----------(---------)
(---------)
-----------

_______ _______ ________ ________ _______

1

Note that benefits from load-altering nonstructural measures are excluded. This table may be used for displaying the benefits of
nonstructural
measures that do not alter the load (see 2.5.2 (b)).
2
3 Time periods selected depend on the nature of project and power system.
Average annual equivalent.

Section Vl—NED Benefit Evaluation
Procedures: Transportation (Inland
Navigation)

(1) Reductions in costs incurred from trip delays
(e.g., reduced congestion by expanding lock sizes
at congested facilities or by imposition of congestion fees).

2.6.1 Introduction.

(2) Reduction in costs because larger or longer
tows can use the waterway (e.g., by channel
straightening or widening).

This chapter presents the procedure for measuring
the beneficial contributions to national economic
development (NED) escalated with the inland
navigation features of water resource protects and
plans.

(3) Reduction in costs by permitting barges to
be more fully loaded (e.g., by channel deepening).
(b)
Shift
of
mode
benefit
(same
origin-destination; different mode). For traffic that
would use a waterway with the project but uses a
different mode, including a different waterway,
without the project, the benefit is the difference
between the costs of using the alternative mode
without the project and the costs of using the
waterway with the alternatives under consideration.
The economic benefit of the waterway to the
national economy is the savings in resources from
not having to use a more costly mode.

2.6.2 Conceptual basis.
The basic economic benefit of a navigation project
is the reduction in the value of resources required to
transport commodities. Navigation benefits can be
categorized as follows:
(a) Cost reduction benefit (same origin-destination;
same mode). For traffic that uses a waterway both
With and without a project, the benefit is the
reduction in the economic cost of using the waterway. This reduction represents an economic efficiency or NED gain because resources will be released for productive use elsewhere in the economy;
for example:

(c) Shift of origin-destination benefit. If a project
would result in a shift in the origin of a commodity,
the benefit is the difference in total costs of getting
the commodity to its place of use with and without
the project. If a project would result in a shift in the
destination of a commodity, the benefit is the difference in net revenue to the producer with and without the Project. The shift of origin-destination

49

benefit cannot exceed the reduction in transportation
charges achieved by the project.
(d) New movement benefit. This benefit applies if a
commodity or additional quantities of a commodity
would be transported only because of lowered
transportation charge with the Project. The quantities
are limited to increases in production and consumption resulting from lower transportation costs.
An increase in waterway shipments resulting from a
shift in origin or destination is not included. The new
movement benefit is defined as the increase in
producer and consumer surplus; practically, it can be
measured as the delivered price of the commodity
less all associated economic costs, including all of
the costs of barge transportation other than those of
the navigation project. This benefit, like the preceding one, cannot exceed the reduction in transportation costs achieved by the project.

ensure the most effective use of an existing waterway system over time. This analysis should be
documented in project reports to assure the
reviewer that the best use of existing facilities will
be made in the without-project condition and that
the benefits of alternative with-project conditions
are correctly stated. The criteria for the best
utilization of the system are overall public interest
concerns, including economic efficiency, safety
and environmental impact.
(2) User charges and/or taxes required by law
are part of the without-project condition. Proposed
or possible fees, charges, or taxes are not part of
the without-project condition but should be considered as part of any nonstructural alternatives in the
with-project condition.
(3) The without-project condition assumes that
normal operation and maintenance will be performed on the waterway system over the period of
analysis.

(e) Use of rates for benefit measurement. It is
currently more difficult to accurately compute the
long-run marginal costs of particular rail movements
on the basis of cost estimation studies than to determine the rates at which railroad traffic actually
moves. In competitive markets, rates (prices) correspond to marginal cost, and, given market stability,
prices will settle at long-run marginal costs. Moreover, the rates actually charged determine the distribution of traffic among modes. For these reasons,
rates will be used to measure shift of mode benefits.
Section 7a of the Department of Transportation
(DOT) Act of 1966 (Pub. L. 89-670) requires the use
of prevailing rates, as described in 2.6.9(b). In the
case of new waterways, this rate may or may not
represent the best estimate of long-run marginal
costs. In the case of existing waterways, prevailing
competitive similar rates are the best available
approximation of long-run Marginal costs.

(4) In projecting traffic movements on other
modes (railroad, highway, pipeline, or other), the
without-project condition normally assumes that
the alternative modes have sufficient capacity to
move traffic at current rates unless there is specific
evidence to the contrary.
(5) Alternative modes should be analyzed as a
basis for identifying the most likely route by which
commodities will be transported in the future in the
absence of waterway improvement.
(6) The without-project condition normally assumes that only waterway investments currently in
place or under construction are in place over the
period of analysis.
(b) With-project condition. The with-project
condition is the most likely condition expected to
exist in the future if a project is undertaken. The
same assumptions as for without-project condition
underlie the with-project condition. The following
discussion relates to the alternatives considered
under the with-project condition.

2.6.3 Planning setting.
(a) Without-project condition. The without-project
condition is the most likely condition expected to exist
in the future in the absence of the navigation project
or any change in law or public policy. The
without-project condition includes any practice likely
to be adopted in the private sector under existing law
and policy, as well as actions that are part of broader
private and public planning to alleviate transportation
problems. The following specific assumptions are
part of the projected without-project condition:

(1) Management of demand by the use of congestion or lockage fees is a nonstructural alternative, which alone or in combination with structural
devices may produce an economic optimum in a
congested waterway. Influencing marginal
waterway users through a congestion fee can
increase the net benefits of a waterway. Evaluate
alternatives that influence demand on the same
basis as supply-increasing (structural) alternatives.

(1) Assume that all reasonably expected nonstructural practices within the discretion of the operating agency, including helper boats and lock operating policies, are implemented at the appropriate
time. Substantial analysis is required to determine
the best combination of nonstructural measures to

(2) Additional nonstructural measures not within
the current purview of the operating agency may
be considered ‘supply management’ measures.
One example is traffic management. These
supply-increasing (nonstructural) measures can be
50

used alone or in combination with other structural or
nonstructural measures.

costs is included in the costs of the alternative
under study and its incremental contribution to
benefits is explicitly identified.

(3) Project alternatives can differ in their timing as
well as in their physical characteristics. Consider the
optimal timing of projects and of individual project
features in project formulation, so as to maximize net
benefits over time.

2.6.4 Evaluation procedure: General.
Use the following 10 steps to estimate
navigation benefits. (See Figure 2.6.4.) The level
of-effort expended on each step depends upon the
nature of the proposed improvement, the state of
the art for accurately refining the estimate, and the
sensitivity of project formulation and justification to
further refinement, especially as applied to steps
6, 7. and 8.

(4) Consider improvements in alternative transportation modes as part of the without-project condition only, as specified in 2.6.3(a)(5).
(5) A change in the waterway system that is currently authorized but not yet under construction may
be included if an appropriate share of its associated

51

Figure 2.6.4——Flowchart of Inland Navigation Benefit
Evaluation Procedure

Identify
commodity
types

Identify study areas

Determine current cost
of alternative movement

Determine current
commodity flow

Determine current
cost of waterway use

Determine future cost
of alternative modes

Forecast potential
waterway traffic

Determine future cost
of waterway use

Determine waterway use
with and without project

Compute benefit

52

2.6.5 Evaluation procedure: Step 1—Identify
the commodity types.

shifts in origin and destination, and to resource and
market analysis in the case of benefits from new
movements. Assess current transportation costs in
the area.

Identify the types of commodities susceptible to
movement on the waterway segment under consideration. The level of detail for each commodity is not
prespecified; for example, in some cases "grains" is
detailed enough, while in others "corn," "wheat" or
"soybeans" is needed.

(b) Existing waterways. This step seeks to identify uses beyond the existing use of the waterway; it
seeks to identify potential commodities that might
use the waterway in response to a reduced transportation charge.

(a) New waterways. Identify commodity types primarily by antennas of shippers and by resource
studies. Interviews will identify primarily the benefit
potentials of a shift of mode; resource studies will
identify primarily the benefit potentials of shifts in
origin-destination and in new movements.

2.6.8 Evaluation procedure: Step 4—Determine
current costs of waterway use.
Determine current costs of waterway use for all
the tonnage identified in step 3. Include in the waterway transportation cost the full origin-to-destination costs, including handling, transfer, demurrage,
and prior and subsequent hauls for the tonnages
identified in step 3. Consider the effect of seasonality on costs. In calculating the cost of prior and
subsequent hauls, care must be taken to avoid inappropriate aggregations and averaging of the
costs of movements in situations in which there is a
wide geographic dispersion in ultimate origins and
or destinations, as in the case of grain traffic.

(b) Existing waterways. Identify commodity types
primarily by analysis of data on existing use of the
waterway segment under study; e.g., data from the
Performance Monitoring System (PMS) and the Water borne Commerce Statistical Center (WCSC).

2.6.6 Evaluation procedure: Step 2—Identify the
study area.
The study area is the area within which significant
project impacts are incurred. The origins and
destinations of products likely to use the waterway
are normally included in the study area, broken out
by river segments.

(a) New waterways. The current cost of the proposed waterway use represents the with-project
condition; there are no without-project costs for waterway transportation.
(b) Existing waterways. Construct two arrays,
one representing the without-project and one the
with project condition. The difference between the
two arrays reflects the reduction in current delays
and any gains in efficiencies resulting from the
alternative under consideration.

(a) New waterways. Determine the origins and
destinations primarily by interviews of shippers and
by resource studies.
(b) Existing waterways. Determine origins and
destinations by analysis of data on existing use of the
waterway segment under study; e.g., PMS and
WCSC traffic traced to its ultimate origin and destination.

2.6.9 Evaluation procedure: Step 5—Determine
current cost of alternative movement.

2.6.7 Evaluation procedure: Step 3—Determine
current commodity flow.

Determine the current cost of alternative movement for all the tonnages identified in step 3. The
cost includes the full origin-to-destination costs, including costs of handling, transfer, demurrage, and
prior and subsequent hauls. Consider the effect of
seasonality on costs. In calculating the costs of
gathering or distribution prior or subsequent to the
primary line haul, care must be taken to avoid inappropriate aggregations and averaging of the costs
of movements in situations in which the ultimate
origins and/or destinations are widely dispersed, as
the case of grain traffic. This procedure uses price
data when available as a proxy for the long-run costs
of movement by other modes. This step, combined
with steps 3 and 4, generates a first approximation of
a demand schedule for waterway transportation given
(1) the costs of transportation by alternative modes,

Gather current data for commodity movements
between origin-destination pairs susceptible to waterway movement as well as for commodities currently transported by waterway.
(a) New waterways. This step seeks to identify the
total tonnage that could benefit from using the
waterway. Obtain this information primarily by interviews of shippers. For benefits from shifts in origin
and destination and from new movements, care
must be taken to identify whether such movement
would be likely to occur if waterway transportation
were available; base this information primarily on interviews. Give particular attention to delivered price
from substitute sources in the case of benefits from
53

(2) current levels of production, and (3) the
distribution of economic activity.

commodity flows can be adequately described
through the use of indices derived from OBERS
projections,
factors
such
as
increasing
environmental concerns, changes in international
relations and trade, resource depletion, and other
factors, may seriously alter the relationship between
waterway commodity flows and the economy
described by OBERS.
(c) If problems of the type described in
paragraph (b) of this section are identified,
undertake independent studies to ascertain the
most appropriate method of projecting commodity
flows. The assessment of available secondary data
forms the basis of these independent studies.
These data will assist in delineating the bounds on
the rate of increase for waterway traffic, as well as
facilitate a better understanding of the problem.
Supplement these data With (1 ) interviews of
relevant shippers, carriers, and port officials; (2)
opinions of commodity consultants and experts: and
(3) historical flow patterns. Commodity projections
can then be constructed on the basis of the results
of the independent studies.
(d) Generally, specific commodity studies are of
limited value for projections beyond approximately
20 years. Given this limitation, it is preferable to
extend the traffic projections to the end of project
life through the use of general indices on a regional
and industry basis. Such indices can be constructed
from the OBERS projections or other generally
accepted multi-industry and regional models.

(a) New waterways. In the case of rail movements,
use the prevailing rate actually charged for moving
the traffic to be diverted to waterways. For traffic
induced by the waterway construct the rail rate as in
step 5b.
(b) Existing waterways. Use rate and other price
data when available to estimate the cost of movement by alternative modes. In the case of rail
movements, if the rate for that movement is not now
used, use prevailing rates that are (1) competitive,
and (2) for movements similar to the individual move
that would occur without the project. Avoid the use of
paper rates, i.e., rates at which no significant amount
of traffic is actually moved. A rate is "competitive" to
the extent that it is for traffic for which there is
intramodal or intermodal competition within the
relevant markets. In identifying a ‘similar’ movement,
the factors considered may include geographic
location, degree of use, characteristics of terrain,
back haul, contract division, seasonality, ownership
of rolling stock, and physical rail connection to the
shipper. It is the responsibility of the analyst to select
rates that, in his or her view, best represent the
long-run marginal costs of the movement. Cost
estimates for particular movements may be useful in
selecting the rate or rates that best meet the criteria
of competitiveness and similarity. If more than one
competitive and similar rate is identified, an average
may be used. Assume that all water-compelled or
water-competitive rates are competitive and similar.

2.6.11 Evaluation procedure: Step 7—
Determine future cost of alternative modes.

2.6.10 Evaluation procedure: Step forecast
potential waterway traffic by commodity.

(a) Future cost per unit of each commodity will
normally be the same as current cost. As stated in
2.6.3(a)(5), the without-project condition normally
assumes that the alternative modes have sufficient
capacity to move traffic at current rates unless there
is specific evidence to the contrary. This step
combined with step 6 provides a time series of
demand schedules specific to a particular commodity origin-destination pattern. Address the projection
of any change in future prices as indicated below.
(b) A future rate is a prevailing rate as defined in
step 5. It reflects exclusively a shift in rates because
of projected changes in the volume of shipments on
a given mode or a shift from one mode to another
(e.g., from rail to pipeline). To support such a shift,
show that the increase in volume is likely to lead to
a change in rate; do not assume, for example, that
an increase in volume of traffic of a commodity
from one area to another will automatically ensure
a more favorable high-volume rate.

Develop projections of the potential use of the
waterway under study for selected years from the
time of the study until the end of the project life, over
time intervals not to exceed 10 years. Document
commodity projections for the commodity groups
identified in step 3.
(a) The usual procedure for constructing commodity projections is to relate the traffic base to
some type of index over time. Indices can be constructed by many different methods, depending on
the scope and complexity of the issue under consideration and the availability of data and previous
studies.
(b) Generally, OBERS projections are the demographic framework within which commodity
projections are made. There are many instances,
however, in which a direct application of
OBERS-derived indices is clearly inappropriate.
Frequently, there are circumstances that distort the
relationship between waterway flows and the
economy described by OBERS. Even when total
54

2.6.12 Evaluation procedure: Step 8
Determine future cost of waterway use.

—

2.6.14
Evaluation procedure: Step 10 —
Compute NED benefits.

Two separate analyses make up this step. First,
analyze the possibility of changes in the costs of the
waterway mode for future years for individual
origin-destination
commodity
combinations.
Second, analyze the relationship between waterway
traffic volume and system delay. Do this second
analysis in the context of the total volume of traffic
on the waterway segments being studied for withand without-project conditions. This analysis will
generate data on the relationship between total
traffic volume and delay patterns as functions of the
mix of traffic on the waterway; it may be undertaken
iteratively with step 9 to produce a "best estimate."

Once the tonnage moving with and without a
plan is known and the alternative costs and waterway costs are known, total NED navigation
benefits can be computed at the applicable
discount rate:
(a) For cost reduction benefits, the benefit is the
reduction in cost of using or operating the waterway; the cost of the alternative mode is a factor in
determining whether the tonnage would move both
with and without the project but is not a factor in
computing benefits. Cost reduction benefits are
generally limited to evaluation of existing waterways. The benefits for current and future cost reductions are reflected by the difference in
waterway costs (steps 4 and 8) with and without
the project. Compare waterway cost data (steps 4
and 8) with the alternative mode costs (steps 5 and
7) in order to determine the traffic flow by mode
over time (steps 3 and 6).

2.6.13 Evaluation procedure: Step 9—
Determine waterway use, with and without
project.
At this point the analyst will have a list of commodities that potentially might use the waterway
segment under study, the tonnages associated with
each commodity, and the costs of using alternate
modes and the waterway, including system delay
functions with and without the project over time. Use
this information to determine waterway use over
time with and without the project based upon:

(b) For shift of mode benefits, the benefit is the
reduction in costs when the alternative movement
is compared with the waterway. These benefits
apply to new or existing waterways. Cost differences between the alternative mode and the
waterway mode (step 5—step 4 x step 3 and step
7—step 8 x step 6) will identify the shift of mode
benefits over time.

(a) A comparison of costs for movements by the
waterway and by the alternative mode, as modified
by paragraph (b) of this section.

(c) For shift of origin-destination benefits and
new movement benefits, the benefit is the value of
the delivered product less the transportation and
production costs with the project. The transportation cost without the project (assuming the
with-project movement would have occurred) is a
factor in categorizing these benefits but is not a
factor in computing them. The upper limit of these
benefits can normally be determined by computing
reduction in transportation charges achieved by
the project. These can be a reduction in waterway
costs (steps 4 and 8) with and without the project
or changes in mode (step 5—step 4 and step
7—step 8).

(b) Any changes in the cost functions and
demand schedules comparing (1) the current and
future without-project conditions and (2) the current
and future with-project condition. Conceptually, this
step should include all factors that might influence
a demand schedule; e.g., impact of uncertainty in
the use of the waterway; ownership of barges and
special equipment; level of service; inventory and
production processes; and the like. As a practical
matter, the actual use of a waterway without a cost
savings or nonuse of a waterway with a cost savings
depends on the knowledgeable judgment of
navigation economists and industry experts.

2.6.15 Evaluation procedure: Problems in
application.

(c) Account for the ‘phasing in’ or ‘phasing out’ of
shifts from one mode to another in the analysis.
Base diversion of traffic from other modes to the
waterway, and from the waterway to other modes
as the waterway becomes congested, on expected
rate savings as adjusted by any other factors affecting the willingness of users to pay or the speed
of the response mechanism to changes in the relative attractiveness of alternative modes. Specifically,
determine diversions from congested waterways in
the order of the willingness of users to pay for
waterway transportation. Divert users with the
lowest willingness to pay first.

(a) Changes in system delays. Differences in
system delays resulting from project alternatives
are difficult to compute. An assessment of system
delays within the state of the analytic art is necessary for a comprehensive benefit analysis. Delays
at all points in the system should be analyzed only
to the extent that project formulation and
evaluation are sensitive to such refinements, and
to the extent that the state of the art permits
accurate refinement of the estimate. Appropriate

55

proxy measures may be used in lieu of individual
assessments at each element in the system when
evaluating system delays.

alternative on the basis of tonnage over time, current rates (step 3), and current fleet
characteristics.

(b) Interaction of supply and demand schedules.
The entire evaluation procedure (2.6.4 through
2.6.15) is based on an assumption that the supply
and demand schedules are independent; but in
fact, they are not. This problem is most acute when
considering the variance in delays at high levels of
lock utilization. Essentially, shippers will face not an
expected delay value but rather a highly uncertain
delay value. Shippers' response to uncertainty (as
reflected in the demand schedule) may be quite different from their response to an expected shipping
cost (as reflected by the intersect of the supply and
demand schedules).

(iii) Growth beyond 20-year period. Compute
the benefits for alternatives carried forward for final
display assuming no growth in tonnage or changes
in fleet characteristics or costs beyond 20 years in
the future.
(iv) Interest rate. For projects whose authorized
discount rate is different from the current discount
rate, compute annualized benefits using the
current rate.
(v) User charges. Estimate the effect on
benefits of full cost recovery through user charges.
(2) Other. In addition, the report should contain
such other sensitivity analyses as are necessary to
meet the objective of a clear, concise report presenting a range of benefit levels that represent
data and assumptions about which reasonable
persons might differ.

(c) User fee collection. The incremental collection
of user charges, fees, or taxes is not a NED benefit.
It is a transfer of resources between the private and
public sectors of the economy, manifesting itself as
resources committed to the proposed navigation
system. The increased collection of these charges,
fees, or taxes is therefore considered a decrease in
the public sector's contribution to the proposed
system.

(e) Data sources. The following discussion
summarizes key data sources, including problems
in their use.
(1) Interviews. Interview data may be used in
steps 1 through 9. (Use only forms approved by
the Office of Management and Budget.) Collect
data not available from secondary sources by
personal intervals. Use statistically sound
techniques for selecting the interview sample and
for devising the questions. The questionnaire and
a summary of responses should be compiled and
displayed in the final report in such a way as to
prevent the disclosure of individual sources.
Describe the errors and uncertainty inherent in the
sampling methods and responses.

(d) Sensitivity analysis. Project benefits are
calculated on the basis of ‘the most probable’
with-project and without-project conditions.
However, risk and uncertainty should be addressed
in the analysis of NED benefits and costs. In
particular, major uncertainty exists in the proper
measure of savings to shippers, namely the
difference in long-run marginal costs. To the extent
that rates or other prices vary from long-run
marginal costs, savings to shippers will contain a
component of transfers varying from real resource
savings. This element of uncertainty should always
be identified or acknowledged in estimates of
benefits. In dealing with uncertainty, three
techniques may be used: establishing consistent
sources of data, expanding the data-gathering, and
estimating the range of benefits. Use the following
two specific approaches to implement the third
technique, and display the results in terms of their
effects on project benefits in tabular form in the
project report.

(2) Other. The basic organizational source for
systematically collected waterway data is the
Office of the Chief of Engineers.
2.6.16 Report and display procedures.
Clear presentation of study results, as well as
documentation of key input data assumptions and
steps in the analysis, will facilitate review of the
report. Tables 2.6.16-1 through 4 are suggested
presentations for all reports that include
navigational objectives. In addition to detailed data
on the NED benefits of a project, summary tables
may present useful information on other aspects of
the project such as its impact on commodity flows
on other modes of transportation, and on the
location of economic activity. See the following
sample tables.

(1) Prespecified sensitivity analysis. Compute the
following and include in the report:
(i) Current tonnage, new waterway. For new waterways, compute benefits for the recommended alternative on the basis of current phased-in tonnage
(steps 3 and 9c), current rates, and current fleet
characteristics.
(ii) Current rates, fleet. For both new and existing
waterways, compute benefits for the recommended

56

Table 2.6.16—1 Summary of Annualized NED Benefits and Costs for Alternative Projects
[Applicable discount rate: ——]

Alternatives
2
3

1

.....................
.....................
.....................
.....................
.....................

X

Navigation benefits.......................................................................................
Cost reduction benefits.................................................................................
Shift of mode benefits.....................................................................................
Shift in origin-destination benefits ................................................................
New movement benefits.............................................................................

.....................
.....................
.....................
.....................
.....................

.....................
.....................
.....................
.....................
.....................

......................
......................
......................
......................
......................

Total navigation benefits......................................................................
Other purpose benefits (list)..........................................................................

..................... ..................... ..................... ......................
..................... ..................... ..................... ......................

Total project benefits..........................................................................
Project costs......................................................................................

..................... ..................... ..................... ......................
..................... ..................... ..................... ......................

Net benefits........................................................................................

..................... ..................... ..................... ......................

Table 2.6.16—2 Time Phasing of NED Benefits for Recommended Project

1

[Applicable discount rate: ——]
Time period
Decade2

Base Years
(specify)

1

2

3

4

5

AAE3

Navigation benefits:
Cost reduction benefit:
Traffic volume (103 tons/year).............
Benefits...............................................
Shift of mode benefit:
Traffic volume (103 tons/year)............
Benefits..............................................
Shift in origin-destination benefit:
Traffic volume (103 tons/year).............
Benefits...............................................
New movement benefit:
Traffic volume (103 tons/year).............
Benefits..............................................

................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................. .................. ................. .................

Total navigation benefits.............................
Other purpose benefits...................................

................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................ ................. ................. .................

................. ................. ................... ................. ................ ................ ................
................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................. ................. ................. .................
................. ................. ................. ................ ................. ................. .................

Total project benefits..................................... .................. .................. .................. .................. .................. .................. ..................
1
2
3

Comparable tables may be made for all detailed alternatives.
Value for last year of decade.
Average annual equivalent.

Table 2.6.16—3 Waterway Traffic and Delays, Without Project Condition
[Applicable discount rate: ——]
Time period
Current
year
Waterway traffic (103 tons/year)......................
(By major commodity group)......................
Delays (minutes/tow)
Study site......................................................
Critical constraints........................................
Total system..........................................

Base
Years
(specify)

Decade1
1

2

3

4

5

AAE2

............. ............... ........... ............ ............ ............ ............

............

................ ................. ............ ............ ............ ............ ............
................ ................. ............ ............ ............ ............ ............

............
............

.............. ................ ............ ............ ............ ............ ............

............

57

Table 2.6.16—3 Waterway Traffic and Delays, Without Project Condition - Continued
Time period
Current
year
Delays (dollars/ton):
Study site......................................................
Critical constraints........................................

Decade1
1

2

3

4

AAE2

5

............... ................ ............ ............ ......... ............ ..........
................ ............... ............ .............. .......... .............. ............

............
..............

.............. ................ ............ ............ ......... ............ ..........

............

Total system.............................................
1
2

Base
Years
(specify)

Value for last year of decade.
Average annual equivalent.

Table 2.6.16—4 Waterway Traffic and Delays, With Recommended Project

1

Time period
Base
Year

Decade2
1

2

3

4

5

AAE3

Waterway traffic (103 tons/year)......................................
(By major commodity group).....................................

............... ............ ............ ............ ............ ............
................ ............ ............ ............ ............ ............

............
............

Delays (minutes/tow)
Study site.......................................................................
Critical constraints.........................................................

................. ............ ............ ............ ............ ............
................. ............ ............ ............ ............ ............

............
............

Total system...................................................................

............... ............ ............ ............ ............ ............

............

Delays (dollars/ton):
Study site...................................................................
Critical constraints...........................................................

................ ............ ............ ............ ............ ............
............... ............ ............ ............ ............ ............

............
................

............... ............ ............ ............ ............ ............

............

Total system.........................................................
1
2

Comparable tables may be made for all detailed alternatives.
A value for last year of decade.
Average annual equivalent.

3

2.7.2 Conceptual basis.

Section
VII—NED
Benefit
Evaluation
Procedures:
Transportation
(Deep-Draft
Navigation)

The basic economic benefits from navigation
management and development plans are the
reduction in the value of resources required to
transport commodities and the increase in the
value of output for goods and services. Specific
transportation savings may result from the use of
larger vessels, more efficient use of large vessels,
more efficient use of existing vessels, reductions in
transit time, lower cargo handling and tug
assistance costs, reduced interest and storage
costs such as from an extended navigation
season, and the use of water transportation rather
than an alternative land mode. Principal direct
benefits are categorized as follows:

2.7.1 Introduction.
This subpart presents the procedure for measuring the beneficial contributions to national economic development (NED) associated with the deep
draft navigation features of water resources plans
and projects. Deep-draft navigation features
include construction of new harbors and channels
and improvements to existing or natural harbors on
the sea coasts to meet the requirements of oceangoing and Great Lakes shipping. Harbor improvements include such structural projects as the construction of breakwaters and jetties to protect exposed harbors and the provision of entrance channels, interior channels, turning basins, and anchorage areas. Non-structural deep-draft measures include improved traffic management and pilotage
regulations.

(a) Cost reduction benefits. If there is no
change in either the origin or destination of a
commodity, the benefit is the reduction in
transportation costs of quantities of the
commonalty that would move with and without the
plan resulting from the proposed improvement.
58

Cost reduction benefits apply in the following
situations:

2.7.3 Planning setting.
The planning setting consists of the physical,
economic, and policy conditions that influence and
are influenced by a proposed plan or project over
the planning period. The planning setting is
defined in terms of a without-project condition and
with-project condition.

(1) Same commodity, origin-destination, and
harbor. This situation occurs where commodities
now move or are expected to move via a given
harbor with or without the proposed improvement.
(2) Same commodity and origin-destination, different harbor. This situation occurs where
commodities that are now moving or are expected
to move via alternative harbors without the
proposed improvement would, with the proposed
plan, be diverted through the subject harbor. Cost
reduction benefits from a proposed plan apply to
both new and existing harbors and channels.

(a)
Without-project
condition.
The
without-project condition is the most likely
condition expected to exist over the planning
period in the absence of a plan, including any
known change in law or public policy. It provides
the basis for estimating benefits for alternative
with-project conditions. Assumptions specific to the
study should be stated and supported. The basic
assumptions for all studies are:

(3) Same commodity and origin-destination, different mode. This situation occurs where commodities that are now moving or are expected to move
via alternative land modes without the proposed
improvement would, with the proposed plan, be diverted through the subject harbor or channel. Cost
reduction benefits from a proposed plan apply to
both new and existing harbors and channels. Compute cost reduction benefits for alternate modes in
accordance with Section Vl (See 2.6.2(e)).

(1) Nonstructural measures within the authority
and ability of port agencies, other public agencies,
and the transportation industry determine changes
that are likely to occur. These measures consist of
reasonably expected changes in management and
use of existing vessels and facilities on land and
water. Examples are lightering, tug assistance, use
of favorable tides, split deliveries, topping-off, alternative modes and ports, and transshipment facilities.

(b) Shift of origin benefits. If there is a change in
the origin of a commodity as a result of a proposed
plan but no change in destination, the benefit is the
reduction in the total cost of producing and transporting quantities of the commodity that would
move with and without the plan.

(2)
Alternative
harbor
and
channel
improvements available to the transportation
industry over the planning period include those in
place and under construction at the time of the
study and those authorized projects that can
reasonably be expected to be in place over the
planning period.

(c) Shift of destination benefits. If there is a
change in destination of a commodity as a result of
a proposed plan but no change in origin, the
benefit is the change in net revenue to the
producer for quantities that would move with and
without the plan.

(3) Authorized operation and maintenance is
assumed to be performed in the harbors and
channels over the period of analysis unless clear
evidence is available that maintenance of the
project is unjustified.

(d) Induced movement benefits. If a commodity
or additional quantities of a commodity are produced and consumed as the result of lowered
transportation costs, the benefit is the value of the
delivered commodity less production and transportation costs. More precisely, the benefit of each increment of induced production and consumption is
the difference between the cost of transportation
via the proposed improvement and the maximum
cost the shipper would be willing to pay. Where
data are available, estimate benefits for various increments of induced movement. In the absence of
such data, the expected average transportation
costs that could be borne by the induced traffic
may be assumed to be half way between the
highest and lowest costs at which any part of the
induced traffic would move.

(4) In projecting commodity movements
involving intermodal movements, sufficient
capacity of the hinterland transportation and
related facilities, including port facilities, is
assumed unless there are substantive data to the
contrary.
(5) A reasonable attempt should be made to reflect advancing technology affecting the
transportation industry over the period of analysis.
However, the benefits from improved technology
should not be credited to the navigation
improvement if the technological change would
occur both with and without the plan.
(b) With-project condition. (1) The with-project
condition is the one expected to exist over the
period of analyses if a project is undertaken. Describe the with-project condition for each
59

alternative plan. Since benefits attributable to each
alternative will generally be equal to the difference
in the total transportation costs with and without the
project, the assumptions stated for the
without-project condition are used to establish the
with-project condition for each alternative.

planning setting to be projected over the period of
analysis. Discuss the rationale for selecting these
elements.
(3) Present the with and without project conditions in appropriate tabular and graphic displays
with respect to the elements selected as in paragraph (c)(2) of this section and as exemplified by
Tables 2.7.6-1, -4, and -5.

(2) Management practices that are sometimes
within the discretion of a public entity and are
therefore subject to change in the with condition include traffic management, pilotage regulations,
addition of berths, and additions or modifications to
terminal facilities.

2.7.4 Evaluation procedures.
Use the following steps to estimate navigation
benefits. The level of effort expended on each step
depends upon the nature of the proposed
improvement, the state-of-the-art for accurately
refining the estimate, and the sensitivity of project
formulation and evaluation to further refinement. A
flowchart of navigation evaluation procedures is
shown in Figure 2.7.4.

(c) Display. In the planning report, present the
derivation and selection of with- and
without-project conditions in accordance with the
following guidelines:
(1) State the assumptions specific to the study.
(2) Specify the significant technical, economic,
environmental, social, and other elements of the

60

Figure 2.7.4
Flow Chart of Deep Draft
Navigation Benefit Evaluation Procedures

1. Determine economic study area

4. Determine vessel fleet
composition and cost

2. Identify commodity types

3. Project waterborne commerce

5. Determine current commodity
movement cost

6. Determine alternative
movement cost

7. Determine future commodity
movement cost

8. Determine harbor use
with and without project

9. Compute NED benefits

(a) Step 1—Determine the economic study area.
Delineate the economic study area that is tributary to
the proposed harbor and channel improvement.
Assess the transportation network functionally related to the studied improvement, including the types
and volumes of commodities being shipped, in order
to determine the area that can be served more
economically by the improvement. Include foreign
origins and destinations in this assessment. Consider
diversion from or to adjacent competitive harbors as
well as distribution via competing modes of transport.
It should be recognized that the lines of demarcation
for the economic study area are not fixed and that
the area may expand or contract as a result of
innovations
or
technological
advances
in
transportation and/or production or utilization of a
particular commodity. The economic study area is
likely to vary for different commodities. Combinations
of economic areas will result in a trade area
delineated specifically for the improvement under
study. However, in many cases, due to the close
proximity of adjacent harbors to the proposed improvement, the economic study area may be the
same as, or overlap with, such adjacent harbors.
Therefore, in the final delineation of the economic
study area for a given improvement, there should be
adequate discussion of the trade area relative to
adjacent ports and any commonality that might exist.
(b) Step 2 - Identify types and volumes of commodity flow. To estimate the types and volumes of
commodities that now move on the existing project or
that may be attracted to the proposed improvement,
analyze commerce that flows into and out of the
economic study area. This analysis provides an
estimate of gross potential cargo tonnage; the estimate is refined to give an estimate of prospective
commerce that may reasonably be expected to use
the harbor during the period of analysis in light of
existing and prospective conditions. If benefits from
economics of ship size are related to proposed
deepening of the harbor, the analysis should concentrate on the specific commodities or types of
shipments that will be affected. Thus, an historical
summary of types and trends of commodity tonnage
should be displayed. The considerations generally
involved in estimating current volumes of prospective
commerce are:
(1) If the plan consists of further improvements to
an existing project, statistics on current waterborne
commerce will provide the basis for evaluation. For
new harbors with no existing traffic, or for existing
commodity movements that may be susceptible to
diversion from adjacent harbors, basic information is
collected by means of personal interviews or
questionnaires sent to shippers and receivers
throughout the economic study area. Secondary
commercial data are usually available through State
and local public agencies, port records, and trans-

portation carriers. In the case of new movements,
give attention to resource and market analyses.
(2) After determining the types and volumes of
commodities currently moving or expected to move
in the economic study area, it is necessary to obtain
origins, destinations, and vessel itineraries in order to
analyze the commodity types and volumes that are
expected to benefit from the proposed improvement.
Commodities that are now moving without the project
but that would shift origins or destinations with the
project, as well as induced movements, should be
segregated for additional analysis (see steps 5 and
6). A study should be made of various alternatives
for the existing traffic and of new traffic susceptible to
diversion from alternative harbors or other modes of
transportation. The objective of such a study is to
determine the type and volume of those
commodities for which savings could be affected by
movement via a proposed navigation improvement
and the likelihood that such movements would
occur. Cost reduction benefits sufficient to divert
traffic from established distribution patterns and
trade routes are navigation project benefits. In
determining the likelihood of prospective commerce,
particular attention should be given to alternative
competitive harbors in the case of new movements
and to hinterland traffic. Elements of analysis of
current tonnage include: size and type of vessel,
annual volume of movements, frequency of
movements, volume of individual shipments,
adequacy of existing harbor and transportation
facilities, rail and truck connections, and service
considerations. Generally this prospective traffic is
the aggregate of a large number of movements
(origin-destination pairs) of many commodities; the
benefit from the navigation project is the savings on
the aggregate of these prospective movements.
(c) Step 3 - Project waterborne commerce. Develop projections of the potential use of the waterway
under study for selected years from the time of the
study until the end of the project life, over time
intervals not to exceed 10 years. Document commodity projections for the commodity groups identified in step 2.
(a) The usual procedure for constructing commodity projections is to relate the traffic base to
some type of index over time. Indices can be constructed by many different methods, depending on
the scope and complexity of the issue under consideration and the availability of data and previous
studies.
(b) Generally, OBERS Projections are the demographic framework within which commodity
projections are made. There are many instances,
however, in which a direct application of
OBERS-derived

62

indices is clearly inappropriate. Frequently, there are
circumstances that distort the relationship between
waterway flows and the economy described by
OBERS. Even when total commodity flows can be
adequately described through the use of indices
derived from OBERS projections, factors such as
increasing environmental concerns, changes in international relations and trade, resource depletion,
and other factors, may seriously alter the relationship
between waterway commodity flows and the
economy described by OBERS.

nages by trade areas both with and without the project
should be displayed at least for the study year, the
base year, fifth year, tenth year, and then by decades
over the period of the analysis.
(4) Most projections of waterborne commerce
are static estimates of dynamic events; therefore, the
projections should be sufficiently current to support
the report conclusions.
(d) Step 4 - Determine vessel fleet
composition and cost — (1) Vessel fleet composition.
Key components in the study of deep-draft harbor
improvements are the size and characteristics of the
vessels expected to use the project. Present data on
past trends in vessel size and fleet composition, and
on anticipated changes in fleet composition over the
project life. Use estimates of future fleet consistent
with domestic and world fleet trends. Undertake
studies to the extent necessary to determine the
appropriate vessel fleet. The assessment of available
secondary data forms the basis of the independent
studies. Data may be obtained from various sources
including the U.S. Department of Transportation
(Maritime Administration), trade journals, trade
associations, shipbuilding companies, and vessel
operating companies. Determine the composition of
the current and future fleet that would utilize the
subject harbor both with and without the proposed
improvement. Provide adequate lead time for
anticipated changes in fleet composition for vessels
that are currently a small part of the world fleet. Size
selection may vary according to trade route, type of
commodity, volume of traffic, canal restrictions,
foreign port depths, and lengths of haul. It may not be
realistic to assume that the optimum size vessel is
always available for charter; the preferred approach is
a fleet concept that includes a range of vessels
expected to call with and without the project. It is
suggested that tabulations in the report show
composition of vessel fleets by deadweight tonnage
for each type of vessel beginning with the current fleet
and by decades through the period of analysis.
Historical records of trips and drafts of vessels calling
at the existing project should also be displayed.

(c) If problems of the type described in paragraph
(b) of this section are identified, undertake independent studies to ascertain the most appropriate
method of projecting commodity flows. The assessment of available secondary data forms the basis of
these independent studies. These data will assist in
delineating the bounds on the rate of increase for
waterway traffic, as well as facilitate a better understanding of the problem. Supplement these data
with (1) interviews of relevant shippers, carriers, and
port officials; (2) opinions of commodity consultants
and experts; and (3) historical flow patterns.
Commodity projections can then be constructed on
the basis of the results of the independent studies.
(d) Generally, specific commodity studies are of
limited value for projections beyond approximately
20 years. Given this limitation, it is preferable to
extend the traffic projections to the end of project life
through the use of general indices on a regional and
industry basis. Such indices can be constructed from
the OBERS projections or other generally accepted
multi-industry and regional models. Describe
projection methods selected in sufficient detail to
permit a review of their technical adequacy.
(2) Sensitivity analysis of several levels of projections is used for the economic analysis. There may
be a high level projection embodying optimistic assumptions and a low level projection based on assumptions of reduced expectations. The high and
low projections should bracket the most foreseeable
conditions. The third and fourth levels of projections
can reflect the with- and without-project conditions
based on the most likely estimates of the future. If a
proposed plan would not induce commodity growth,
one level of projection may be shown for both the
with- and without-project conditions. (See Chapter I,
Supplement I).

(2) Vessel operating costs. To estimate transportation costs, obtain deep-draft vessel operating costs
for various types and classes of foreign and United
States flag vessels expected to benefit from using the
proposed improvement. Since vessel operating costs
are not readily available from ocean carriers or from
any central source, the Corps of Engineers, Water
Resources Support Center, will develop and provide
such costs on an annual basis for use in plan
evaluation. Planners should determine to what extent
these estimates of vessel costs must be modified to
meet the needs of local conditions. Document and
display selected vessel operating costs in the report.

(3) The commodities included in the projections
should be identified, if possible, according to the
following waterborne modes: containerized, liquid
bulk, dry bulk, break-bulk, etc. Projection-related
variables include estimated value, density, and perishability. The commodities should also be categorized by imports, exports, domestic shipments, domestic receipts, and internal trade. Projected ton63

(e) Step 5 - Determine current cost of
commodity movements. Determine transportation
costs prevailing at the time of the study for all
tonnage identified in Step 2. Transportation costs
include the full origin-to-destination cost, including
necessary handling, transfer, storage, and other
accessory charges. Construct costs for the withand without project condition. The without-project
condition is based on costs and conditions
prevailing at the time of the study. Transportation
costs with a plan reflect any efficiencies that can
be reasonably expected, such as use of larger
vessels, increased loads, reduction in transit time
and delays (tides), etc. Use competitive rates,
rather than costs, for competitive movements by
land (See 2.7.2(a)(3), 2.6.2(e), and 2.6.9(b)). This
concept also applies to Steps 6, 7, and 9 and
elsewhere where a Competitive movement by land
is an alternative.
(f) Step 6 - Determine current cost of alternative
movement. Determine transportation costs prevailing at the time of the study for all tonnage identified
in Step 2 for alternative movements. The cost includes the full origin-to-destination cost. Such
alternatives include competitive harbors, lightering,
lightening and topping-off operations, off-shore
port facilities, transshipment terminals, pipelines,
traffic management, pilot age regulations, and
other modes of transportation. Consider
competitive harbors with existing terminal facilities
and sufficient capacities as possible alternatives
for traffic originating in or destined to the hinterland
beyond the confines of the harbor and for all other
new commerce as well as all diverted traffic.
Commerce with final origins and destinations
within the confines of the study harbor is normally
noncompetitive with other harbors and need not be
considered for diversion unless unusual
circumstances exist. Diversion of established
commerce now moving through the existing harbor
to or from the hinterland is dependent on many
different cost and service factors; therefore, to
ensure that all of these factors are included in the
analysis, interviews, and consultations with
shippers and receivers should be conducted prior
to any determination concerning diversion of traffic.
Factors to be considered in the analysis include
transportation costs for both inland and ocean
movement, handling and transfer charges,
available service and schedules, carrier connections, institutional arrangements, and other related
factors. In addition, for commodities with shifts in
origins and destinations, as well as for new movements, collect data on the value of the delivered
product as well as production and transportation
costs for shipments with the project. The specific
data and method of collection will vary with the
specific situation and the nature of the benefit.

(g) Step 7 - Determine future cost of commodity
movements. Estimate relevant shipping costs
during the period of analysis and future changes in
the fleet composition, port delays, and port
capacity under the with- and without-project
conditions for each alternative improvement under
study. Base future transportation costs on the
vessel operating cost prevailing at the time of the
study. Additional data may be needed to analyze
the relationship between total volume and delay
patterns and the port capacity for the with- and
without-project conditions for each alternative.
Changes in costs due to the project should be
identified and separated from changes due to
other factors.
(h) Step 8 - Determine use of harbor and
channel with and without project. At this point, the
analyst will have a list of commodities that
potentially might use the proposed improvement;
potential tonnages of each commodity or
commodity group; transportation costs for
alternatives and for the proposed improvement;
and present and future fleet composition with and
without the proposed plan. To estimate the
proposed harbor use over time, both with and
without the project, compare costs, other than
project costs, for movements via the proposed
plan and via each alternative. Analyze any
changes in the cost functions and demand
schedules in the current and future without
condition and the current and future with condition.
Conceptually, this step includes all factors that
might influence a demand schedule. Determine
the impact of uncertainty in the use of the harbor,
the level of service provided, and existing and
future inventories of vessels. Provide adequate
lead time for adoption for vessels that are currently
a small percentage of the world fleet.
(i) Step 9 - Compute NED benefits. Once the
tonnage moving with and without a plan is known
and the cost via the proposed harbor and via each
alternative are known, compute total NED
navigation benefits will be computed using the
applicable discount rate.
(1) Cost reduction benefits. (i) Traffic with same
commodity, origin-destination, and harbor. For traffic now using the harbor or expected to use it, both
with and without the proposed project, the
transportation benefit is the difference between
current and future transportation cost for the
movement by the existing project (without-project
condition) and the cost with the proposed
improvement (with-project condition) .
(ii) Traffic with same origin-destination; different
harbor. For commerce shifted to the proposed improvement from other harbors or alternatives, including future growth, the benefit is any reduction
in current and future costs when movement via the

64

proposedimprovementiscomparedwitheachalternative.
(iii) Traffic with same commodity and
origin-destination, different mode. For commerce
shifted to the proposed improvement from other
modes, the benefit is any reduction in current and
future costs to the producer or shipper. (See
2.7.2(a)(3)) when movement via the proposed
improvement is compared with each alternative.)
(2) Shift of origin benefits. For commerce that
originates at a new point because of the proposed
improvement, the benefit is the difference between
the total cost of producing and transporting the
commodity to its destination with and without the
plan.
(3) Shift of destination benefits. For commerce
that is destined to a new point because of the proposed improvement, the benefit is the difference in
net revenues to producers with and without the
plan.
(4) Induced movement benefits. If a commodity
or additional quantities of commodity are produced
and consumed as a result of a plan, the benefit for
each increment of induced production and consumption is the difference between the cost of
transportation via the proposed improvement and
the maximum cost the shipper would be willing to
pay. To determine the maximum cost the shipper
would be willing to pay, estimate how much of a
price increase it would take to induce the producer
to increase its output by each increment or how
much of price decrease it would take to induce
consumers to increase their consumption by each
increment. In the absence of data suitable for
incremental analysis, the expected average
transportation costs that could be borne by the
induced traffic may be assumed to be half way
between the highest and lowest costs at which any
part of the induced traffic would move.

attempt to shorten the analysis to the most
relevant cost items.
(c) Sensitivity analysis. Guidance for addressing
risk and uncertainty in the analysis is found in Supplement I to Chapter I. The uncertainty in the estimates of critical variables should be dealt with.
These variables specifically related to deep-draft
navigation may be traffic projections, especially
foreign shipments, fleet composition, and cost of
commodity movements.
(d) Data sources. The following discussion summarizes key data sources including problems in
their use:
(1) Interviews. Collect data not available from
secondary sources by personal interviews. (Use
only interview forms approved by the Office of
Management and Budget.) Display the questionnaire used and a summary of responses in the
project report in such a way that individual sources
are not disclosed.
(2) Publications. Data concerning commerce in
foreign trade, United States coastal shipping, and
activities of U.S. flag vessels in foreign trade, together with limited data concerning the world fleet,
are readily available from a number of Federal
agencies, trade journals, and port publications.
However, data concerning the foreign-flag fleet are
often not regularly available in up-to-date form
from sources in the United States. Principal
governmental sources are the Corps of Engineers,
the Maritime Administration and the Bureau of the
Census. For more detailed background on world
fleet trends, shipping outlooks, and vessel
characteristics, available foreign literature must be
carefully analyzed. A few of the available foreign
ship registers and literature are listed below to
illustrate the type of data available from foreign
sources.

2.7.5 Problems in application.

Lloyd's Register of Shipping, London (Annual).
The Tanker Register, H. B. Clarkson (Annual).
The Bulk Carrier Register, H. B. Clarkson
(Annual).
Shipping Statistics and Economics (and special
reports), H. P. Drewry, Ltd., London (Weekly).
Fairplay International Shipping Journal (and special reports), London (Weekly).

(a) Multiport analysis. This procedure calls for a
systematic determination of alternative routing possibilities, regional port analyses, and intermodal
networks that may require the use of computer
modeling techniques. The data needed for such a
determination are often difficult to obtain;
therefore, interviews with knowledgeable experts
will often have to be relied upon.
(b) Ultimate origins and destinations. The
procedure calls for an analysis of full
origin-destination costs to determine routings as
well as to measure benefits in some instances.
Problems will arise in determining the ultimate
origins and destinations of commodities and in
determining costs. Therefore, the analyst should

2.7.6 Report and display procedures.
Clear presentation of study results, as well as
documentation of assumptions and steps in the
analysis, will facilitate review of the report. The accompanying tables are suggested. The number of
displays will depend on the complexity of the study.
65

a

Table 2.7.6—1 Projected Vessel Fleet Size Distribution, -- Ft. Channel Plan
[By percentage]
Vessel size
(D.W.T.)

Percentage of tonnage

Currentb

c

Base Year
Year 5
With project

Year 10

Year 20

Year —

Year end

Total
Without project
Total
a
Size distribution should be made separately, as follows: 1. For foreign and US flag fleets. 2. For vessel types. 3.For trade routes (where
distances,
constrictions or other circumstances indicated varying sized vessel fleets). 4. For year project plan.
b
Study year.
c
First year of project benefits.

Table 2.7.6—2 Typical Vessel Dimensions of Vessel Fleet by Type and Deadweight Tonnage
Vessel characteristics

Type

DWT

Length

Beam

Draft, loaded

1

Table 2.7.6—3 Computation of Annual Transportation Costs for ------Foot channel
D.W.T. group

Tonnage carried
Percent Volume

(000)

Unit
cost

Foot channel
Total
cost

Tonnage carried
Percent Volume

(000)

Unit
cost

Foot channel
Total
cost

Tonnage carried
Percent Volume

(000)

Unit
cost

Total
cost

(000)

Total ..........................
1

Similar computations should be included for major commodity movements

Table 2.7.6—4 Projected Commerce for Deep-Draft Traffic
Commodity1

Current
Year 2

Base
Return
Year 3

Year 5

Year 10
With project

Without project

1
Commodities
2
Study area
3

should be categorized by trade area

First Year of project benefits

66

Year 20

Year —

Year —

Year end

Average
Annual

Table 2.7.6—5 Projected Vessel Trips for Deep-Draft Traffic
Vessel type 1

Current
Year 2

Base
Return
Year 3

Year 5

Year 10

Year 20

Year—

Year —

Year end

Average
Annual

With project

Without project

1
Show
2
Study
3

projected vessel trips by type of vessel and total for project life.
year.
First Year of project benefits.

(2) Many proposed projects subject to NED
benefit-cost analysis involve both recreation gains
and recreation losses. For example, stream and
land-based recreation may be lost because of the
project, or recreation may be transferred to the
proposed site from a more distant site. Net
recreation benefits are the value of the gains
minus the value of the losses; benefits may be
positive or negative. Since reliable empirical
methods for estimating willingness to accept
compensation for losses have not been
developed, measures of willingness to pay are
used to value both gains and losses. Evaluation
procedures should be based on sound economic
rationale and have an empirical basis that permits
an objective and reproducible analysis of benefits
and costs.

Section
Vlll—NED
Benefit
Evaluation Procedures: Recreation
2.8.1 Introduction.
This section provides the procedures for
evaluating the beneficial and adverse effects of
water project recreation on national economic
development (NED). The Federal Water Project
Recreation Act of 1965 (Pub. L. 89-72) requires
that full consideration be given to the opportunities
that Federal multiple-purpose and other water
projects afford for outdoor recreation and
associated fish and wildlife enhancement.

2.8.2 Conceptual basis.

(b) Criteria for an acceptable evaluation procedure. An acceptable evaluation procedure has the
following characteristics:

(a) General. (1) Benefits arising from recreation
opportunities created by a project are measured
terms of willingness to pay. Benefits for projects
(or project features) that increase supply are
measured as the willingness to pay for each
increment of supply. Benefits for projects (or
project features) that alter willingness to pay (e.g.,
through quality changes) are measured as the
difference between the without- and with-project
willingness to pay. Willingness to pay includes
entry and use fees actually paid for site use plus
any unpaid value (surplus) enjoyed by consumers.
(Payment for equipment, food, transportation
costs, or lodging associated with recreation activity
cannot be used as direct estimates of willingness
to pay, because these payments are not
specifically for site use). The total willingness to
pay is represented as the area under the demand
curve between the old and new supply. Because
most recreation is publicly provided, it is usually
not possible to estimate demand directly from
observed price-consumption data. This section
describes procedures for estimating use and
willingness to pay by means of travel behavior,
user surveys, and other quantifiable measures.

(1) Evaluation is based on an empirical estimate
of demand applied to the particular project.
(2) Estimates of demand reflect the socioeconomic characteristics of market area populations,
qualitative characteristics of the recreation resources under study, and characteristics of
alternative existing recreation opportunities.
(3) Evaluation accounts for the value of losses or
gains to existing sites in the study area affected by
the project (without-project condition).
(4) Willingness to pay projections over time are
based on Protected changes in underlying
determinants of demand.
(c) Description of evaluation methods. The
procedures described in this section and its
appendices incorporate three evaluation methods.
They are the travel cost method (TCM), contingent
valuation method (CVM), and unit day value (UDV)
method.

67

The use of any other method should be justified as
Conforming to the Characteristics listed in 2.8.2(b)
and the selection process described in 2.8.2(d).

categories of project-related use: (1) total or gross
expected use of project facilities, including transfers
of use from other sites: (2) and existing site use
displaced or destroyed by project facilities. The criteria for selecting the appropriate procedure for each
use category are set out in Figure 2.8.2. Application
of the criteria may result in selection of different
procedures for the two categories. The criteria given
in Figure 2.8.2 consider several dimensions of
project evaluation situations: Three measures of the
absolute and relative size of the recreation benefit
created, displaced, or transferred by the proposed
project, and the nature of the recreation activities
affected. If either use category specified above
involves more than 750,000 annual visits, use either
a regional model or site-specific study to evaluate
benefits or benefits foregone. If recreation is an
important project component relative to other outputs
and costs, or if specialized activities (those for which
opportunities in general are limited, intensity of use is
low, and users skill, knowledge, and appreciation is
great) are affected, the criteria also require greater
accuracy in benefit estimates. If both specialized
activities and general recreation are affected by the
project, the choice between a regional model and a
more limited site-specific study is at the discretion of
the agency, based on consideration of the relative
importance of the specialized activity, the
advantages of the respective methods, and cost
considerations.

(1) Travel cost method. The basic premise of the
travel cost method is that per capita use of a recreation site will decrease as out-of-pocket and time
costs of traveling to the site increase, other variables
being constant. TCM, consists of deriving a demand
curve by using the variable costs of travel and the
value of time as proxies for price. This method may
be applied to a site-specific study or a regional
model.
(2) Contingent valuation method. The contingent
valuation method estimates NED benefits by directly
asking individual households their willingness to pay
for changes in recreation opportunities at a given
site. Individual values may be aggregated by
summing willingness to pay for all users in the study
area. This method maybe applied to a site-specific
study or a regional model.
(3) Unit day value. The unit day value method
relies on expert or informed opinion and judgment to
estimate the average willingness to pay of recreation
users. By applying a carefully thought-out and
adjusted unit day value to estimated use, an approximation is obtained that may be used as an estimate of project recreation benefits.
(d) Selection of evaluation procedure. Select a
procedure for evaluating each of the following two

68

Figure 2.8.2——Criteria for Selecting Procedures for Evaluating
Recreation Benefits

69

2.8.3 Planning setting.

without-project condition provide the basis for the
with-project condition. Analysis of the with-project
condition considers recreation opportunities that
will be diminished in quality or quantity because of
project development and operation. This will be
accomplished in assessing the use of the
proposed recreation development.

(a) General. Determine changes in recreation
use and value resulting from alternative plans
through analysis of without-project and with-project
conditions in the study area over the prescribed
period of analysis.
(b)
Without-project
condition.
The
without-project condition is the pattern of
recreation activity expected to prevail over the
prescribed period of analysis in the absence of the
recreation project or plan. The without-project
condition includes existing water and related land
recreation resources, and projects and additional
recreation resources currently being developed or
both authorized and likely to be developed during
this period.

2.8.4 Evaluation procedure: General.
Use the following procedure to determine the
benefit from recreation resource use with a plan or
project. (See Figure 2.8.4.) The benefit is based on
the gross value of recreation use of the resource
for the with-project condition less the gross loss in
recreation use caused by the project or plan. The
recreation benefit is measured in nine steps. The
level of effort expended on each step depends on
the nature of the proposed improvement, the state
of the art for accurately refining the estimate. and
the sensitivity of project formulation and
justification to further refinement.

(c) With-project condition. The with-project
condition is the pattern of recreation activity
expected to prevail over the prescribed period of
analysis with a recreation plan or project.
Recreation
resources
included
in
the

70

Figure 2.8.4

Flowchart of Recreation Benefit Evaluation Procedures

Define study area

Estimate recreation
resource

Forecast recreation use

Determine without-project
condition

Forecast recreation use
diminished by project

Forecast recreation use
with project

Estimate value of recreation
diminished by project

Estimated value of recreation
use with project

Compute benefit

71

2.8.5 Evaluation procedure: Define the study
area.

lated land resources providing similar or complementary types of recreation within the study area.
(b) Forecasting potential future participation in
recreation activities for the study area involves four
steps: (1) Collect data on explanatory variables that
influence the demand for recreation activities; (2)
Relate potential use to these variables by means of
some use estimating techniques as described in
2.8.9; (3) Forecast values of the explanatory variables over the period of analysis. Justify projections
and explain any simplifying assumptions.
Reference to statistical evidence on trends is
encouraged; (4) Calculate expected use for the
study area using the values obtained in Step (3) and
the relationships determined in Step (2).

Determine changes in recreation use and value
resulting from alternative plans through the analysis
of without-project and with-project conditions in the
study area over the prescribed period of analysis.
The impacts should relate to the geographical recreation "market" defined by the location of actual
and potential user populations. Definition of the
study area should be justified with respect to the
particular characteristics and quality of the site and
the availability of similar alternative recreation opportunities. Reference to statistical evidence regarding the spatial distribution of trip generation is
encouraged.

2.8.8 Evaluation procedure: Determine the
without-project condition.

2.8.6 Evaluation procedure: Estimate recreation
resource.

Determine the without-project condition for the
study area on the basis of a comparison of the
available recreation resources as specified in 2.8.6
and the recreation resource use as specified in
2.8.7 for each activity currently provided at the project site and each activity proposed in the plan or
project. Compare the capacities of all sites, including the site without the proposed project, to produce
recreation activities with the expected demand for
each activity.

(a) Include in estimates of the recreation resource
capacity for the study area all sites (see 2.8.3(b))
that provide recreation activities similar to those
displaced or provided by the project. The recreation
resource in the study area is the system of water
and related land recreation sites that influence the
demand for the proposed project and are
influenced in turn by the demand at the existing site.
(b) Include in the inventory of water and related
land recreation sites in this study area those Federal. State, county, local, and private sites that are in
varying stages of development or that are authorized and likely to be developed in the forecast
period.

2.8.9 Evaluation procedure: Forecast recreation
use with project.
(a) General. Forecast recreation use with the
project as a basis for estimating project recreation
values. Project use over time by calculating the
change in use induced by anticipated changes in
the variables that determine use. Explain values
employed for projecting future demand and any
simplifying assumptions. For the capacity method
described in paragraph (b)(4) of this section, use is
constant over time as determined by the capacity
constraint. Explain use projections and any simplifying assumptions. Reference to statistical projections
of recreation participation is encouraged.

(c) Identify the ability of recreation alternatives to
provide different recreation activities and assess the
quality of the alternative recreation experiences.

2.8.7 Evaluation procedure: Forecast potential
recreation use in the study area.
Potential use is the expected visitation at prevailing prices unconstrained by supply. Forecast of total
recreation use in the study area should be made for
each activity currently provided at the project site
and for each activity proposed in the plan or project.
The potential use for a specified outdoor water and
related land recreation activity will depend on the
size and characteristics of the study area population
and the availability of the specified recreation
activity and other types of recreation in the study
area.

(b) Use estimating techniques. Use one or more
of the following approaches for estimating recreation use for the with-project and/or without-project
conditions. The use of any other method should be
justified as conforming to the characteristics listed in
2.8.2(b). References to statistical estimates are
encouraged.
(1) Regional use estimating models. Regional
use estimating models are statistical models that
relate use to the relevant determinants based on
data from existing recreation slates in the study
area. The use of regional models can economize

(a) The recreation use of the site's resources will
depend not only on the attributes of the site and its
proximity to population centers, but also on its location in relation to the location of other water and re72

on resources required for site-specific studies. In
the absence of a regional model, estimate use by
one of the site-specific methods described below. If
a use estimating model has already been
developed for the region in which a proposed
project is to be located, use estimates should be
obtained by the following procedure:

(ii) The most efficient and technically sound similar project procedure is based on per capita use
curves (i.e., regression curves relating per capita
rate of use to travel distance) from which use estimates are derived. The similar project method involves the following steps:
(A) Evaluate the characteristics of a proposed
project or other area under study.

(i) Delimit the areas of origin for the proposed
project (use of counties or parts of counties as
origin areas will facilitate gathering of data in subsequent steps).

(B) Select a similar project or area by comparing
characteristics of the proposed project with available information for existing sites; include evaluation
and comparison of the respective recreation market
areas.

(ii) Compute measures of the explanatory variables in the use equation for each origin area and for
each year for which an estimate is required.

(C) Adjust the per capita use curve to account for
the differences between the similar project and the
proposed project.

(iii) Calculate use from each area for each year.
(iv) Aggregate use from each area to get estimated annual use.

(D) Determine the county populations within the
market area for the years in question, and derive
per capita use rates for each county population by
measuring road mile distance from the project to
the center of the most populated city within the
county (proxy for centroid of county population).

(2) Site-specific use estimating models. The preferred site-specific method of estimating use is a
use estimating model (UEM) that relates use per
1,000 of origin population to distance traveled, socioeconomic factors, and characteristics of the site
and alternative recreation opportunities. Use estimating models yield regression coefficients estimated from data gathered at a comparable existing site
or cross section of existing sites. The coefficients
are used to estimate visitation at a proposed site in
the same way as described for regional models.
Factors that influence demand for recreation, such
as characteristics of user populations and availability of alternative opportunities, are explicitly taken
into account by variables in the model. Because of
the influence of congestion during heavy use periods, it is desirable to distinguish use during summer
weekends and holidays. If data limitations do not
permit desegregation, explain treatment of seasonal use variation and any simplifying assumptions.

(E) multiply each county per capita rate by county
population and sum to get total use.
(F) Determine the percentage of total use that
the foregoing estimate represents; if 100 percent,
use as is; if less, adjust accordingly.
(iii) Justify assumptions used to adjust or modify
per capita use curves.
(4) Capacity method of determining use. If data
on use determining variables are unavailable and
are not cost effective to obtain, and if it can be
demonstrated that sufficient excess demand exists
in the market area to accommodate the additional
capacity supplied by a proposed project, use may
be assumed to be equal to capacity. Since this
method provides no information on trip generation,
willingness to pay cannot be evaluated by the travel
cost method.

(3) Application of information from a similar project.
(i) If a UEM is not available and cannot be estimated because of data limitations, use may be estimated by the similar project method. This method
assumes that recreation demand for a proposed
project can be estimated from observations of visitation patterns at one or more existing projects with
similar resource, operations, and use characteristics. The alternatives under study are compared
with water resource projects and recreation resource areas for which trip generation and other
statistics are known. It is Important to obtain as
close a match as possible in type, size, and quality
of project; market area demographic and socioeconomic characteristics; existence and location of
competing recreation opportunities; and other variables that influence demand.

2.8.10 Evaluation procedure: Estimate value of
use with the project.
As noted in 2.8.2, three alternative methods can
be used to estimate recreation benefits:
(a) Travel cost estimate of willingness to pay
based on use estimating model or per capita use
curves— (1) Conditions under which TCM may not
be used. (i) Use was not estimated by a technique
relating trip-generation to distance to the site;
(ii) There is insufficient variation in travel distances to allow parameter estimation (for example,
urban slates); or

73

(iii) The project site is typically only one of several
destinations visited on a single trip.

(iv) Given willingness to pay bids from an unbiased sample of users in the market area. the socioeconomic characteristics of respondents, distance
to the site, and available alternative recreation opportunities for each origin, obtain multiple regression estimates of average household value for the
proposed change in recreation opportunities for
households in each group.

(2) Construction of a TCM demand curve. The
area under a demand curve based on travel costs
to a site approximates the willingness to pay for
access to the recreation opportunities there. This
estimate involves the following calculations:
(i) Convert round-trip distance from each origin
into monetary values by using the most recent U.S.
Department of Transportation average variable
costs in cents per mile to operate an automobile,
plus the opportunity cost of leisure time spent in
travel and on the site. Time costs vary according to
the alternative uses of time available to visitors and
are correlated with income, age, education,
occupation, time of year, and day of week. Explain
values assigned to time and any simplifying
assumptions.

(v) Multiply this value by the number of households in the group and sum the group values to estimate the aggregate willingness to pay if- the average values are annual; multiply this value by estimated annual use if average values are daily.
(3) Obtaining individual bids from personal interviews or mail surveys. The preferred format is one
in which the respondent is required to answer "yes"
or "no" to questions if he or she is willing to pay a
stated amount of money to obtain a stated
increment in annual recreation opportunities. The
value is increased gradually until the highest
amount that the respondent is willing to pay is identified. Examples of question formats and further discussion of survey techniques can be found in Appendix 2 of this section. Appendix 2 is provided for
background information. Development and use of
techniques more refined than those presented in
this Appendix are encouraged.

(ii) Construct a demand curve that relates "prices"
to total visits. Given a relationship between travel
costs and annual visitation from a use estimating
model or a per capita use curve, construct a
demand curve by gradually increasing travel cost
and calculating the total visitation associated with
each increase, until visitation falls to zero for all
origins.
(iii) Compute the area under the demand curve
plus any user charges or entrance fees. This value
measures the annual total willingness to pay for
recreation activities available at the site.

(4) Developing regional contingent valuation
models. Regional models may be developed with
CVM as well as use estimating models. All survey
forms are subject to the clearance procedures of
the Office of Management and Budget.

(iv) Discussion of travel cost method can be found
in Appendix 1 of this section. Appendix 1 is provided
for background information. Development and use
of techniques more refined than those presented in
this Appendix are encouraged.

(c) Unit day value approximation of willingness to
pay-(1) Application
2.8.2(c)(3).

(b) Contingent Valuation (survey) estimate of willingness to pay--( 1 ) Use of contingent valuation
method for dally or annual values. CVM may obtain
either daily or annual estimates of willingness to
pay. Multiply daily estimates by annual use obtained
previously. Annual estimates do not require use estimation except to demonstrate the net increase in
recreation use in the market area.

of

unit

day

values. See

(2) Selection of value. (i) If the UDV method is
used for economic evaluations, select a specific
value from the range of values agreed to by Federal water resource agencies. The product of the selected value times the difference in estimated
annual use over the project life relative to the without-project condition provides the estimate of recreation benefits.

(2) Designing and using simulated markets to
identify the value of recreational resources as if
actual markets existed. Five steps are involved:

(A) If evidence indicates that a value outside the
agreed-to range is more accurate, a regional model
or site-specific study should be conducted. Explain
the selection of any particular value within the published range.

(i) Establish a market to the respondent.
(ii) Permit the respondent to use the market to
make trades and establish prices or values reflecting the respondent's individual evaluation of the
recreation opportunities bought or sold.

(B) To explain the selection of a specific value, a
point rating method may be used to reflect quality,
relative scarcity, ease of access. and esthetic features. Appropriate use should be made of studies of
preferences, user satisfaction. and willingness to
pay for different characteristics; particular efforts

(iii) Treat the values reported by the respondent of
individual values for recreation, contingent upon the
existence of the market.
74

should be made to use estimates derived elsewhere from applications of the TCM and CVM techniques.

scribed in 2.8.2, estimate the value of the recreation
uses that would be diminished by the physical
displacement expected to occur as a result of the
plan or project. In determining project net benefits,
account for changes in recreation use of an existing
resource and/or project as a result of transfers to
the plan or project under study.

(ii) Account for site transfers in choosing unit day
values. An example of a point rating table that does
this and further discussion of unit day value selection can be found in Appendix 3 of this section. Appendix 3 is Provided for background information.
Development and use of techniques more refined
than those presented in this Appendix are encouraged.
2.8.11
Evaluation
procedure:
recreation
use diminished with project.

2.8.13 Evaluation procedure: Compute net
project benefits.
Compute the project benefit as the difference
be-tween the gross value of recreation use as
estimated in 2.8.9 and the value of recreation use
diminished as estimated in 2.8.12. However, if
excess capacity for any activity exists in the study
area, benefits are the user cost savings plus the
value of any qualitative differences in recreation.

Forecast

Using the appropriate method described in 2.8.9,
forecast the recreation resource uses that would be
diminished due to physical displacement expected
because of the plan or project.

2.8.14 Report and display procedures.

2.8.12 Evaluation procedure: Estimate value of
recreation use diminished with project

Tables 2.8.14-1 and 2 are suggested presentations for reports that include recreation as a purpose.

Using the appropriate methods described in
2.8.10 and selected by the appropriate criteria deTable 2.8.14-1

Recreation Capacity and Use (19--)

1

Without project
Capacity
Plan 1......................................................
Plan 2......................................................
Plan 3 .....................................................
Plan X ....................................................
1

Use

......................... .........................
......................... .........................
......................... .........................
......................... .........................

With project
Surplus or deficit

Capacity

Gross use

Displaced
use

.........................
.........................
.........................
.........................

..................
..................
..................
..................

......................
......................
......................
......................

..................
..................
..................
..................

Prepare for representative project years

Table 2.8.14-2

Annualized Recreation Benefits, Recommended Plan

Recreational activity
Specialized..............................................................................
General ....................................................................................

Value of
gross use

Value of
displaced use

Net value

............................
...........................

...........................
..........................

......................................
......................................

using the variable costs of travel and the value of
time as proxies for price. By use of data collected
from users of existing sites, the travel cost method
permits development of (1 ) estimated use of the
proposed site; (2) a per capita demand function for
recreation at the site; and (3) an estimate of the
NED recreation benefits of the site. The travel cost
procedure consists of two steps: estimating use
and deriving a demand curve.

Appendix 1 to Section Vlll—Travel
Cost Method
The basic premise of the travel cost method
(TCM) is that per capita use of a recreation site will
decrease as the out-of-pocket and time costs of
traveling from place of origin to the site increase,
other things remaining equal. The method consists
of deriving a demand curve for a recreation site by
75

(a) Estimating use -- (1) Use estimating models. (i)
The preferred method for estimating use is a use
estimating model (UEM) that relates use at a proposed site to distance traveled, socioeconomic factors, and characteristics of the site and alternative
recreation opportunities. Use estimating models are
based on data gathered at an existing site or on a
cross section of existing sites with the resultant statistical coefficients used to estimate use at a proposed site. Factors that influence demand for recreation, such as characteristics of user populations
and availability of alternative opportunities, are
explicitly taken into account by variables in the
model.
(ii) Application of an existing UEM to a proposed
site involves the following steps: (A) Identify the
areas of origin for the proposed project (use of
counties or parts of counties as origin areas facilitates gathering of data in subsequent steps); (B)
compute measures of the explanatory variables in
the use equation for each origin area and for each
year an estimate is required; (C) calculate use from
each area and for each year; and (D) aggregate use
from each area to get estimated annual use.
(2) Similar project use estimation. (i) The similar
project procedure is based on the concept that recreation demand for a proposed project can be estimated by observing the visitation patterns at one or
more existing projects with similar resource, operation, and anticipated recreation-use characteristics.
The procedure involves the graphic or statistical
matching of the recreation site alternatives under
study with existing water resource projects and
recreation resource areas for which use statistics
and other information are known. The objective of
the similar project procedure is to obtain as close a
match as possible in type, size, and quality of
project; market area demographic and socioeconomic characteristics; the existence and location of
competing recreation opportunities; and other
demand influencing variables.
(ii) The most efficient and technically sound similar
project procedure is based on per capita use curves
(i.e., regression curve relating on per capita rate of
use to travel distance) from which use estimates are
derived. Per capita use curves have been estimated
1
for 52 existing reservoirs. An overview of the
methodology adapted from Brown, et al., is provided
below.
(iii) Briefly stated, use of the similar project prediction method involves the following steps:
(A) Evaluate the characteristics of a proposed
project or area under study.
(B) Select a similar project or area by comparing
characteristics of the proposed Project with available

information for existing sites; include evaluation and
comparison of the respective recreation market
areas.
(C) Adjust the per capita use curve to account for
the differences between the similar project and the
proposed project.
(D) Determine the county populations within the
market area for the year in question and derive per
capita use rates for each county population by
measuring road-mile distance from the project to the
center of the most populated city within the county
(proxy for centroid of county population).
(E) Multiply the contribution from each county per
capita rate by county population, and sum to get total
use.
(F) Determine the percentage of total use that
the foregoing estimate represents. If 100 percent,
use as is; if less, adjust accordingly.
(iv) A critical shortcoming of this similar project
method is the subjectivity inherent in the manual
adjustment of the per capita use curve required to
account for demand factors other than travel distance. The reliability of the method can be enhanced
through experience, but it cannot be expected to
approach the reliability of the more sophisticated
statistical models.
(b) Deriving demand in the travel cost method.
(1) The travel cost method is based on the correspondence between increasing the distance from
areas of origin to the site and increasing the cost or
price of recreation at the site. The second step of the
procedure consists of calculating total use at
different incremental distances (prices); it is based
directly on use estimator models or per capita use
curves. The result is a demand curve for the site
being evaluated that relates "prices" to total visits.
Distances are converted to dollar values using per
mile conversion factors reflecting both time and
out-of-pocket travel costs. The area under the
demand curve plus any user charges or entrance
fees measure the recreation benefits attributable to
the site. The procedure is described in detail below.
(2) The estimate of recreation use for a project
derived from application of a per capita use curve or
UEM model yields an initial point on a resource's
demand curve. This point is the quantity of use that
would be demanded at a zero price. For example,
assume that the appropriate per capita use rates
have been estimated as follows:

Origin
A ............
B ............

1

Brown, R., et al., Plan Formulation and Evaluation Studies:
Recreation. Vol. II. U.S. Army Engineer Institute for Water Research.
1974

76

Population

Distance

10,000
1,000

10
20

Visits per Estimated
capita
visitation
3
2

30,000
2,000

C ...............

3,000

30

1

3,000

Total...........

..............

..............

.............

35,000

(3) This estimate of 35,000 yields an initial point
on the resource's demand curve. To find sufficient
points to determine the entire demand curve, it is
necessary to make small incremental increases in
the price of participation and to measure the quantity of use that would be demanded given these
chances. This is equivalent to moving the project
farther and farther from the potential users, requiring them to pay more and more in travel costs. As
the simulated distance increases, use decreases,
and for each increment in distance a new use estimate is computed using either the use estimating
model or the per capita use curve. The new use
estimates are the various quantities of recreation
that would be demanded at increasing prices.
(4) For example, assume that an increment of
10 miles in travel distance is used to simulate an
increase in cost for the proposed project described
above. The use estimate of use would then be:

Origin
A ..........
B ..........
C ..........
Total

Population
10,000
1,000
3,000

Simulated
distance
(Actual 10)
20
30
40

Visits per
capita

Estimated Visitation

Origin

20,000
1,000
0

................. ................. .................

21,000

30
miles

A ................
B ................
C ................

30,000
2,000
3,000

20,000
1,000
0

10,000
0
0

0
0
0

Total

35,000

21,000

10,000

0

(i) Proxy for price. (A) To determine the price at
which the various quantities of use are demanded,
the incremental increases in distance are simply
converted into the costs that would be incurred by
the recreation users if they were required to travel
the additional mileage. The variable or out-of-pocket travel costs are used as the proxy for price,
since these are the costs that potential users
would be most aware of when making a decision
about whether to visit a particular resource area.
(B) The conversion of mileage to price should
use the most current published results of studies
conducted periodically by the U.S Department of
Transportation concerning the average cost of operating an automobile. As an example, average
variable cost estimates for 1976 are summarized
below (U.S. Department of Transportation, 1977).

Estimated
visitation
2
1
0

[Simulated increase in mileage]
10
20
0
miles
miles

Average Variable Costs, in cents per mile, to
Operate an Automobile

Variable cost category

(5) This would be a second point on the resource's demand curve; the quantity demanded
(21,000 visits) at a price equivalent to the travel
cost associated with an increment in distance of 10
miles. (A discussion of the proxy for price used to
assign a dollar value to this increment is in paragraph (6)(i) of this appendix.)
(6) Remaining points on the resource demand
curve are then estimated by making continued increments in the price (simulated increases in distance) until the anticipated visitation from all areas
of origin is zero. In the example above using 10 mile increments, the visitation expected with simulated increases in distance would be:

Standard

Automobile type
Com- SubcomAverage
pact
pact

Maintenance,
accessories, parts, and
tires....
Gasoline and oil....
Taxes on gasoline, oil,
and tires .....................

4.2
3.3

3.4
2.5

3.1
1.8

3.6
2.5

0.9

0.6

0.5

0.7

Total

8.4

6.5

5.4

6.8

(C) The variable cost reflects the average out-ofpocket cost per mile to operate various types of
automobiles. It does not include such fixed costs
as depreciation, insurance, and registration, since
those costs would generally not affect the potential
user's decision to travel the additional mileage for
recreation purposes.
(D) Two adjustments are required, however.
before this cost can be used as the proxy for price.
The first is an adjustment to round-trip mileage.
The distance measure used in the per capita use
curve or regional estimator is one-way mileage,
while the recreation user must incur the variable
costs while traveling to and from the project, so the
cost per mile is doubled. Since more than one
77

user may arrive in each vehicle a second
adjustment must be made to distribute the travel
costs of the trip between the number of users
traveling in each vehicle. This is readily
accomplished by using the average number of
users per vehicle determined from the survey of
the existing sites used to develop the per capita
use curve or regional estimator.

universally accepted formulation of this tradeoff
has been established and empirically tested. In
one proposed formulation, time is valued as onethird the average wage rate in the county of origin
for adults and one-fourth of the adult value
(one-twelfth of the wage rate) for children. Any
method used to value time should be supported by
documenting evidence. Both travel and onsite time
costs should be included in the derivation of total
willingness to pay for access to the site.

(E) The variable travel costs are the proxy for
price associated with the simulated increase in distance used to derive the resource demand curve.
Using the average variable cost for all three types
of automobiles (6.8 cents per mile and using a hypothetical average of 2.7 persons per vehicle, the
proxy for price for a simulated increase in distance
of 10 mites in the above example would be equal
to 80.50 (6.8 cents per mile times 2 for round-trip
mileage, divided by 2.7 persons per vehicle, times
10 mile increment).

(iii) Benefit computation. (A) The final
computational step in the travel cost approach is to
measure the area under the demand curve. This
area is equal to the amount users would be willing
to pay but do not have to pay for the opportunity to
participate in recreation at the resource being
evaluated. Any user charges or entrance fees
should be added to this value to determine the
gross value of the resource escalated with the
specified management option.

(ii) An adjustment for the opportunity cost of
time. (A) The use of variable travel costs alone In
the development of the demand schedules ignores
the effects of time on recreation decisions. If time
is ignored, the demand schedules are constructed
under the hypothesis that increasing distance decreases use only because of higher money cost.
However, the additional time required to travel the
increased distance would seem to be a deterrent
equal to or greater than the out-of-pocket money
costs. The exclusion of the time factor introduces a
bias into the derived demand schedule, shifting it
to the left of the true demand schedule and
resulting in an underestimation of the recreation
benefits.

(B) The travel cost approach can be used for
evaluating either the with-project or without-project
conditions as long as a use estimating model or a
per capita use curve is available for estimating use
under the specified condition. To evaluate the without-project condition, estimate the value of the recreation that would be lost at a site if a water resource development project were developed. To
evaluate a with-project alternative, estimate the
value of the new recreation opportunities that
would be created. If a use estimator is not
available for evaluating either the without-project
conditions or one of the with-project conditions, the
techniques described in other portions of this
manual should be used.

B) The opportunity cost of time is the value of
work or leisure activities foregone to travel to and
recreate at the site. The opportunity cost for a
person whose work time is variable is measured as
income foregone during the recreation visit and
associated travel. Most people, however, are constrained by a fixed work week and receive payload
vacation days. Recreation occurring during periods
where no working time is lost incurs only leisure
time costs. This value may range between 0 (if the
recreationist would not have engaged in any other
leisure activity in the absence of the observed recreation) and the wage rate (if the alternative leisure
activity was valuable enough to forego earnings,
given that opportunity).

(C) The procedure described above is
applicable to any type of activity or groups of
activities for which use can be described by a use
estimating equation or per capita use curve. The
separation of any use from overnight use or
sightseeing from other day use activities, for
example, is dependent upon the specificity of the
survey data and the model formulation.
(c) Data requirements. (1) The development of
use estimator models as described above requires
that data from existing areas be systematically collected. The major requirement is that the data on
use and users of a range of facility types and locations span the proposed types and locations for
which estimates are to be made. A series of surveys at existing sites can provide such basic data,
which would normally include total use, timing and
patterns of use, characteristics or users, and users
areas of origin.

(C) Where direct survey data on time costs are
not available, published statistics or studies of
work-leisure choices and wage rates may be used
to justify particular assumed values.
One
procedure that may be used to accommodate the
disutility of time is to assume a known trade off
between time and money; however, but no

78

(2) Methods of data collection that have proved
fairly satisfactory involve a short handout
questionnaire or interviews of a small sample of
randomly selected users of the different recreation
areas. It is important that reliable total visit statistics
be obtained for each existing area being
investigated. This can usually be done satisfactorily
with judicious use of traffic counters at most
water-based recreation areas. If totals are collected
throughout the season, samples for questionnaires
or interviews need be drawn only on a few days - on
both weekends and weekdays, as patterns are
likely to vary greatly between them.
(3) The number of questions asked may also be
limited. The major concerns are the origin and purpose of the trip and limited information about the
users. A representative range of areas. facilities.
and locational proximities should be covered in
such surveys. Fully adequate methods that are relatively inexpensive, entail a minimum of difficulty at
the site and to the user, and yield meaningful results are available.

eral possible kinds of response bias. Several techniques are available for obtaining the individual
bids, which are the basic data for CVM.
(b) Iterative bidding formats. (1) Iterative bidding
surveys ask the respondent to react to a series of
values posed by the enumerator. Following establishment of the market and a complete description
of the recreational good, service, or amenity to be
valued, the respondent is asked to answer “yes”
or “no” to whether he is willing to pay the stated
amount of money to obtain the stated increment in
recreation. The enumerator iteratively varies the
value posed until he identifies the highest amount
the respondent is willing to pay. This amount is the
respondent's “bid” for the specified increment in
recreation.
(2) Iterative bidding techniques are most
effective in personal interviews. Mail survey
formats have also been used in research studies.
These typically ask the respondent to answer
“yes” or “no” to a small number of specified
values in iterative questions and, finally, ask an
open-ended question: “Now, write down the
maximum amount you will be willing to pay, $
———— .” At present, mall survey applications of
the iterative bidding technique have not been
adequately tested and cannot be recommended.
(3) The recreation facilities to be evaluated will
be described in quantity, quality, time, and location
dimensions. These descriptions should be hypothetical in the sense that they do not precisely describe features of actual sites or proposed
projects, but they should be precise enough to give
the respondent adequate information on which to
base a valuation. To permit estimation of regional
models, quantity, quality, and location dimensions
should be varied and the iterative bidding exercise
repeated. Verbal descriptions should be precise,
and, when practicable, pertinent aspects of the
facilities should be displayed or depicted
nonverbally (e.g., with photographs, drawings,
motion pictures, scale models).
(4) In most cases, the good to be valued is “the
right to use (the recreation facility) for one year.”
The responses obtained are thus annual
measures of the individual's willingness to pay for
a given increment or decrement in recreation
opportunities. Bidding formats that define the good
in some other terms (e.g., day of use, trip) can also
be used in some applications as long as
appropriate estimates of numbers of days of use
and trips are available to permit calculation of
annual values.
(5) The institutional rules pertaining to the hypothetical market will be described in sufficient detail
so that the respondent knows his rights and the
rights of all others in the market. These rules
should be realistic and credible, they should place

Appendix 2 to Section Vlll Contingent
Valuation (Survey) Methods
(a) Overview. (1) Contingent valuation methods
(CVMs) obtain estimates of changes in NED benefits by directly asking individuals about their willingness to pay (WTP) for changes in quantity of recreation at a particular site. Individual values may be
aggregated by summing the WTPs for all users in
the area.
(2) Contingent valuation methods consist of designing and using simulated markets to identify the
value of recreation just as actual markets would, if
they existed. Three basic steps are involved: (i)The
analyst establishes a market to the respondent; (ii)
he permits the respondent to “use” the market to
make “trades” and to establish prices or values that
reflect the respondent's individual valuation of the
recreation opportunities “bought” or “sold”; and (iii)
the analyst treats the values reported by the
respondent as individual values for the recreation,
contingent upon the existence of the described
market. The respondent's bids are used with the
data contained in the market description (step i) to
estimate the aggregate value of the recreation
being studied.
(3) Contingent valuation methods are particularly
appropriate for evaluating projects likely to be one
of several destinations on a single trip and projects
that will result in a relatively small change in the
quality of recreation at a site. Contingent value results may be adversely affected unless questions
are carefully designed and pretested to avoid sev79

the respondent in a role and encourage market behavior with which he is familiar, and they should be
of a kind generally viewed as just, fair, and ethically
sound. They should be nonthreatening. Formats
that threaten the respondent with a welfare shock
that he may view as unfair should be avoided.
(6) The method of payment (called payment vehicles) should be carefully pretested. At the pretest
stage, always include a neutral vehicle, e.g., "The
money collected will be placed in a trust fund and
devoted entirely to providing (the good)."
(7) The respondent should be given price or value
information and asked, "Would you buy?" With the
clear understanding that “if no, you would go
without.” The wording “Would you be willing to pay
@ @ @ ?” should be avoided because some
respondents may interpret it as an appeal for
voluntary contributions. The question must be
worded to suggest the pragmatic “take it, or leave
it” atmosphere of the marketplace.
(8) Depending on the “yes” or “no” answer, the
price or value is varied iteratively and the question
repeated until the respondent’s point of indifference
between the money and the good is identified. Early
iterations may change the price widely until the
enumerator senses that he is approaching the
respondent's indifference point; then iterative price
variations will become finer.
(9) The starting price quote (called "starting
point") will vary across respondents. The particular
starting point assigned to a given respondent will be
chosen randomly.
(10) The payment vehicle should be specified.
Payment vehicles that may generate an emotional
reaction should be avoided because they might introduce a confusing element into the bid data.
Vehicles based on increments in taxes, utility bills,
and hunting or fishing license fees may generate
such reactions.
(11) General formats for iterative bidding questions are presented below, followed by specific examples. The questions must be specific to the particular measure of value to be elicited from the respondent. WTP formats should always be used;
they may be incremental (willingness to pay for an
increment in a desired recreation opportunity) or
decremental (willingness to pay to availed a threatened decrement in a desired recreation opportunity). The incremental format has two major advantages: it is the theoretically correct measure and,
since it offers the respondent the (hypothetical)
chance to pay for a desired good, it is unlikely to
provoke an offended reaction. The decremental
format, which asks the respondent how much he
would pay to avoid a change he does not want, may
seem unfair or morally offensive to some, and thus
may elicit biased or otherwise unreliable value

estimates. The incremental version is preferred
wherever it is credible.
(12) The incremental version may not be
credible if the real world experience is typically one
of the decrements rather than increments. For
example, the question “if a new, unspoiled natural
recreation environment could be created and the
right to use it would cost $———— , would you
buy?" may be rejected as fantasy by some
respondents in a world in which “unspoiled natural
recreation environments" are fast disappearing. In
such circumstances, it may be necessary to resort
to decremental formats. However, since
reasonable doubts can be raised, a priori. about
the efficiency of WTP decremental formats, the
following precautions are essential: The format
designed must be the most consistent and
plausible and least offensive possible; and at least
two different formats must be pretested to permit
statistical testing for differences in their
performance.
(13) General examples of the WTP formats
are:
WTP incremental: “If you had the opportunity to obtain [describe
an increment in recreation facilities, hypothetical market rules,
and payment vehicle], would you pay [starting price]? Yes (pay)
---- Or would you refuse to pay, and do without (the increment)?
No (pay) --” Reiterate with new prices until the highest price
eliciting a “yes” response is identified.
WTP decremental (example 1): “[Describe a decrement in
recreation facilities] will occur unless [describe market rules and
payment vehicle]. Would you pay [starting price] to avoid [the
decrement]? Yes (pay) ---- Or would you refuse to pay, and thus
permit [the decrement]? No (pay) ---”
WTP decremental (example 2): “[Describe a recreation facility
currently available to respondent] is currently available [describe
current market rules, existing payment vehicle, and existing
price]. Unless [the existing price] is increased [describe a
decrement] will occur. Would you pay [starting price, which is
some increment over the existing price] in order to prevent [the
decrement]? Yes (pay)———— Or would you refuse to pay,
and thus permit [the decrement]? No (pay) ———— “ Reiterate
...

(14) Since some respondents may bid only
zero amounts to WTP questions, it is important to
identify which zero bids represent true zero
valuations and which, if any, represent a protest
against the market rules or payment vehicles in the
bidding format. Check questions should always be
used to probe “zero” responses to WTP formats,
e.g., “Did you bid zero because (check one):”
a. You believe [the stated increment] would be
worth nothing to you?
b. You believe [the payment vehicle) is already
too high?
c. You believe [the stated increment] would be
of value, but you do not think it is fair to expect (the
respondent’s class of citizen, e.g., hunting license
holders, utility customers) to pay for it?

80

(15) Answers (b) and (c) above are “protest” responses, addressed not to the value of the good but
to some element of the question format. Protest
bids should be recorded but eliminated from
calculations to estimate values. Formats that elicit
more than 15 percent protest responses in pretests
should be discarded, since a high incidence of protest bids may indicate that some nonzero bids are
also distorted.
(c) Noniteratlve bidding formats. (1) Noniterative
bidding formats are adaptable to implementation
with mail surveys. There are two kinds of noniterative formats: close-ended, which ask respondents to
answer "yes" or “no” to a single stated value; and
open-ended, which ask the respondent to write
down the maximum amount he would be willing to
pay. A variant of the open-ended format asks the
respondent either to select his maximum WTP from
a list of stated discrete values or to write down his
maximum WTP. Noniterative bidding formats are
unlikely to be as reliable as iterative formats.
(2) Noniteratlve mail survey formats may be used
only for analysis of small projects. These formats
must, to the extent practicable, have the basic attributes of the personal interview formats described
above. Survey instruments should include color
photographs and, if appropriate, other nonverbal
stimuli.
(3) Open-ended bidding formats should be used
With one half of the sample and close-ended
formts with the other half. The bids obtained should
be analyzed to determine if the format influences
the results to a significant degree. Examples of
these formats are presented below.
(4) Open-ended. "Due to pressures of population
growth and economic development, 10 miles of
trout stream such as that shown in the accompanying photograph are likely to be converted to other
uses (e.g., a reservoir) and thus lost for trout fishing.
Assume that the only way to preserve this 10 mile
stretch for trout fishing is for trout fishermen to
agree to buy an annual pass to fish in that stream
segment. The money collected would pay for presentation of the stream section. If the stream segment was __ miles from your home, and you could
expect to catch __ trout in a typical day's fishing
there, what is the maximum amount you would pay
for the annual fishing pass? Answer: $__ per year.
(5) Closed-ended. The information presented in
the open-ended format does not change, but the
final question reads: “ * * * and an annual fishing
pass costs $__ (assign dollar amounts randomly to
respondents), would you buy one? Answer: Yes __
No __.”
(d) Use estimation with CVMs. (1) All of the contingent valuation procedures described above generate annual value estimates directly, instead of first
generating values per user day and then estimates

of expected user days. The “annual value
estimation” procedure is superior because it is
more reliable, it automatically corrects for the economic
influence
of
existing
recreation
opportunities, and it is better adapted to estimating
activity and existence values where both are
important.
(2) Contingent valuation formats can also be
designed to estimate values per user day but can
have questions worded in terms of a day's activity.
In the case of proposed increments, great care
must be taken to determine the respondent's
valuation of a day at the proposed site, given the
continued availability of existing sites. Estimates of
use may be made either by collecting such
information as part of the survey or by other
approved methods.
(3) To collect use information in the survey, proceed as follows:
(i) For decrements in recreation opportunities,
ask (A): how many trips the household made (1)
last year or (2) in a typical year, if last year was unusual for any reason; (B) how many days the trip
lasted; and (C) how many household members
participated in each trip.
(ii) For increments, ask (A): the same
information as for decrements, but about existing
recreation sites similar to the proposed increment.
Then, if the proposed increment (described with
verbal and nonverbal stimuli) were available. (B)
how many trips, for how long, and with how many
family members for the proposed increment; and
(C) how many trips, for how long, and with how
many family members in total for both the existing
and proposed sites.
(e) Using contingent valuation methods. Contingent valuation methods can be used to develop
value estimator models or to estimate recreation
benefits for a specific proposed project. These two
uses are discussed below.
(1) Value estimator models. (i) Value estimator
models (VEMs) are statistical models of the relationships between the bid and selected
characteristics of the site(s) and user populations.
A typical model has the form:
Vjk = F(Ek, Djk, Ck, Ak, Sjk, Qj, Ij)
Where
Vjk is the value to household k of the specified change in recreation opportunity at site j.
Ek is a vector of social and demographic variables pertaining to
household k, typically including income, ethnicity, and education.
Djk is the distance from the home of k to site j.
C k is a measure of the capacity use of the existing stock of
recreation facilities similar to those at site j in the market area
centered at k’s home.

81

Ak is distance from the home of k to the nearest existing
alternative facility offering recreation opportunities similar to
those at site j.
Sjk is an index of the availability of substitute recreation facilities
(e.g., ocean beach for reservoir beach) in the market area
centered at k’s home.
Q j is a vector of variables describing the quality of recreation at
site j.
Ij is the increment or decrement in recreation at site j specified in
the contingent valuation mechanism.

information presented to the respondent on size,
distance, etc.
(E) Using the best available econometric techniques, the equation is then estimated. The dependent variable is expressed in terms of annual
value per household eliminating the need for separate estimation of user-days and the mean value of
a user-day.
(iv) Using an existing VEM to estimate the
recreation benefits of a proposed project involves
the following steps:
(A) Determine the market area for the
recreation services affected by the project. If the
market area is expected to exceed 120 miles,
document the reasons.
(B) Determine from census data the
demographic characteristics of the market area
population.
(C) Divide the market area into groups on the
basis of demographic variables and distance from
the proposed site. One such group might be
“households headed by a male of (ethnic group)
with 10 to 12 years of education and household
income between $12,001 and $15,000 annually,
living 51 to 75 miles away from the site.”
(D) Calculate separately for each market
subarea the values of the variables describing
existing recreation facilities obtained from inventory
and planning data.
(E) Obtain from project planning data the
values of the variables describing project-specific
attributes.
(F) Use the specified data and the fitted model
to estimate the household value for the proposed
increment or decrement in recreation opportunities
for a typical household in each group.
(G) Multiply this value by the number of households in the group, and sum the group values to
get the aggregate benefit estimate.
(2) Applying CVM to a specific proposed
project. In some circumstances, CVMs may be
used to estimate the recreation benefits of a
specific proposed project. Great care must be
taken in the design of the survey instruments and
editing of the data, however, because some
respondents may try to influence the outcome of
the analysis by their bidding responses. The survey
design and sampling requirements of such a study
are discussed under “Data requirements” below.

(ii) This method has several desirable characteristics: (A) The VJk are current WTP estimates of
value for increments and decrements in recreation
opportunity; (B) the VJ are annual values of the existence of the recreation facilities at site j, and thus
replace user days and unit day values; (C) the VJk
are not arbitrarily set at the same daily value for all
users, as are unit day values; (D) the variables in
vector Qj provide a systematic statistical basis for
estimating how VJ varies with site quality; (E) the
variables Ck,, Sjk, andk A provide a systematic
statistical basis for adjusting VJ to account for
competing and substitute facilities.
(iii) Estimating a value estimator model requires
the following steps:
(A) The final bids, after any calculations
necessary to convert them to annual or daily
household values, serve as the observations of the
dependent variable.
(B) The observations of demographic variables
serve as observations for the first set of independent variables.
(C) Existing recreation resource inventories and
planning data provide the basis for specifying the
second set of independent variables, i.e., those describing the existing stock of recreation opportunities. The location of each respondent's home is recorded on the completed survey instrument, and,
together with the inventory and planning data for
existing resources, permits calculation of individual
observations of those variables that relate the
existing stock of recreation opportunities to the
location of the respondent's home. To complete
the task of specifying these variables, some
indices of the availability and quality of the existing
recreation stock must be developed. These
include indices of facilities and conveniences, and
of site quality, especially esthetic quality.
(D) Site-specific descriptors serve as the third
and final set of independent observations. These
are the data presented to the respondent and
upon which he based each of his bids. The
estimated esthetic score of each photograph used
in the bidding process serves as one of these sitespecific descriptors. Other descriptors are the

(3) Data requirements -- (i) Survey design. For
contingent valuation exercises, the survey instrument must contain two major sections: One for
bidding formats and one for collecting appropriate
demographic data; a brief final section should elicit
82

respondent feedback. Since there is no reason to
prohibit the use of additional sections, other data
useful for recreation planning may be gathered
during the interview. Additional sections may include recreation activities, attitudes, recreation
preferences, and protected use of proposed new
recreation facilities. To minimize inconvenience to
respondents and to avoid respondent fatigue and
lapses of concentration, the complete interview
should typically not require more than 30 minutes.

(C) Random sampling methods are also used
for mail surveys. At least two followup mailings are
necessary to reduce nonresidence. In addition, a
random telephone survey of 10 percent of the nonresponses after the second followup mailing is
necessary. The results of the telephone survey
must be analyzed separately in order to permit
testing for non response bias.
(iv) Specific proposed project requirements. (A)
Procedures for valuing recreation benefits using
project-specific iterative bidding formats are
similar, in some respects, to the procedures
described above. Aspects that are different are
highlighted in the following:

(ii) Pretesting. (A) The basic survey instrument,
including bidding formats and questions to collect
additional data (e.g., demographic data, respondent's history of use of recreation facilities. etc.),
must be pretested by using a sample of at least 30
respondents in order to generate a data set
permitting appropriate statistical tests. The pretest
sample should not be drawn from the same
population as the actual study sample. Sampling
procedures for the pretest are not especially
crucial, but an attempt should be made to obtain a
demographic cross section of users. A variety of
bidding formats, hypothetical market designs, and
payment vehicles should be pretested.

(B) The population to be sampled is that of the
market area(s) for the various categories of
recreation opportunities that would be beneficially
or adversely affected. Survey instruments follow
the basic format described above, with the major
exception that the bidding formats provide
site-specific information on the proposed project
itself. Photographs and other stimuli should be
focused on the without-project condition for
adverse effects and on the with-project condition
for beneficial effects. In the latter case, it may be
necessary to use photographs of a completed
similar project.

(B) Nonresponses and protest responses should
be tabulated for all bidding formats. Those formats
eliciting large proportions (i.e., more than 15 percent) of such responses should be eliminated or
redesigned and retested. Statistical tests for
information bias, vehicle bias, and starting point
bias should be performed, and formats that
generate any of these biases should be eliminated,
or redesigned and retested.

(C) Individual bid data must be used as
observations to test carefully for biases, including
vehicle bias, information bias, starting point bias,
and strategic bias, using established statistical
testing procedures. Evidence of bias should (1)
lead to elimination of formats producing bias at the
pretest stage, and (2) lead to reporting of any bias
remaining after all instrument redesign possibilities
have been exhausted. Final bids are aggregated
across the sample and then projected to the
market area population. These “population
aggregate bids” are then used as estimates of the
total value, positive or negative of the effects,
beneficial or adverse, of the proposed increments
or decrements in recreation opportunities. Net
project recreation effects are calculated as in (e)
(1) of this appendix.

(iii) Sampling. (A) Following pretesting and, if
necessary, redesign, a sampling frame for the
malign survey should be drawn. The household is
the basic sampling inlet. For estimation of activity
values, samples may be drawn from reliable list of
participants (e.g., fishing license holders), if available. For activity values where no such lists exist,
and for existence values, the sample must be
drawn from the regional population of households.
(B) Sampling procedures should have the performance characteristics of random sampling. To
save travel time in a personal anatomy survey,
randomized, cluster sampling is permissible,
provided that no cluster is larger than one-thirtieth
of the sample size, Sample size should be no
fewer than 200 households. The respondent
selected to answer on behalf of the household
should preferably be the head-of-household or
spouse of the head. In the absence of the head
and spouse, another adult member of the
household may be interviewed, provided he or she
has assumed a responsible life-role (e.g., is a
parent or is financially self-supporting).

Appendix 3 to Section Vlll—Unit
Day Value Method
The unit day value (UDV) method for estimating
recreation benefits relies on expert or informed
opinion and judgment to approximate the average
willingness to pay of users of Federal or Federally
assisted recreation resources. If an agency can
demonstrate that more reliable TCM or CVM estimates are either not feasible or not justified for the
particular project under study, as discussed under
applicability criteria, the UDV method may be used;
83

by applying a carefully thought-out and adjusted unit
day value to estimated use, an approximation is
obtained that may be used as an estimate of project
recreation benefits.

“Specialized” refers to a recreation day involving
those activities for which opportunities in general are
limited, intensity of use is low, and a high degree of
skill, knowledge, and appreciation of the activity by
the user may often be involved.

(A) Implementation. (1) When the UDV method is
used for economic evaluations, planners will select a
specific value from the range of values provided in
the most current published schedule. Application of
the selected value to estimated annual use over the
project life, in the context of the with- and without-project framework of analysis, provides the estimate of recreation benefits.

(3) Estimates of total recreation days of use for
both categories, where applicable, will be developed.
The general category comprises the great majority of
all recreational activities associated with water
projects, including swimming, picnicing, boating and
most warm water fishing. Activities less often
associated with water projects, such as big game
hunting and salmon fishing, are included in the
specialized category. A separate range of values is
provided in a conversion table (Table VIII-3-1) for
each for each category and for fishing and hunting to
facilitate adoption of a point system in determining
the applicable unit values for each individual project
under consideration.

(2) Two categories of outdoor recreation days,
general and specialized, may be differentiated for
evaluation purposes. “General'' refers to a recreation
day involving primarily those activities that are
attractive to the majority of outdoor users and that
generally require the development and maintenance
of convenient access and adequate facilities.

Table VIII-3-1 Conversion of Points to Dollar Values
Point values
Activity categories
0

10

20

30

40

50

60

70

80

90

100

General recreation (Points from Table VIII-3-2)

1.60

1.90

2.10

2.40

3.00

3.40

3.70

3.90

4.30

4.60

4.80

General fishing and hunting (Points from Table
VIII-3-2)

2.30

2.60

2.80

3.10

3.40

3.70

4.10

4.30

4.60

4.70

4.80

15.60 16.80 18.00

19.00

12.80 14.90 17.00

19.00

Specialized fishing and hunting Points from
Table VIII3-3)
Specialized recreation other than fishing and
hunting
(Points from Table VIII-3-3)

11.20 11.50 11.70 12.00 12.30 13.50 14.70
6.50

6.90

7.40

8.00

8.50

9.60 10.60

Note.--Adjust dollar value for subsequent years to reflect changes in the Consumer Price Index after July 1, 1982

(4) When employing this method to determine
recreation benefits, select appropriate values from the
range of values provided. If evidence indicates a value
outside the published range, use the TCM or CVM
method.

(I) General recreation (Table Vlll-3-2). Activities in this
category are those associated with relatively intensive
development of access and facilities as compared to
the specialized recreation category. Generally,
progressively higher physical standards for each unit of
carrying capacity is involved in selecting higher unit
values, and these may be accompanied by larger
related nonproject costs.

(5) In every case, planners are expected to explain
the selection of any particular value. To assist in
explaining a specific value, a point rating method may
be used. The method illustrated here contains five
specific criteria and associated measurement
standards designed to reflect quality, relative scarcity,
ease of access, and esthetic features. Since the list of
criteria and weights assigned may vary with the
situation, public involvement should occur in the value
determination process.
Planners in the various
agencies are also expected to make appropriate use of
studies of preferences, user satisfaction, and
willingness to pay for different characteristics. When
these studies are used, particular efforts should be
made to use estimates derived elsewhere from
applications of the TCM and CVM techniques, to
support the value selected.

(ii) Specialized recreation (Table Vlll-3-3). (A)
This category includes those activities whose values
are generally lowered, if not actually excluded, by the
type of development that enhances activities in the
general recreation category. Thus, extensive or low
density use and development constitutes the higher end
of this range of values (e.g., big game hunting and
wilderness pack trips). Also included in the upper end
of the range are relatively unique experiences such as
inland and marine fishing for salmon and steelhead,
white water boating and canoeing, and long-range boat
cruises in areas of outstanding scenic value. Examples
of activities to which values at the lower end of the
range would be assigned include upland bird hunting
and specialized nature photography.

84

Table VIII-3-2 Guidelines for Assigning Points for General Recreation
Criteria
(a) Recreation
experience 1

Total points: 30
Point value:
(b) Availability of
opportunity 4

Total points: 18
Point value:

Judgement factors
Two
2

general activities Several general
activities

0-4

5-10

Several within 1 hr.
travel time: a few
within 30 min. travel
time

(d) Accessibility

Total points: 18
Point value:
(e) Environmental
quality

Total points: 20
Point value H

11-16

Several within 1 hr.
travel time: none
within 30 min. travel
time

0-3

One or two within 1
hr. travel time: none
within 45 min. travel
time

4-6

(c) Carrying capacity 5 Minimum facility
development for
public health and
safety
Total points: 14
Point value:

Several general
activities: more than
one high quality value
activity

7-10

Basic facilities to
conduct activities

0-2

6-8

Fair access, poor
Fair access, fair road
quality roads to site: to site: fair access,
limited access within good roads within site
site

0-3

4-6

7-10

Low esthetic factors 6 Average esthetic
exist that significantly quality: factors exist
lower quality 7
that lower quality to
minor degree
0-2

11-14

24-30
None within 2 hr.
travel time

15-18

Adequate facilities to Optimum facilities to Ultimate facilities to
conduct without
conduct activity at
achieve intent of
deterioration of the
site potential
selected alternative
resource or activity
experience

3-5

Limited access by
any means to site or
within site

17-23
None within 1 hr.
travel time

Numerous high
quality value
activities: some
general activities

9-11
Good access, good
roads to site: fair
access, good roads
within site
11-14

12-14
Good access, high
standard road to site:
good access within
site
15-18

Above average
High esthetic quality: Outstanding esthetic
esthetic quality: any no factors exist that quality: no factors
limiting factors can be lower quality
exist that lower quality
reasonably rectified

3-6

7-10

11-15

16-20

1

Value for water-oriented should be adjusted if significant seasonal water level changes occur
General activities include those that are common to the region and that are usually of normal quality. This includes picnicking,
camping, hiking, riding, cycling, and fishing and hunting of normal quality.
3
High quality value activities include those that are not common to the region and/or Nation and that are usually of high quality.
4
Likelihood of success at fishing and hunting.
5
Value should be adjusted for overuse.
6
Major esthetic qualities to be considered include geology and topography, water, and vegetation
7
Factors to be considered to lowering quality include air and water pollution, pests, poor climate, and unsightly adjacent areas.
2

Table VIII-3-3

Guidelines for Assigning Points for Special Recreation

Criteria
(a) Recreation
experience 1

Total points: 30
Point value:
(b) Availability of
opportunity 2

Judgement factors
Heavy use or
frequent crowding or
other interfernce with
use

0-4
Several within 1 hr.
travel time: a few
within 30 min. travel
time

Moderate use, other
users evident and
likely to interfere with
use

Moderate use, some Usually little evidence Very low evidence of
evidence of other
of other users, rarely other users, never
users and occasional if ever crowded
crowded
interference with use
due to crowding

5-10
Several within 1 hr.
travel time: none
within 30 min. travel
time

11-16
One or two within 1
hr. travel time: none
within 45 min. travel
time

Total points: 18

85

17-23
None within 1 hr.
travel time

24-30
None within 2 hr.
travel time

Table VIII-3-3 Guidelines for Assigning Points for Special Recreation -- Continued
Criteria

Judgement factors

Point value:
(c) Carrying capacity

Total points: 14
Point value:
(d) Accessibility

Total points: 18
Point value:
(e) Environmental
quality

Total points: 20
Point value H
1
2
3
4
5

0-3
3

Minimum facility
development for
public health and
safety

0-2
Limited access by
any means to site or
within site

0-3
Low esthetic factors 4
exist that significantly
lower quality 5

0-2

4-6
Basic facilities to
conduct activities

7-10

15-18

Adequate facilities to Optimum facilities to Ultimate facilities to
conduct without
conduct activity at
achieve intent of
deterioration of the
site potential
selected alternative
resource or activity
experience

3-5

6-8

Fair access, poor
Fair access, fair road
quality roads to site: to site: fair access,
limited access within good roads within site
site
4-6
Average esthetic
quality: factors exist
that lower quality to
minor degree

11-14

7-10

9-11
Good access, good
roads to site: fair
access, good roads
within site
11-14

12-14
Good access, high
standard road to site:
good access within
site
15-18

Above average
High esthetic quality: Outstanding esthetic
esthetic quality: any no factors exist that quality: no factors
limiting factors can be lower quality
exist that lower quality
reasonably rectified

3-6

7-10

11-15

15-20

Value for water-oriented should be adjusted if significant seasonal water level changes occur
Likelihood of success at fishing and hunting.
Value should be adjusted for overuse.
Major esthetic qualities to be considered include geology and topography, water, and vegetation
Factors to be considered to lowering quality include air and water pollution, pests, poor climate, and unsightly adjacent areas.

(B) The unit day values to be used for both the
general and specialized recreation categories
should be further adjusted to reflect additional
quality considerations expected to prevail at
various project sites at various regions of the
Nation, and weighted to their importance to users.
For example, a reservoir that is expected to carry a
relatively heavy load of suspended silt or is
expected to be used beyond optimum capacity
would be less desirable, and therefore of lower
unit value, than one that will have clear water and
be less crowded.

(D) The degree to which alternative nonproject
opportunities are available to users is also
considered in the assignment of values. Higher
values should be assigned if the population to be
served does not have existing water-oriented
recreation opportunities.
If water-oriented
recreation opportunities are relatively abundant,
as compared to other outdoor recreation
opportunities, lower unit values should be
assigned, even if a large number of visitations are
expected at the proposed development.
(E) The choice of a unit day value must account
for transfers to availed double counting of benefits.
The net value of a transfer of use from one site to
another is the difference in unit day values for recreation at the two sites. If recreation activities at the
two sites are comparable, travel cost savings are
the only NED benefits associated with the transfer.
Use at the site must therefore be disaggregated
according to the proportion of total estimated use
that would not have occurred without the project
and the proportion of total use that represents
transfers from existing sites. The respective types
of uses must then be assigned different daily
values as indicated.

(C) Hunting and fishing may be treated either as
general recreation (Table V111-3-2) or specialized
recreation (Table V111-3-3) depending upon
whether it is associated with developed areas or
back country areas, respectively. In either case,
the recreation experience (criterion “a” in the
tables) will be given points according to the
additional consideration of the chances of success:
the midpoint of the value range is associated with
the regions average catch or bag. Other criteria
may be modified if appropriately based on
available evidence about the preferences and
willingness to pay of hunters and fishermen for
different recreation quality factors.

(iii) Establishing specific values within each range.
Unit values selected are to be considered net of all
86

associated costs of both the users and others in
using or providing these resources and related
services. Agencies will be encouraged, through
review procedures, demonstration projects, and
educational workshops, to adopt the TCM and
CVM techniques for project evaluations that would
otherwise have used UDVs. As agencies gradually
adopt CVM and TCM and develop a more
comprehensive set of regional models, reliance on
the UDV can be expected to diminish.

(c) Calculating values. The estimates of annual
use are combined with the selected unit day values
to get an estimate of annual recreation benefits.
The value assigned to each activity or category of
activities is multiplied by the number of recreation
days estimated for that activity. The products are
then summed to obtain the estimate of the total
value of an alternative. Recreation days to be
gained and lost or foregone as a result of a
particular alternative are listed and valuated
separately, not merely shown as net recreation
days. Transfers of recreational users to or from
existing sites in the region must be calculated, and
the net regional gain or loss used in the final
benefit estimated. Adequate information must
appear in the discussion of the use estimation and
valuation procedure or elsewhere in the report
concerning the alternative being considered, so
that the reader can derive a similar value for each
activity.

(b) Estimating use in the UDV method. (1) Using
the ranges of values requires the study of estimates of annual use foregone and expected at
recreation sites. Use can be estimated by a use
estimating equation or per capita use curve as discussed above, but when these means are available, the second step of the travel cost method
should generally be used instead of UDVs to
derive the benefit.
(2) The capacity method is an alternative
method of estimating use, but it has severe
limitations. The capacity procedure involves the
estimation of annual recreation use under
without-project and with-project conditions through
the determination of resource or facility capacities
(taking into consideration instantaneous rates of
use, turnover rates, and weekly and seasonal
patterns of use). Seasonal use patterns are
dependent on climate and culture and probably
account for the greatest variation in use estimates
derived through this method. In general, annual
use of outdoor recreation areas, particularly in
rural locations and in areas with pronounced
seasonal variation, is usually about 50 times the
design load, which is the number of visitors to a
recreation area or site on an average summer
Sunday. In very inaccessible areas and in those
known for more restricted seasonal use, the
multiplier would be less; in urban settings or in
areas with less pronounced seasonal use patterns,
the multiplier would be greater. In any case, the
actual estimation of use involves an analytical procedure using instantaneous capacities, daily turnover rates, and weekly and seasonal use patterns
as specific data inputs.

Section
IX—
NED
Benefit
Evaluation Procedure: Commercial
Fishing
2.9.1 Introduction.
This section provides procedural guidance for
the evaluation of the national economic
development (NED) benefits of water and related
land resources plans to commercial fishing. These
procedures apply to marine, estuarine, and fresh
water commercial fisheries for both fish and
shellfish.
2.9.2 Conceptual basis.
(a) The NED benefits are conceptually measured as the change in consumers' and producers'
surplus as a result of a plan. However, since
proper measurement of these quantities ordinarily
requires estimates of supply and demand
elasticities, reasonable approximations may be
obtained by the following methods:
(1) When no change in aggregate fish catch is
expected as a result of a plan (Perhaps because
of an effective quota system), NED benefits may
be measured as cost savings to existing fish
harvests.

(3) Because the capacity method does not involve the estimation of site-specific demand, its
use is valid only when it has been otherwise
determined that sufficient demand exists in the
market area of project alternatives to
accommodate the calculated capacity. Its greatest
potential is therefore in urban settlings where
sufficient demand obviously exists. Additionally, its
use should be limited to small protects with (i) a
facility orientation (as opposed to a resource
attraction), and (ii) restricted market areas that
would tend to make the use of alternative use
estimating procedures less useful or efficient.

(2) When the fish catch is projected to change
as a result of a plan, but the change is too small to
affect market prices, a seasonally-weighted average of recent prices may be used to value the
without- and with-plan harvests. In this case, it may
be convenient for computational purposes to break
the total change in income into two parts: (i) the
cost savings for the existing (without-plan) catch;
and (ii) the change in net income associated with
the incremental catch. This latter part may be
87

measured as the change in total revenue due to
the increased catch minus the change in total cost
due to harvesting time increased catch.

(1) Habitat condition. The biological resources
consist of stocks of living resources subject to
commercial fishing, any living resources
ecologically related to the stocks, the migration
pattern and reproduction rate of the stocks and
any physical characteristic of the environment
essential to these living resources.

(3) When the additional fish catch is expected to
affect market prices, the change in net income
may be estimated in two parts: (i) the cost savings
for the existing, or without-plan, catch; and (ii) the
change in net income associated with the incremental catch. The incremental gross revenue may
be estimated by multiplying the change in catch by
a price midway between expected without and
with-plan prices. The incremental cost of the
harvest is then subtracted from the estimated
incremental gross revenue.

(2) The institutional setting. Existing and
expected local, State, regional, national, and
international policies and regulations governing the
harvest and sale of the affected species, including
the level of access to the fishery are included in
the without-plan condition. Other revisions of such
policies and rules of the alternative plans being
studied.

(b) Harvest costs expected to vary between the
with- and without-plan conditions should be analyzed.

(3) Nonstructural measures. The effects of
implementing reasonably expected nonstructural
measures. Nonstructural measures include
prevention of pollution to the marine environment
or relocation of shore facilities.

(1) These include the cost of development
ownership and operation; harvesting materials;
labor and management: maintenance operation,
and replacement. Examples of changed costs
include reduced travel time, reduced travel time to
safe moorage in storm conditions, reduced costs
associated with more efficient or larger boats,
reduced time awaiting favorable tides, damage
reduction to vessels or facilities, reduced fish
spoilage, and reduced maintenance expenditures.
If costs associated with plan measures (e.g., dock
costs, harbor facilities, etc.) are included in the
plan cost analysis, exclude them from harvest
costs.

(4) Market conditions. Information on the
without plan situation includes the projected
number of harvesters, the percentage of their time
and capacity utilized, harvest technology, the
markets in which they buy inputs, fishing efforts,
probable harvests, harbors and channels utilized,
ex-vessel price of harvests, and probable
processing and distribution facilities. See 2.9.2.
Project market conditions that are consistent with
the projected biological and institutional conditions.
(b) With-plan condition. The with-plan condition
is the most likely condition expected to exist in the
future with a given alternative. The elements and
assumptions included in the without-plan condition
are also included in the with-plan condition.
Special attention should be given to tracing
economic conditions related to positive or negative
biological impacts of the propose plan.

(2) Value purchased a input at current market
prices. Value all labor, whether operator, hired or
family at prevailing labor rates. Value
management at 10 percent of variable harvest
costs and interest at plan discount rates.
(3) Project current production costs to the
selected time periods; any changes should reflect
only changes in catch or physical conditions.

2.9.4 Evaluation procedure: General.
Follow the steps in 2.9.5 - 2.9.8 to estimate NED
benefits to commercial fishing from water or
related land resources plans. The level of effort
expended on each step depends on the nature of
the proposed project, the reliability of data, and the
degree of refinement needed for plan formulation
and evaluation. (See Figure 2.9.4.)

2.9.3 Planning setting.
(a) Without-plan condition. The without-plan
condition is the most likely condition expected to
exist in the future in the absence of any of the
alternative plans being considered. Several
specific elements are included in the without-plan
condition:

88

Figure 2.9.4 -- Commercial Fishing Benefit Evaluation Procedure

Identify biological
study area

Identify economic
study area

Define process by which
areas are linked

Describe biological
conditions without the plan

Describe institutional
setting without plan

Describe biological
sphere with plan

Describe economic
setting without plan

Describe economic
setting with plan

Compute NED Benefits

89

2.9.5 Evaluation
affected areas.

procedure:

Identify

the

identified by each alternative plan and the without-plan.

(a) Identify the areas which the proposed
alternative plans will have biological impacts.

(c) Compute the NED benefit from an
alternative plan as the value of the change in
harvest less the change in harvesting cost from the
without-plan condition to the with-plan condition.

(b) Identify the areas in which the proposed alternative plans will have economic impacts.

2.9.9 Problems in application.

(c) Describe the process by which the biological
and economic study areas are linked.

(a) As the harvest rate of living stocks goes up,
it is possible to reach a range in which the
increases in annual harvesting efforts will actually
produce a long-run decrease in the quantities
harvested. In the absence of effective limits on
harvesting, it is possible that commercial fishing
will operate in this range of absolute decreasing
returns. This is possible because individual
operators will compare only their revenues and
costs; they will not be concerned with the absolute
productivity of the stock. This can be very
important in determining NED unfits because what
may appear to be a positive effect (something that
encourages an increase in harvesting effort) may
ultimately result in negative benefits (decreased
total harvest and increased total cost per unit of
harvest).

2.9.6 Evaluation procedure: Determine the
without-project condition.
(a) Estimate the harvest of the relevant species
in physical terms if a plan is not undertaken. Include a detailed description of the stock, including
catch per unit of effort and whether the estimated
harvest is at, or near. the range of absolute
decreasing returns. (See 2.9.3(a)(1) and 2.9.9(a).)
(b) Describe the most likely set of institutional
conditions that would exist without a project. (See
2.9.3(a)(2).)
(c) Estimate the total cost of harvesting the relevant species in each of the relevant years if a plan
is not undertaken. For each relevant species,
determine the current weighted ex-vessel price
corrected for seasonal fluctuations. (See
2.9.3(a)(4).)

2.9.7
Evaluation
conditions that
alternative plan.

(b) The fact that fish are common, as opposed to
private, property creates special problems in
measuring NED benefits. Unless entry is restricted,
excessive quantities of capital and labor may enter
a fishery; that is, entry may continue until the ”economic rent” from the living stock is dissipated. This
excess entry will result in economic inefficiency in
the utilization of fishery resources because the
value of the resulting extra output will be less than
the social opportunity cost of the entry. Some economic benefits may be realized but the total benefits will not be as large as they might be if entry
were restricted. Although evaluation of this potential has been limited by the specification of the
with- and without-plan condition in 2.9.3, three specific points are worthy of separate mention.

procedure:
Determine
would exist with an

(a) Estimate the harvest of the exploited stocks
in each of the relevant years if an alternative plan
is undertaken.
(b) Estimate the seasonally corrected current
price of the harvested species and the total cost of
harvesting in each of the relevant years if a plan is
undertaken. This will require an understanding of
the economics of entry and exit for the fish harvesting industry, as well as the effects of a change in
harvest rates on the catch per unit of effort.

(1) Transitory benefits. Because the benefits from
harvesting open-access fisheries tend to be dissipated through entry of excess capital and labor,
some NED benefits from commercial fishing can
be transitory. It will therefore be necessary to
determine how many years these benefits will last
and in what amounts for each year.

2.9.8 Evaluation procedure: Estimate NED
benefits.

(2) Industry capacity. The excess capacity that
will normally exist will make it difficult to obtain a
proper estimate of changes in cost associated with
changes in harvests. In some instances, idle boats
will be available and the only additional costs will
be operating costs, in other instances, vessels that
are already operating will be able to harvest the

(a) Calculate the ex-vessel value of the harvest
(output) for each alternative plan and for the
without-plan condition.
b) Determine the harvesting costs, including
nonproject
operation,
maintenance,
and
replacement, for the level of catch (output)

90

extra catch without significant change in variable
costs.

Table 2.9.11
Benefit

(3) Regulation. Because of the tendency of open
access fisheries to attract excess capital and labor
which can deplete the stocks, most commercial
fishing operations are currently subject to government regulations which stipulate the manner, time,
place, etc., in which harvesting may take place.
These stipulations usually result in harvesting
activity that is not as economically efficient as it
might be. These stipulations will therefore affect
the size of NED benefits.

(1) Change in output........................................
(2) Value of change in output (line1 times
expected price).........................................
(3) Change in costs ........................................
(4) NED benefit (line 2 minus line 3) ................

Years
1

2

.......... .......... ..........
.......... .......... ..........
......... ......... .........
......... .......... .........

Section X—NED Benefit Evaluation
Procedures: Other Direct Benefits

2.9.10 Data sources.
(a) Data for annual harvests, demand,
harvesting and processing costs, ex-vessel and
other prices, physical production, biological
modeling, models or information about
management policies and regulations, and survey
results are available from several Federal, State,
and local government agencies, universities
(especially those with sea grant programs), private
organizations (such as industry groups, fishermen
unions, or cooperatives), regional fisheries
management councils, and international commissions or organizations.

2.10.1 Introduction.
This section provides a definition of other direct
benefits and procedural guidelines for the
evaluation of other direct benefits attributable to
water resources plans and projects. Other direct
benefits are the incidental direct benefits of a
project. The other direct benefits to be included in
the NED benefit evaluation are the incidental
effects of a project that increase economic
efficiency by increasing the output of intermediate
final consumer goods over and above the direct
outputs for which the plan is being formulated.

(b) Initial contacts should be made with the National Marine Fisheries Service Regional Office,
United States Coast Guard, State resource agencies having management or other responsibility for
the fishery or resource in question, and all local or
regional fishery councils, commissions, or
institutes that have responsibility or jurisdiction or
that are functioning within the area affected by the
project. Fisheries dynamics biologists at
universities or at National Marine Fisheries Service
regional laboratories will be the best source of
information on biological effects and their
repercussion in the market.

2.10.2 Conceptual basis.
Other direct benefits are incidental to the primary
purposes of water resource projects. Primary purposes of projects are those purposes for which the
alternative plans are formulated. Other direct
benefits derive from incidental increases in outputs
of goods and services or incidental reductions in
production costs.
2.10.3 Planning setting.
Standard planning procedures involve comparison of the with-project condition to the without-project condition. In considering other direct benefits,
define the boundary of direct influence of the plan.
Economic efficiency gains to firms in production
and satisfaction gains to consumers other than
those identified as the direct beneficiaries of primary project purposes should be valued and
measured as other direct benefits.

2.9.11 Report and display procedures.
(a) Clear presentation of study results, as well as
documentation of key input data assumptions and
steps in the analysis, will facilitate review of the
report. Table 2.9.11 is a suggested method of data
presentation. Its use will provide the reader with information on physical changes in output as well as
value.

(a) Without-project condition. Forecast future
conditions
expected
to
exist
without
implementation of the plan. The without-project
condition is the projection of output and production
levels and costs of production likely to be achieved
in the absence of a plan.

(b) Because the benefits are broken down into
annual flows, it will be possible to determine if and
when the open access nature of commercial
fishing will lead to a dissipation of any NED
benefits provided by the project.

91

n

(b) With-project condition. Future conditions expected to exist when the plan is fully implemented.
The with-project condition is the projection of
output and production levels and the costs of production likely to be achieved with the plan.

emphasized that it is not practical or economic to
trace out all direct effects.
(a) Determining the “context" or system within
which the major incidental impacts might be
experienced is a useful first step in identifying likely
direct benefits worth measuring. The immediate
watershed or the subsystem of a river system
would constitute a relevant context. The
delineation of geographical and economic market
regularities in which impacts are likely to be felt
cannot usually encompass the whole regional
economy in a highly industrialized area.
Nevertheless, it is important to avoid delineating
too small an area in which to search for possible
effects.

2.10.4 Evaluation procedure: General.
(a) When applicable, compute other direct benefits according to the procedures for measuring
benefits in this chapter. Some benefits, such as reduced water supply treatment costs, can be computed 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
following 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
floodplains 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 density; 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 increase as
game fish productivity rises. Shrimp production
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 incidental effect
is the improvement in water quality to downstream
users; turbidity is reduced in winter and water
hardness is reduced in summer. Treatment costs
are lower for firms and households. If the
impoundment causes the recharge of groundwater
basins in the vicinity of the dam site or along the
stream course, these incidental effects are other
direct benefits. Pumping costs could be reduced.

(b) Another procedure for identifying likely impacts 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—oxygenation,
turbidity,
temperature, etc.—can undergo change that may
impact on fish and wildlife resources 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 function, and firm capacity. Studies of industrial structure and the interdependence of firms In the
supply of various inputs and the use of outputs can
provide valuable supplemental information.

2.10.7 Evaluation
uncertainty.

procedure:

Risk

and

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 uncertainty attached to the hypothesized outcomes can
be reduced by clearly revealing areas of uncertainty. 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 involve high degrees of risk and relative uncertainty,
based as they are on the total mix of project outputs and the effect these mixes would have on
stimulating increased productivity.

2.10.5 Evaluation procedure: Problems in
application.
The major problems encountered in the
estimation of other direct NED benefits are the
identification of the firms, industries, and
consumers who will be subject to these incidental
effects caused by projects and plans. It must be

92

2.10.8 Report and display procedures.

(b) Conceptually, any employment, anywhere in
the Nation, of otherwise unemployed or underemployed resources that results from a project represents a valid NED benefit. However, primarily because of identification and measurement problems
and because unemployment is regarded as a temporary phenomenon, only those labor resources
employed onsite in the construction or installation
of a project or a nonstructural measure should be
counted. Benefits from use of otherwise unemployed or underemployed labor resources may be
recognized as a project benefit if the area has substantial and persistent unemployment at the time
the plan is submitted for authorization and for appropriations to begin construction. Substantial and
persistent unemployment exists in an area when:

Other direct benefits should be identified by
component and added onto the benefits of the
benefit cost analysis. The method used to value
the benefits should be presented in the report.
Provide a tabular breakdown of all other direct
benefits claimed for the project.

Section XI—NED Benefit Evaluation
Procedures: Unemployed or
Underemployed Labor Resources
2.11.1 Introduction.
The economic effects of the direct use of otherwise unemployed or underemployed labor resources during project construction or installation
may, under certain conditions, be included as a
national economic development (NED) benefit.
Because of the dynamic nature of unemployment
situations, the appropriateness of these benefits
will be determined in consideration of economic
conditions existing at the time the project is
submitted for authorization and for appropriations
to begin construction. This section provides
procedural guidance in the evaluation of NED
benefits resulting from increased employment of
these labor resources. Use the procedures
described in 2. 11.4 to calculate these benefits for
all structural and nonstructural alternatives
considered during the planning process.

(1) the current rate of unemployment, as determined by appropriate annual statistics for the most
recent 12 consecutive months, is 6 percent or
more and has averaged at least 6 percent for the
qualifying time periods specified in paragraph (2)
and
(2) the annual average rate of unemployment has
been at least: (i) 50 percent above the national
average for three of the preceding four calendar
years, or (ii) 75 percent above the national average
for two of the preceding three calendar years, or
(iii) 100 percent above the national average for
one of the preceding two calendar years.
(c) Only the portion of project construction activity
located in such an area is eligible for employment
benefits as calculated in accord with the procedures specified below. Any benefit claimed
should be clearly justifiable both in terms of availability of amounts of unemployed and/or underemployed labor and their skills and occupations.

2.11.2 Conceptual basis.
(a) The social cost of a project is less than the
market contract cost in situations in which otherwise unemployed or underemployed labor resources are used in project construction. The opportunity cost of employing otherwise unemployed
workers in project construction or installation is
equal to the value of leisure time foregone by such
workers. Because society does not give up any alternative production of goods and services and because it would be difficult to measure the value of
leisure time foregone, a zero opportunity cost is
used in these procedures. The opportunity cost of
employing otherwise underemployed workers
equals their without-project earnings, which, by
virtue of their underemployment, are less than
their market cost. The most straightforward way to
reflect the effects of employing unemployed or
underemployed labor resources would be to
reduce by the appropriate amount the project
construction costs in the NED account, but this
method would cause accounting difficulties in
appropriations, cost allocation, and cost sharing.
Therefore, these effects are treated as a project
benefit in the NED account.

2.11.3 Planning setting.
(a) Without-project condition. The without-project
condition is the most likely condition expected to
exist in the future in the absence of a project, including known changes in law or public policy. The
evaluation of NED benefits associated with the use
of otherwise unemployed and underemployed
labor resources is linked to the number by which
these resources would be reduced over time
without a project.
(b) With-project condition. The with-project
condition is the most likely condition expected to
exist in the future with a given project alternative.
There is a different with-project condition and thus
a different employment benefit for each alternative
plan. Currently, the employment benefit cannot be
estimated directly on the basis of a comparison of
the size of the pools of unemployed and
underemployed labor with and without a project.
Instead, the benefit procedure implicitly projects
93

the percentage of project labor hires estimated to
come from the unemployed labor pool.

taken directly from the PWIP report, as PWIP has
no local hire rule. Case 2 covers situations in
which there is a local hire rule; the reference data
are modified to account for an 80-percent local
hire by scaling up the local hires (for skilled and
unskilled workers) to 80 percent, but retaining the
distribution of local hires previously employed to
local hires previously unemployed.

2.11.4 Evaluation procedure.
(a) Step 1. Calculation of employment benefits is
limited to onsite project construction or installation
activity in eligible regions as defined in 2.11.2(b).
The first step therefore is to determine whether a
project is wholly or partially located in an eligible
area.

(i) Case 1, NED benefits. no local hire rule. Multiply the total wages determined by categories of
workers (skilled, unskilled, and other) by the
following percentages to obtain NED benefits by
year of construction:

(b) Step 2. Estimate the number of skilled and
unskilled unemployed construction workers in the
labor area. Construction labor pool data are
usually available from local offices of State
employment security agencies.

Skilled — 30
Unskilled — 47
Other — 35

(c) Step 3. Determine the labor requirements for
plan implementation as follows:

(ii) Case 2. NED benefits, local hire rule. Apply
the following percentages in case 2 situations:

(1) Labor cost. The manpower requirements of
water resource projects differ widely. Construction
cost estimate data will provide the percentage of
labor cost to total construction contract cost.

Skilled — 43
Unskilled — 58
Other — 35

(2) Manpower requirements. Analyze the plan's
construction work force and schedule to determine
manpower requirements over the construction
period for skilled and unskilled categories of workers. Convert these data to total construction wages
in skilled and unskilled categories by year of construction. In addition, estimate the yearly wage bill
of other workers needed on the project. Use the
occupational tables in Appendix 1 of this section to
categorize different types of workers.

Because the 80-percent local hire rule is a goal,
nota requirement, support these percentages by
data that indicate the local hire goal is likely to be
met. If this is unlikely, reduce Case 2 percentages
to numbers between the standard Case 1 and
Case 2 percentages.
(iii) Annual NED benefits. Convert the NED benefits by year of construction to an annual equivalent
basis using the current discount rate.
(2) Alternative methods. The percentages of unemployment hires may be changed from those
used in the standard method if the change can be
supported by an empirical study that shows different percentages of unemployed and underemployed workers on a similar project, or on a segment of the same project, for labor market conditions similar to those of the proposed project. In
using this method, it may be necessary to vary the
categorization of construction workers used in the
standard method. The opinions of experts such as
local State employment security agencies, local
construction firms, associations of contractors, and
labor unions may not be substituted for empirical
data. Studies used to document alternative
percentages for specific types or locations of
projects should be cited if not included in the
project report.

(d) Step 4. Compare the annual manpower requirements of the project to the size of the unemployed labor pool in eligible regions. If labor availability is significantly larger than labor
requirements, proceed to the next step. If not,
reduce the percentages in the next step based on
one or both of the following: expert interviews; or a
careful match up of requirements and availability
for specific types of jobs (e.g., carpenters).
(e) Step 5. Calculate NED employment
benefits— (1) Standard method. The following
percentages are derived from An Evaluation of the
Public Works Impact Program (PWIP). 2 Although
the projects studied in the PWIP report are not fully
comparable to many typical water projects, the
report does provide an empirical basis for relating
public works expenditures to employment of
unemployed workers. Case 1, below, covers
situations in which there is no “local hire” rule; it is

(3) The percentages are used in the standard
method to measure wages paid directly to
previously unemployed workers. Previously
employed workers may vacate jobs that then
become available to unemployed workers, but
there are no empirical data to support a
quantification of such indirect effects and no

2

Economic Development Administration, U.S.
Department of Commerce. An evaluation of the Public Works
Impact Program (PWIP). Springfield, VA, National Technical
Information Service (PB-263 089), January 1975.

94

Reboundman
Road Laborer
Roof Helper
Sand Blaster
Set-up-man
Sprinkler Apprentice
Stake Setter
Tender
Termite Operator
Tile Setter Operator
Vibrator Operator
Water Truckman
Lumberman and Nurseryman
Tree Thinner
Treeman
Treeplanter
Operating Engineer Apprentice
B. M. Apprentice
EO Group III
EO Group 222
Plumber Apprentice
Plumber Apprentice
Plumber Helper
Painter’s Helper
Sheet Metal Apprentice
Vibrator Operator
Watchman
Night Watchman

estimates of these effects should be included in
the NED account.

2.11.5 Report and display procedures.
Include the employment benefits of each
alternative plan as a line item in the display of NED
benefits in the system of accounts for any project
or portion of a project located in an area that
contains
unemployed
or
underemployed
resources, as defined in 2.11.2(b).

Appendix 1 to Section XI—Occupational Tables
Blue Collar Unskilled Occupations
Bricklayer Apprentice
Carpenter Apprentice
Apprentice Carpenter
Carpenter Helper
Chainman
Deck Hand
Electrical Apprentice
Apprentice Electrician
Apprentice Wireman
Electrician Trainer
Iron Worker Apprentice
Laborer
Asphalt Distributor
Assistant Carpenter
Bottom Laborer
Brick Tender
Carpenter Aid
Carpenter Helper
Chainsawman
Common Laborer
Concrete Braker
Concrete Laborer
Concrete Saw
Construction Laborer
Ditch Laborer
Drill Helper
Flag Person
Hod Carrier
Kettleman
Laborer
Laborer Apprentice 3rd
Laborer Group I
Laborer Group V
Labor Shop Man
Laborer Topman
Laborer Utilityman
Landscape Laborer
Mason Helper
Mason Laborer
Mason Tender
Mortarman
Mortarmler
Pipe Layer
Pipe Helper
Pipe Fitter
Plasterer Tender
Powderman
Pusher
Rakeman

Blue Collar Skilled Occupations
Blaster
Boilermaker
Boilermaker Foreman
Bricklayer
Block Layer
Truckpointer
Brick mechanic
Bricklayer Foreman
Carpenter
Form Setter
Journeyman Carpenter
Soft Floor Layer
Carpenter Foreman
Carpenter Superintendent
Cement Mason
Finisher
Journeyman Finisher
Cement Mason Foreman
Diver
Driller
Drill Rig Operator
Electrician
Journeyman Electrician
Mechanical Electrician
Wireman
Journeyman Wireman
Electrical Foreman
General Foreman
General Labor Foreman
Project Foreman
Glazier
Iron Worker
Reinforcing Ironworker
Structural Ironworker
Steel Worker
Steel Erector
Steel Setter

95

Reinforcing Steel Worker
Iron Worker Foreman
Labor Foreman
Construction Foreman
Foreman
Job Foreman
Lead Foreman
Lather
Lather Foreman
Master Mechanic
Mechanic Welder
Repairman
Repairman Leadman
Oiler
Oiler Equipment Operator
Oiler Operator Group II
Oiler Track Type
Operating Engineer
Asphalt Distributor Operator
Asphalt Heaterman
Backhoe Operator
Blade Operator
Bobcat Operator
Bulldozer Operator
Case Operator
Class A Operator
Class C Operator
Crane Operator
Digger Operator
Distributing Operator
Dragline Operator
Equipment Operator
Equipment Operator Group III
Front End Lift Fork Operator
Heavy Equipment Operator
Hi-Lift Operator
Lift Fork Operator
Light Equipment Operator
Loader Operator
Maintenance Loadman
Motor Grader Operator
Operator Group III
Pan Operator
Park Equipment Operator
Power Drive Moister Operator
Power Equipment Operator
Pneumatic Tire Roller Operator
Pneumatic Tractor Operator
Roller Operator
Scraper Operator
Shovel Operator
Tractor Operator
Traxeavator Operator
Trenching Machine Operator
Truck Loader Operator
Operating Engineer Foreman
Leader Operator
Painter
Brush Painter
Roller Painter
Spray Painter
Painter Foreman
Pile Drive
Pipe Fitter
Sp. Box Man
Pipe Fitter Foreman
Sprinkler Foreman
Plasterer

Plasterer foreman
Plumber
Pipe Layer
Plumber Foreman
Plumber General Foreman
Plumber Superintendent
Rigger Foreman
Roofer
Sheet Metal Worker
Journeyman Sheet Metal
Sheet Metal Mechanic
Sheet Metal Operator
Sheet Metal Foreman
Steam Fitter
Tile Setter
Truck Driver
Worker
Axle Truck Driver
4 Axle Truck Driver
Dump Truck Driver
Road Truck Driver
Tandem Truck Driver
Truck Driver II
Truck Driver Highway
Waterproof Foreman

Section XII—NED Cost Evaluation
Procedures
2.12.1 Introduction.
This section provides procedures for the evaluation of NED costs of structural and nonstructural
elements of water resource plans and projects.
2.12.2 Conceptual basis.
(a) Project measures, whether structural or nonstructural, require the use of various resources.
NED costs are the opportunity costs of resource
use in evaluating NED costs, resource use must be
broadly defined so as to fully recognize scarcity as
a component of value. This requires consideration
of the private and public uses that producers and
consumers are currently making of available
resources or are expected to make of them in the
future.
(b) The opportunity costs of resource use are
usually reflected in the marketplace. When market
prices adequately reflect total resource values, they
are used to determine NED costs. When market
prices do not reflect total resource values, surrogate values are used appropriately to adjust or replace market prices.
(c) Total NED cost is the market value of a resource plus other values not reflected in the market
price of the resource; it therefore accounts for all
private sector and public sector uses. Market price
is used to reflect the public sector use of resources

96

required for or displaced by a project, and
surrogate value is used to reflect the public sector
use.

costs incurred before the beginning of the period of
analysis by adding compound interest at the
applicable project discount rate from the date the
costs are incurred to the beginning of the period of
analysis. Convert all NED costs to an annual
equivalent value over the period of analysis.

(1) The market price approach relies on the
interaction of supply and demand. Price is
determined through transactions on the margin
between knowledgeable and willing buyers and
sellers, neither of whom are able to influence price
by their individual decisions. Distortions in market
price occur if one or more of the conditions of
perfect competition is violated.

(c) Project NED costs may be adjusted by an allowance for the salvage value of land, equipment,
and facilities that would have value for nonproject
uses at the end of the period of analysis. Significant
salvage values of replaceable items (e.g., generators) will normally become adjustments to
allowances for replacement costs.

(2) The surrogate value approach involves the
approximation of opportunity costs based on an
equivalent use or condition. Surrogate values are
frequently used in restricted markets and in nonmarket situations.

2.12.5 Evaluation procedure: Implementation
outlays.
The NED costs of implementation outlays include
the costs incurred by the responsible Federal entity
and, where appropriate, contributed by other Federal or non-Federal entities to construct, operate, and
maintain a project in accordance with sound engineering and environmental principles and place it in
operation. These costs are the remaining postauthorization planning and design costs; construction
costs; construction contingency costs; administrative services costs; fish and wildlife habitat mitigation
costs; relocation costs; historical and archaeological salvage costs: land, water, and mineral
rights costs; and operation, maintenance, and replacement costs.

(d) Proper NED analysis requires that project
NED costs and benefits be compared at a
common point in time. Costs are calculated in
annualized terms (see 2.1.3).

2.12.3 Planning setting.
The basis for the evaluation rests in a thorough
analysis of expected conditions in the future with a
project and without a project. This requires identification of those resources that will be affected by a
project; the current value of such uses is
measured as the economic worth to the Nation of
the services associated with those uses.

(a) Postauthorization planning and design costs.
The costs are the direct cost for investigations, field
surveys, planning, design, and preparation of specifications and construction drawings for structural
and nonstructural project measures. In the evaluation procedure, base these costs on the actual current costs incurred by the responsible Federal entity
for carrying out these activities for similar projects
and project measures. They may be computed as a
percentage of construction costs when there is a
documented basis for the rate used. Make adjustments when appropriate to reflect circumstances special to the project under consideration.

2.12.4 Evaluation procedure: General
(a) Resources required or displaced to achieve
project purposes by project installation and/or operation, maintenance, and replacement activities
represent a NED cost and should be evaluated as
such. Resources required or displaced to minimize
adverse impacts and/or mitigate fish and wildlife
habitat losses are also NED costs. Costs for features not required for project purposes, avoiding
adverse effects, and/or mitigating fish and wildlife
habitat losses are not project-related NED costs
and should not be evaluated.

(b) Construction costs. These costs are the direct
cost of installing project measures. They should be
based on the market value of goods and services
required to install project measures, including those
measures required for avoiding adverse environmental effects and public health and safety risks.
They include the cost of purchased materials (including associated transportation costs); equipment
rental or purchase; construction wages or salaries
(including social security and fringe benefit costs);
and contractors' management, supervision, overhead, and profit. Base such costs on current contract bid items in the project area or on the current

(b) Base all NED costs on current costs adjusted
by the project discount rate to the beginning of the
period of analysis as defined in Section 1, 2.1.2(c).
Compute all costs at a constant price level and at
the same price level as used for the computation
of benefits. Base current costs on the price level at
the time of the analysis. These costs will be updated in the year(s) the project is submitted for
authorization and/or appropriations. Discount
deferred costs to the end of the installation period,
using the applicable project discount rate. Increase
97

market value of purchased materials and services,
etc.

(f) Relocation costs. (l) These are project costs
associated with—

(c) Construction contingency costs. These are
project costs normally added to reflect the effects
of unforeseen conditions on estimates of construction costs. They are not an allowance for inflation
or for omissions of work items that are known to be
required. They are included to cover unforeseen
construction problems. These costs will vary with
the intensity of the surveys and investigations
performed. The variability of size conditions, and
the type of project measures being installed. They
may be computed as an appropriate percentage of
estimated construction costs.

(i) the requirements of the Uniform Relocation
Assistance and Real Property Acquisition Policies
Act of 1970 (Pub. L. 91-646); and
(ii) the relocation of highways, railroads, and utility
lines.
(2) Real property acquisition relocation payments
are applicable to a displaced person, business, or
farm operation. The costs include moving and
related expenses for a displaced person, business,
or farm operation; financial assistance for
replacement housing for a displaced person who
qualifies and whose dwelling is acquired because of
the project; and termination payments for dislocated
businesses whose owners choose to close out.
Base the NED cost of replacement housing on
replacement in kind. (Costs over and above
replacement in kind are treated as financial costs
for nonproject purposes.) Base these costs on
current market values.

(d) Administrative services costs. These are the
costs associated with the installation of project
measures, including the cost of contract
administration; permits needed to install the
project measures; relocation assistance advisory
services; administrative functions connected with
relocation payments; review of engineering plans
prepared by others; government representatives;
and necessary inspection service during
construction to ensure that project measures are
installed in accordance with the plans and
specifications. Base these costs on the actual
current costs incurred by the responsible Federal
entity for carrying out these activities for similar
projects and project measures. These costs may
be computed as a percentage of construction
costs if there is a documented basis for the rate
used. Make adjustments when appropriate to
reflect unusual circumstances special to the project under consideration.

(3) Base the relocation cost of railroads and utility
lines on the costs of replacement in kind. In the
case of highways, base the relocation cost on replacement that reflects the current traffic count and
current standards of the owner, which may result in
a justified improvement over the configuration of the
existing roadway. The additional relocation cost of
highways that are upgraded to increase their carrying capacity for project purposes such as recreation is also a project cost. The relocation cost of
highways, railroads, and utility lines shall include all
project outlays associated with their relocation, including planning and design costs; construction
costs; construction contingency costs; administrative services costs; fish and wildlife habitat mitigation
costs; land, water, and mineral rights costs; and
historical and archaeological salvage costs. Base
these costs on current market values and the actual
current costs incurred by the Federal entity for
carrying out similar relocations.

(e) Fish and wildlife habitat mitigation costs.
These are the costs of mitigating losses of fish and
wildlife habitat caused by project construction, operation, maintenance, and replacement. The
mitigation measures to be included in the project
will be determined by the responsible Federal
entity in coordination with Federal and State Fish
and Wildlife Agencies as required by the fish and
Wildlife Coordination Act (Pub. L. 85-625).
Installation of these mitigation measures should be
concurrent with the installation of other project
measures, where practical. These costs include all
project outlays associated with the installation of
mitigation measures. Including postauthorization
planning and design costs; construction costs;
construction contingency costs; administrative
services costs; relocation costs; land, water, and
mineral rights costs; and operation, maintenance,
and replacement costs. Base the costs on current
market values and the actual current costs
incurred by the Federal entity for carrying out these
activities for similar mitigation measures.

(g) Historical and archaeological salvager operation costs. These are project costs associated with
salvaging artifacts that have historical or archaeological values as prescribed by the Preservation of Historic and Archaeological Data Act (Pub. L.
93-291). Base these costs on the current market
price of salvage operations carried on during construction.

98

2.12.6 Evaluation procedure: Associated costs.

(h) Land, water, and mineral rights costs. (1)
These costs include all costs of acquiring the land,
water, and mineral rights required for installing, operating, maintaining, and replacing project measures. They include all expenditures incurred in
acquiring land, water, and mineral rights,
easements, leases, and rights-of-way. Such costs
include the cost of the land, water, and mineral
rights minus salvage value; the cost of surveys
incident to a sale; legal fees and transfer costs;
foregone real estate taxes: and severance payments.
Base these costs on current market values and the
actual current costs incurred by the Federal entity for
carrying out similar land, water, and mineral rights
acquisitions. Base the market value of easements on
the difference in market value of land without the
easement and with the easement.

Associated costs are the costs of measures
needed over and above project measures to achieve
the benefits claimed during the period of analysis.
For example, associated costs include the cost of
irrigation water supply laterals, if they are not
accounted for in the benefit estimate. Base associated costs on the current market prices of
goods and services required for the installation of
measures needed over and above project measures.
2.12.7 Evaluation procedure: Other direct costs.
(a) These are the costs of resources directly required for a project or plan, but for which no implementation outlays are made. Consequently, they are
included in the economic costs of a plan but not in
the financial costs. These costs may be important for
both structural and nonstructural plans. For example,
a zoning plan to preserve floodplain values by
restricting development would have as a cost the
value of with-project development opportunities
foregone. A plan that responds to demand growth by
reallocating existing outputs from low value uses to
high value uses through pricing mechanisms (i.e.,
raising the price of existing outputs) would have as its
main cost the value of the outputs to the users who
forego its use as a result of its higher price. On the
other hand, a structural project may displace
recreation use at the project site. Whenever possible,
compute these costs using the procedure set forth in
this manual for computing benefits. If these costs are
not quantified, they should be otherwise identified.

(2) Some land, water, and mineral rights are
owned by Federal, State, and local governments and
have been committed to specific uses. Base the
NED cost of using such resources for project
purposes consistent with their committed uses on the
surrogate value of the public services provided by the
resources. For example, if State-owned land
committed to recreation use is to be used for project
recreation development, its NED cost is not the
market value of the land, but the value of the recreation services that would be provided by the land
without the project. Public domain lands not
committed to specific uses should be valued at the
market value of comparable private land or a surrogate use value, or a combination if there are complementary uses.
(i) Operation, maintenance, and replacement
costs. These costs represent the current value of
materials, equipment, services, and facilities needed
to operate the project and make repairs and
replacements necessary to maintain project
measures in sound operating condition during the
period of analysis. They include salaries of operating
personnel; the cost of repairs, replacements, or
additions; and an appropriate charge for inspection,
engineering, supervision, custodial services, and
general overhead. When operation, maintenance, or
replacement will be performed by contract, the cost
should include an allowance for contingencies and
the costs of survey, planning design, and administrative services. Base these costs on actual
current costs incurred for carrying out these activities
for similar projects and project measures. When the
project is an addition to or extension of an existing
project for which the costs and benefits are not
included or otherwise involved in the project analysis,
include only the additional cost of operation,
maintenance, or replacement necessitated by the
addition or extension to the existing project. Adjustments can be made when appropriate to reflect
circumstances special to the project under consideration.

(b) Other direct costs also include uncompensated
NED losses caused by the installation, operation,
maintenance, or replacement of project or plan
measures. All uncompensated net losses in
economic outputs (not transfers) that can be quantified shall be considered project NED costs. The
evaluation of such costs requires an analysis of
project effects both within and outside the project
area.
(c) Examples of other direct costs include increased downstream flood damages caused by
channel modifications, dikes, or the drainage of
wetlands; increased water supply treatment costs
caused by irrigation return flows; erosion of land
along stream banks caused by dams that prevent the
replenishment of bed load material; loss of land and
water recreation values through channel modifications, reduced instream flow due to consumptive
use of water by irrigated agriculture, or inundation by
reservoirs; increased transportation costs caused by
rerouting traffic around a reservoir; new or increased
vector control costs caused by the creation of
wetlands; and decreased output or increased cost
payoff unit of output of private firms caused by
project-induced decreases in raw materials. When
applicable, compute such costs using the
procedures for computing benefits contained in
this chapter. Some costs, such as increased water

99

supply treatment costs, may be computed on the
basis of increased costs to resource users.

recreation value, so the surrogate recreation value
(loss) must be added as a cost.
(c) Market prices are relatively easy to obtain.
However, some prices are subject to large fluctuations in short periods of time, so care must be
taken to determine reasonable current costs of
such items for project evaluation purposes.

2.12.8 Evaluation procedure: Problems in
application.
(a) Application of the procedures in this section
requires care to ensure that all costs are included.
The identification and determination of all associated costs and external diseconomies require full
perception of the measures required to achieve
the benefits being claimed and the impacts
produced by the actions taken. It must be
emphasized that it is not practical or economic to
trace out all other direct effects.

2.12.9 Evaluation procedure: Data sources.
Market price information is available from data
on comparable sales, Government publications
(e.g., bulletins of the U.S. Departments of
Commerce, Agriculture, and Labor), and business
reports. Data sources for those NED benefit
evaluation procedures having application to cost
analysis are covered in their respective sections of
this chapter.

(b) Application of the procedures in this section
requires care to avoid double counting. A full
understanding of the values reflected by market
and surrogate values is necessary to prevent
double counting. For example, the market value of
land that includes a private recreation
development reflects the recreation value. In this
case, double counting would result if a surrogate
recreation value (loss) were added as a cost. On
the other hand, the market value of land that
provides free public recreation does not reflect the

2.12.10 Report and display procedures.
Display NED costs identified through the procedures described above as line item entries in the
adverse effects section of the NED account. The
following display tables are suggested:

Table 2.12.9-1—Project Investment
Alternative—1

Alternative—2

Alternative—X

Unit

Unit

Unit

Quantity

Price

Amount

Quantity

Price

Amount

Quantity

Price

Amount

1. Construction cost......................

................ ............... ............... ................ ............... ............... ................ ............... ...............

2. Construction contingency
costs............................................

................ ............... ............... ................ ............... ............... ................ ............... ...............

3. Postauthorization planning and
design costs.................................

................ ............... ............... ................ ............... ............... ................ ............... ...............

4. Administrative services
costs.............................................

................ ............... ............... ................ ............... ............... ................ ............... ...............

5. Fish and wildlife habitat mitigation
costs.............................................

................ ............... ............... ................ ............... ............... ................ ............... ...............

6 Historical and archeological salvage
operation costs
7. Land, water, and mineral rights
costs..............................................

................ ............... ............... ................ ............... ............... ................ ............... ...............

8. Relocation costs.......................

................ ............... ............... ................ ............... ............... ................ ............... ...............

9. Interest during installation period at
rate of ---%...

................ ............... ............... ................ ............... ............... ................ ............... ...............

Total investment....

................ ............... ............... ................ ............... ............... ................ ............... ...............

Price level: —
Installation period: —
Period of analysis: —

100

Table 2.12.9—2 Annualized Adverse Effects
[Price level: period of analysis; discount rate]

Alternatives
1

2

X

Interest on
investment..................................................................................

............................

.............................

.............................

Amortization of
investment..................................................................................

.............................

.............................

.............................

Average operation and
maintenance...............................................................................

.............................

.............................

.............................

Major
replacement................................................................................

.............................

.............................

.............................

Associated costs a.....................................................................

.............................

.............................

.............................

Other direct costs a....................................................................

.............................

.............................

............................

Total annualized costs.............................................

.............................

.............................

.............................

Other adverse effects not evaluated in monetary terms a.........

.............................

.............................

.............................

a

Identified by type

101

This page is intentionally left blank.

102

Chapter III—Environmental Quality (EQ) Procedures
Section I—Introduction

Section II—Definitions.

3.1.1 Purpose.

3.2.1 Definitions.

This chapter provides an alternative set of procedures that may be used for evaluating the effects of
alternative water resources plans on environmental
quality (EQ). The EQ procedures in this chapter are
for Federal administrative purposes and do not
create any substantive or procedural rights in private
parties. The purpose of these procedures is to:

EQ account

(a) Establish a process for identification and description of beneficial and adverse effects of alternative plans on significant natural resources and
historic and cultural properties (referred to hereinafter as natural and cultural resources).

EQ attributes are the ecological, cultural, and
aesthetic properties of natural and cultural resources
that sustain and enrich human life.

The EQ account may be used to describe that part
of the NEPA human environment that identifies
beneficial and adverse effects on significant EQ resources and attributes.
EQ attributes

(1)Ecological attributes are components of the
environment and the interactions among all its living
(including people) and nonliving components that
directly or indirectly sustain dynamic, diverse, viable
ecosystems. In this category are functional and
structural aspects of the environment, including
aspects that require special consideration because
of their unusual characteristics.

(b) Assist agencies in meeting the requirements of
the National Environmental Policy Act of 1969, as
amended (NEPA; Pub. L. 91-190; 42 U.S.C. 4321,
et. seq.), as specified in the CEQ NEPA regulations
(40 CFR Parts 1500-1508). Relationships between
the CEQ NEPA regulations and these procedures
are noted in the text. Appendix B lists relationships
that may aid in the preparation of an environmental
impact statement (EIS).

(i) Functional aspects of the environment include
production, nutrient cycling, succession, assimilative
capacity, erosion, and other dynamic, interactive
processes and systems. Examples are the role of
wetlands as a potential sink for nutrients and pollutants; the high productivity of marshes that is often
exported to other systems; and prime and unique
farmlands.

(c) Provide a basic analytical framework for focusing the concurrent integration of other related
review, coordination, and consultation requirements
into the planning process. These other related requirements include those mandated by the Fish and
Wildlife Coordination Act of 1958, as amended (Pub.
L. 85-624; 16 U.S.C. 661, et seq.); the National
Historic Preservation Act of 1966, as amended (Pub.
L. 89-655, 16 U.S.C. 470, et seq.); the Endangered
Species Act of 1973, as amended (Pub. L. 93-205;
16 U.S.C. 1531, et seq.); and the Coastal Zone
Management Act of 1972, as amended (Pub. L.
92-583, 16 U.S.C. 1451, et seq.). These procedures
for EQ evaluation are intended to rely on and make
use of, rather than duplicate, analyses and
documentation already used by agencies for
compliance with such requirements.

(ii) Structural aspects of the environment include
plant and animal species, populations and communities; habitats; and the chemical and physical properties of air, water (surface and ground), and soil and
other geophysical resources. Examples are water
quality factors that support or are indicative of trout
fisheries; the substrate characteristics and the
aggregations of plants and animals that support a
rookery; the pH of the rainfall; pristine wilderness
areas; endangered, threatened, and other unique or
scarce plant and animal species; and rock strata with
scientific or educational uses.
(2) Cultural attributes are evidence of past and
present habitation that can be used to reconstruct or
preserve human lifeways. Included in this category
are structures, sites, artifacts, environments, and
other relevant information, and the contexts in which
these occur. Cultural attributes are found in
archaeological remains of prehistoric and historic
aboriginal occupations; historic European and
American areas of occupation and activities; and
objects and places related to the beliefs, practices,
and products of existing folk or traditional
communities and native American groups. Examples

3.1.2 Limitations.
(a) These procedures are limited to evaluation of
effects on the ecological, cultural, and aesthetic attributes of Significant natural and cultural resources.
(b) During the course of the EQ evaluation, the
planner should be aware that contributions or effects
that can be measured in monetary terms are to be
monetized and included in the NED account.

103

are campsites of prehistoric mammoth hunters, a
19th century farm stead, and a stream crossing in
longstanding use by an Appalachian community for
baptizing church members.

"desirability of scent" described on a scale of
"offensive/neutral/pleasant").
Significant
Significant means likely to have a material bearing
on the decisionmaking process. In EQ evaluation,
significant EQ resources and attributes (see 3.4.3)
and significant effects (see 3.4.12) are identified
based on institutional, public, and technical recognition.

(3) Aesthetic attributes are perceptual stimuli that
provide diverse and pleasant surroundings for
human annulment and appreciation. Included in this
category are sights, sounds, scents, tastes, and
tactile impressions, and the interactions of these
sensations, of natural and cultural resources. Examples are the sight of a pristine landscape, the view of
a historic fortress, the sound of a waterfall or brook,
the scent of a hedgerow of honeysuckle or a pine
forest, and the taste of mineral water.

Technique
A technique is a systematic procedure for measuring or otherwise describing current and future
conditions of a specified indicator in terms of the
indicator's specified unit.

EQ resource

Unit

An EQ resource is a natural or cultural form,
process, system, or other phenomenon that—

A unit is a numeric or non-numeric term in which
change in an indicator is measured or otherwise
described.

(1) Is related to land, water, atmosphere, plants,
animals, or historic or cultural objects, sites, buildings, structures, or districts; and

With-plan condition

(2) Has one or more EQ attributes (ecological,
cultural, aesthetic).

The with-plan condition is an estimation of the
most probable future condition expected to occur as
a result of implementation of a specific alternative
plan formulated during a study. The with-plan
condition includes changes likely to directly, indirectly, or cumulatively result both from the alternative
plan and from all reasonably foreseeable actions
that are not part of the plan.

Guidelines
A guideline is a standard, criterion, threshold, optimum, or other desirable level for an indicator that
provides a basis for judging whether an effect is
beneficial or adverse. Guidelines are to be based on
institutional, public, or technical recognition.

Without-plans condition

Indicator

The without-plans condition is an estimation of the
most probable future condition expected to occur in
the absence of any of the study's alternative plans.
The without-plans condition includes any changes
expected to directly, indirectly, or cumulatively result
from all reasonably foreseeable actions without any
of the study’s alternative plans. For example, if it is
most probable that within the next 20 years 60
percent of a woodland will be cleared for agricultural
purposes without any of the plans being considered
by the agency, the effects of such clearing would be
included in the without-plans conditions. Similarly, if
existing legislation, such as the Clean Water Act, is
expected to improve water quality in a river, such
improvement would be included in the without-plans
conditions. The without plans condition is
synonymous with "No Action' as used in NEPA and
the CEQ NEPA regulations (40 CFR 1502.14(d)).

An indicator is a characteristic of a EQ resource
that serves as a direct or indirect means of measuring or otherwise describing changes in the quantity
and/or quality of an EQ attribute.
(1) Quantity indicators describe how much of a
resource attribute is present in terms of physical size,
magnitude, or dimension. They are usually
measurable in numeric units (example: The indicator
"depth" is measurable in meters, feet, etc.); but they
may be described in non-numeric terms (example:
The indicator "amount" could be described on a
scale of "abundant/adequate/scarce/ unique"). The
diversity or stability of an ecosystem or natural
community may be a numeric or non-numeric
indicator.
(2) Quality indicators are characteristics that describe the degree or grade of an attribute's desirability (how good or how bad). Some quality
indicators are measurable in numeric units (example:
The indicator “landscape beauty" measured by an
ordinal ranking of landscapes); some represent
composites of numeric measurements (example:
The indicator “class 'A' water quality" is a composite
of measurements of concentrations of dissolved
oxygen, suspended solids, etc.); some are described
in non-numeric units (example: The indicator
104

3.2.2 References for terms.

Table 3.2.3—Abbreviations and Acronyms—
Continued

Table 3.2.2 lists key terms and indicates where
their definitions or explanations are located in these
procedures or in the CEQ NEPA regulations.

Abbreviations and
acronyms
P&G . . . . . . . . . . . . .
Pub. L . . . . . . . . . . . .
RED . . . . . . . . . . . . .
U.S.C. . . . . . . . . . . . .

Table 3.2.2—References for Terms

Term

Reference

Activity . . . . . . . . . . . . . . . . . . . . . .
Aesthetic attribute . . . . . . . . . . . . . .
Affected area . . . . . . . . . . . . . . . . .
Cooperating agency . . . . . . . . . . . .
Cultural attribute . . . . . . . . . . . . . . .
Cumulative effect . . . . . . . . . . . . . .
Direct effect . . . . . . . . . . . . . . . . . .
Ecological attribute . . . . . . . . . . . . .
Effect . . . . . . . . . . . . . . . . . . . . . . .

3.4.1(b)
3.2.1—EQ attribute
3.2.1—Planning area
40 CFR 1501.6
3.2.1—EQ attribute
40 CFR 1508.7
40 CFR 1508.8(a)
3.2.1—EQ attribute
40 CFR 1508.8 and

714.431(a)
Environmental impact statement . . .
EQ account . . . . . . . . . . . . . . . . . . .
EQ attribute . . . . . . . . . . . . . . . . . .
Existing condition . . . . . . . . . . . . . .
Forecast dates . . . . . . . . . . . . . . . .
Guideline . . . . . . . . . . . . . . . . . . . . .
Human environment . . . . . . . . . . . .
Indicator . . . . . . . . . . . . . . . . . . . . .
Indirect effect . . . . . . . . . . . . . . . . .
Institutional recognition . . . . . . . . . .
Natural and cultural resources . . . .
Phase . . . . . . . . . . . . . . . . . . . . . . .
Planners . . . . . . . . . . . . . . . . . . . . .
Public recognition . . . . . . . . . . . . . .
Scoping . . . . . . . . . . . . . . . . . . . . . .
Significant . . . . . . . . . . . . . . . . . . . .
Stage . . . . . . . . . . . . . . . . . . . . . . .
Technical recognition . . . . . . . . . . .
Technique . . . . . . . . . . . . . . . . . . . .
Trend condition . . . . . . . . . . . . . . . .
Unit . . . . . . . . . . . . . . . . . . . . . . . . .
With-plan condition . . . . . . . . . . . . .
Without-plan condition . . . . . . . . . .

40 CFR 1508.11
3.2.1
3.2.1
3.4.6(a)
3.4.7(g)
3.2.1
40 CFR 1508.14
3.2.1
40 CFR 1508.8(b)
3.4.3(c)(1) and 3.4.12(b)
3.1.1(a)
3.4.1(b)(1)
3.3.1(c)
3.4.3(c)(2) and 3.4.12(c)
40 CFR 1501.7
3.2.1
3.4.1(c)(1)
3.4.3(c)(3) and 3.4.12(d)
3.2.1
3.4.6(a)
3.2.1
3.2.1
3.2.1

Phrase
Principles and Guidelines.
Public law.
Regional economic development.
United States Code.

Section III—General Evaluation
Requirements
3.3.1 Interdisciplinary planning.
(a) An interdisciplinary approach is required by
NEPA and the CEQ NEPA regulations (40 CFR
1501.2(a) and 1507.2(a)).
(b) The wide range of resources that should be
viewed from the perspective of the EQ evaluation
is beyond the scope of any single scientific
discipline. Therefore, the use of many scientific
disciplines in an ongoing, interactive approach is
necessary to deal effectively with the range of EQ
resources to be considered in decisionmaking.
(c) The types of generalists and specialists from
various disciplines, referred to hereinafter as "planners," needed for an interdisciplinary approach will
vary from study to study. An interdisciplinary approach is not limited to the expertise immediately
available in the planning agency. As necessary for
a particular study, agency expertise may be
supplemented by knowledge and skills from
cooperating agencies, universities, consultants,
and other sources. Regardless of the source of
expertise, the types of expertise brought to bear on
a given EQ analysis, judgment, or other decision
requiring professional judgment should be relevant
to the decision.

3.2.3 Abbreviations and acronyms.
3.3.2 Public involvement.

Table 3.2.3 lists commonly used abbreviations
and acronyms that appear in these procedures.

(a) Agencies should invite the early and continuing involvement of government entities at the Federal, regional, State, and local levels; national, regional, and local, public and private organizations
and groups, including Indian tribes; and individuals.
Public involvement is required by the CEQ NEPA
regulations (40 CFR 1506.6).

Table 3.2.3—Abbreviations and Acronyms
Abbreviations and
Phrase
acronyms
CEQ . . . . . . . . . . . . .
EIS . . . . . . . . . . . . . .
EQ . . . . . . . . . . . . . .
et seq . . . . . . . . . . . .
FR . . . . . . . . . . . . . . .
HEP . . . . . . . . . . . . .
NED . . . . . . . . . . . . .
NEPA . . . . . . . . . . . .
OSE . . . . . . . . . . . . .

Council on Environmental Quality.
Environmental impact statement.
Environmental quality.
et sequens (and the following).
Federal Register.
Habitat Evaluation Procedures.
National economic development.
National Environmental Policy Act.
Other social effects.

(b) Public involvement in EQ evaluation is appropriate for the following reasons:
(1) First, the public is the basic source, and in
many cases the only source, of knowledge and
opinions that are needed to make the process
work.
Such knowledge and opinions are
105

especially critical in determining public recognition
and concerns.

the National Historic Preservation Act of 1966, as
amended (Pub. L. 89-655; 16 U.S.C. 470, et seq.);
the Fish and Wildlife Coordination Act of 1958, as
amended (Pub. L 85-624; 16 U.S.C. 661, et seq.);
and the Coastal Zone Management Act of 1972,
as amended (Pub. L. 92-583; 16 U.S.C. 1451, et
seq.).

(2) Second, as a reviewer of the results of EQ
evaluation, the public will have opportunities to
ensure that their views have been properly incorporated; understand the implications of their views on
plan formulation; and react to evaluation results in a
way that will facilitate modification of alternative
plans.

(b) These procedures for EQ evaluation are not
intended to duplicate or in any way modify such
other requirements. Rather, the EQ evaluation
process described in these procedures may be
used as the basic analytical framework for
concurrently integrating into water resources
planning the information developed in response to
other requirements. The relationship between the
requirements of NEPA for contents of
environmental impact statements and these
procedures is given in further detail in Appendix B.

(c) The means to achieve public involvement in
EQ evaluation are left to the discretion of agencies.
The P&G and the CEQ and NEPA regulations (40
CFR 1506.6) suggest several means of public involvement. In some cases, means of public involvement are specifically established in law and should
be relied upon to provide input to EQ evaluation.
Examples of specifically established means are:
(1) The NEPA scoping process (see the CEQ
NEPA regulations, 40 CFR 1501.7).

3.3.4 Documentation.

(2) The participation of cooperating agencies with
jurisdiction by law or special expertise (see the CEQ
NEPA regulations, 40 CFR 1501.6, 1501.7, 1508.5,
1508.15, and 1508.26).

(a) EQ evaluation should be documented in
such a way that an independent reviewer can fully
and clearly understand the decisions that were
made and the reasons for making them.
Documentation in water resources project reports,
however, should be limited to that required for the
agency decision making process. Other
documentation should be retained on file and its
availability referenced in the project report.
Documentation should be clear and concise, as
required by the CEQ NEPA regulations (40 CFR
1502.2(a) and (c) and 1502.8).

(3) Procedures, developed pursuant to Federal
laws other than NEPA, that require a specific type of
review, coordination, or consultation between
planning agencies and agencies with custodial responsibilities for certain EQ-related factors. Such
procedures include, but are not limited to, the "Section 7 Consultation Process" pursuant to the Endangered Species Act of 1973, as amended (Pub.
L 93-205; 16 U.S.C. 1531, et seq.); the "Section
106 Procedure" pursuant to the National Historic
Preservation Act of 1966, as amended (Pub. L. 89-655; 16 U.S.C. 470, et seq.); the "Coordination Act
Report" pursuant to the Fish and Wildlife Coordination Act of 1958, as amended (Pub. L. 85-624 16
U.S.C. 661, et seq.); and the "Consistency Determination" pursuant to the Coastal Zone Management
Act of 1972, as amended (Pub. L. 92-583; 16
U.S.C. 1451, et seq.).

(b) Information collected by field sampling,
laboratory experiments, interviews, literature
searches, and other means should be
documented to include:
(1) Date and place of information collection;
(2) Name of person(s) who collected the
information;
(3) Techniques and methods used; including assumptions and rationale for selecting techniques
and methods used;

3.3.3 Integration of other review, coordination,
and consultation requirements.

(4) Known or suspected factors that could affect
the accuracy of information collection techniques
and methods, including gaps in relevant
information and scientific uncertainty;

(a) To the fullest extent possible, EQ evaluation
and its documentation should be conducted and
prepared concurrently and integrated with the analyses and documentation required by other review;
coordination, and consultation requirements related
to EQ evaluation, as required by the CEQ NEPA
regulations (40 CFR 1500.2(c), 1501.7(a)(6),
1502.2(d), 1502.25, and 1506.2). Such requirements include, but are not limited so, those related
to NEPA; the Endangered Species Act of 1973, as
amended (Pub. L 93205; 16 U.S.C. 1531, et seq.);

(5) Information collected; and
(6) Interpretations of the information.
(c) Information collected prior to initiation of an
EQ evaluation and referenced or incorporated in
the EQ evaluation should be documented as described in paragraph (b) of this section, to the
extent practical.
106

(d) The reasons and bases for actions, decisions,
and results required in the EQ evaluation activities
should be documented in an appropriate form. Narrative statements, ranging from short notes to extensive descriptions, are appropriate for most documentation needs. Other formats that may be used
are: maps, including composites and overlays; graduated scales, including time lines; graphs; lists;
tables; scale models; sound recordings; photographs; films; conceptual drawings; and other formats that accurately record information. Appendix A
presents examples of documentation formats that
may be used.

alternative plans is available when needed for
decisionmaking, in accordance with 40 CFR
1502.22.

Section IV—EQ Evaluation Process
3.4.1 Orientation.
(a) EQ evaluation in the planning process. (1) This
section describes the EQ evaluation phases and
activities that should be used to identify the significant
beneficial and adverse effects of alternative plans on
significant EQ resources.
(b) EQ evaluation phases and activities. (1) Evaluation in the planning process (Step 4) consists of
the assessment and appraisal of effects. As described in these procedures, it also includes the
necessary definition and inventorying that are preparatory to assessment and appraisal. These four
general
actions—define,
inventory,
assess,
appraise—are called phases in these procedures.
Each phase is divided into specific actions defined in
terms of operational instructions. These specific
actions are called activities in these procedures. The
phases and their activities that make up the EQ
evaluation process described in these procedures
are graphically illustrated in Figure 3.4.1-1.

3.3.5 Performance objectives.
Performance objectives are statements of intent
that serve as guides to planners in making decisions
on how to carry out and document EQ evaluation. In
accordance with the intent of the CEQ NEPA
regulations, EQ evaluation and its documentation
should be:
(a) Generally understandable to members of the
public interested in the evaluation (see 40 CFR
1502.8).
(b) Accessible in a form readily available to members of the public interested in the evaluation (see 40
CFR 1506.6(f)).

Figure 3.4.1-1—EQ Evaluation Process: Phases
and Activities

(c) Traceable so that members of the public interested in knowing the bases and events that led to
decisions can follow these factors through the
process (see 40 CFR 1500.2(b), 1502.18, and
1502.24).

Phases

Define resources

Activities

Identify resources
Develop evaluation

(d) Focused on analysis of significant issues (see
40 CFR 1500.1 (b), 1501.7(a) (2) and (3), and
150,2.2(b)).

Inventory resources

Survey existing conditions
Forecast without-plans
condition

(e) Analytic rather than encyclopedic, with information that will be useful to making decisions in advancing the planning process (see 40 CFR 1500.1
(b) and (c), 1500.2 (a) and (b), and 1500.4(f)).

Forecast with-plan condition
Assess effects

Identify effects
Describe effects

(f) At a level of detail comparable to economic and
technical analyses (see 40 CFR 1501.2(b)) and
necessary for reasonable accuracy of measurements, estimates, and other descriptions needed
in understanding and making decisions about alternative plans (see 40 CFR 1502.15).

Determine significant effects
Appraise effects

Appraise significant effects
Judge net EQ effects

(g) Based on scientifically valid and, to the extent
practical, acceptable precepts (see 40 CFR
1502.24).

(2) Although these phases are presented in a
linear sequence, many interrelationships exist among
the phases and their activities. Planners may have to
repeat phases and activities in stages to complete a
given EQ evaluation.

(h) The means to identity and describe the effects
of alternative plans, rather than to justify decisions
already made (see 40 CFR 1502.2(9)).

(c)
EQ evaluation stages.
(1)
The
interrelationships among EQ evaluation phases and
activities, as well as the interrelationships between

(i) Complete and timely, so that information about
effects that is essential to a reasoned choice among

107

EQ evaluation and the planning process, usually
necessitate performing and repeating phases and
activities in increasing levels of detail, each level
commensurate with the evaluation needs of the
overall planning effort. Such repetitions are called
stages in these procedures. Conducting EQ
evaluation in stages of increasing levels of specificity

and detail is a study-specific adaptation of the tiering
concept described in the CEQ NEPA regulations (40
CFR 1502.20 and 1508.28). The level of detail and
number of stages will vary with each planning study,
but the following stages, shown graphically in Figure
3.4.1-2, should be considered for every study.

108

PLANNING PROCESS
STEPS

Figure 3.4.1-2

Relationship between Planning Process
and EQ Evaluation Phases and Stages
1. Specify Problems and Opportunities
2. Inventory and Forecast
3. Formulate Alternative Plans
4. Evaluate Alternative Plans
5. Compare Alternative Plans
6. Select Plan

109

EQ EVALUATION PROCESS

Phase
Define

Inventory

Assess

Activity
Identify

Phase
Define

Activity
Identify

Phase
Define

Activity
Identify

Phase
Define

Activity
Identify

Develop

Develop

Develop

Develop

Survey

Survey

Survey

Survey

Forecast without

Inventory

Forecast without

Inventory

Forecast without

Inventory

Forecast without

Forecast with

Forecast with

Forecast with

Forecast with

Identify

Identify

Identify

Identify

Describe

Assess

Determine
Appraise

Appraise

Describe

Describe

PRELIMINARY IDENTIFY/INVENTORY
STAGE

PRELIMINARY ASSESS/APPRAISE
STAGE

Identify EQ resources
Collect available
Identify information needs

Identify EQ resources that are
likely to be significantly affected

Describe
Determine

Appraise

Appraise
Judge

Assess

Determine

Appraise

Appraise
Judge

Assess

Determine

Appraise

Appraise
Judge

DETAILED IDENTIFY/INVENTORY
STAGE

Develop adequate
information base

Judge

DETAILED ASSESS/APPRAISE
STAGE

Asses and appraise
significant affects
Judge net EQ effects

(I) Preliminary definition-and-inventory stage. In
accordance with the requirements of the CEQ
NEPA regulations (40 CFR 1501.2, 1501.7, and 1
507.2(e)), a preliminary definition-and-inventory
stage should be undertaken in easy planning. The
objective of this stage is to identify EQ resources,
develop an evaluation framework, and collect
readily available information.
This stage
emphasizes the activities of the Define Resources
Phase to provide an early focus for evaluation and
to reveal information needs. Where information
gaps are found, allocation and initiation of data
collection and forecasting programs should be
undertaken in accordance with the CEQ NEPA
regulations (40 CFR 1501.6 and 1501.7(a) (4)(6)).

assessment-and-appraisal stage should be undertaken following final formulation of specific alternative
plans. The objective of this stage is to identify,
describe, and appraise individual effects, and appraise the net EQ effect of each alternative plan. This
stage emphasizes the activities of the Assess Effects
and Appraise Effects Phases to provide the agency
decisionmaker with reasonable bases for judging net
EQ effects. The results of this appraisal will form the
EQ basis for plan selection in planning process Step
6 (selection).
(2) Repeating phases and activities in stages of
increasing levels of detail will aid in focusing on resources and effects that will play a role in
decisionmaking, rather than on resources unrelated to
or not affected by alternative plans.

(ii) Preliminary assessment-and-appraisal stage.
A preliminary assessment-and-appraisal stage
should be undertaken following the preliminary
formulation of alternative plans. The objective of
this stage is to identify resources likely to be
directly, indirectly, or cumulatively affected by one
or more plans. This stage emphasizes the
activities of the Assess Effects Phase, further
focusing information needs on those resources
that would be affected by alternative plans. The
assessment and appraisal of effects at this stage
will help planners understand the enhancement
and degradation potentials of alternative plans,
thereby providing bases for further reformulations
in Steps 3 through 5 of the planning process.
Since a substantial amount of time in most
planning studies is spent in exploring a wide range
of alternative plans, this EQ evaluation stage will
probably be repeated several times in a given
study. While a complete, detailed inventory is
usually not essential at this stage, effects should
be identified in adequate detail so they can be
compared with economic and technical analyses
as required by the CEQ NEPA regulations (40
CFR 1501.2(b)).

(d) Managing evaluation demands. During the
course of EQ evaluation, the number of variables
(such as the number of resources, indicators, forecast
dates, etc.) identified at a given point in the process
will vary. Most activities in these procedures are
designed to limit the number of variables being
considered. It is important that the number of
variables be adequate to fully account for all significant effects. However, increases in the number of
variables will increase demands on study time, funds,
and expertise. Therefore, a proper balance between
adequate analysis and study resources should be
achieved.
3.4.2 Define resources phase.
This phase is performed to identify the EQ resources and attributes that will be evaluated, and to
specify how they will be measured or otherwise described in EQ evaluation. In the first activity, EQ resources and attributes to be evaluated are identified
on the basis of their significance and their likelihood of
being affected by an alternative plan. In the second
activity, an evaluation framework is developed for
measuring or otherwise describing the conditions of
identified EQ resources and attributes in terms of
indicators, units, guidelines, and techniques.

(iii) Detailed definition-and-inventory stage. In
accordance with the requirements of the CEQ
NEPA regulations (40 CFR 1502.14(b) and
1507.2(e)), a detailed definition-and-inventory
stage should be undertaken during the formulation
of specific alternative plans. The objective of this
stage is to develop an adequate information base
for a detailed assessment and appraisal of effects.
This stage emphasizes the activities of the
Inventory Resources Phase, including completion
of information collection and forecasting programs.
This stage may often be conducted concurrently
with, or during later repetitions of, the preliminary
assessment-and-appraisal stage.

3.4.3 Identify resources activity.
(a) This activity is performed to identify EQ resources and attributes that will be analyzed in later
EQ evaluation activities. This is accomplished by
reviewing the planning process Step 2 information
base to identify EQ resources and attributes that
are—
(1) Significant, based on institutional, public, or
technical recognition; and

(iv) Detailed assessment-and-appraisal stage. In
accordance with the requirements of the CEQ
NEPA regulations (40 CFR 1502.14(b)), a detailed

(2) Likely to be affected by one or more of the
alternative plans.

110

(b) Many EQ resources will have more than one
EQ attribute; these attributes may be interrelated.
For example, a wetland may have both ecological
and aesthetic attributes, and the ecological
attribute may complement the aesthetic attribute.
Only when the full range of a given resource's
significant attributes is identified and evaluated can
the requirements of the NEPA human environment
and planning process Step 4 (evaluation) be met.

Table 3.4.3—Sources of institutional recognition:
Federal policies.
(a) Public laws.
(1) American Folklife Preservation Act. Pub. L 94-201; 20 U.S.C.
2101, et seq.
(2) Anadromous Fish Conservation Act, Pub. L. 89-304; 16
U.S.C. 757, et seq.
(3) Antiquities Act of 1906, Pub. L 59-209; 16 U.S.C. 431, et seq.
(4) Archeological and Historic Preservation Act, Pub. L. 93-291; 16
U.S.C. 469, et seq. (Also known as the Reservoir Salvage Act of
1960, as amended; Public Law 93-291, as amended; the MossBennett Act; and the Preservation of Historic and Archeological Data
Act of 1974.)
(5) Bald Eagle Act; 16 U.S.C. 668.
(6) Clean Air Act, as amended, Pub. L. 91-604; 42 U.S.C. 1857h-7,
et seq.
(7) Clean Water Act, Pub. L. 92-500; 33 U.S.C. 1251, et seq. (Also
known as the Federal Water Pollution Control Act; and Public Law
92-500, as amended.)
(8) Coastal Zone Management Act of 1972, as amended, Pub. L.
92-583; 16 U.S.C. 1451, et seq.

(c) Significant EQ resources and attributes that
are institutionally, publicly, or technically
recognized as important to people should be taken
into account in decisionmaking. Focusing on
significant issues is required by the CEQ NEPA
regulations (40 CFR 1500.1(b), 1501.7(a) (2) and
(3), and 1502.2(b)).
(1) Significance based on institutional recognition
means that the importance of an EQ resource or
attribute is acknowledged in the laws, adopted
plans, and other policy statements of public agencies or private groups. Sources of institutional recognition include:

(9) Endangered Species Act of 1973, as amended, Pub. L. 93-205;
16 U.S.C. 1531, et seq.
(10) Estuary Protection Act, Pub. L. 90-454; 16 U.S.C. 1221, et
seq.
(11) Federal Environmental Pesticide Control Act, Pub. L. 92-516; 7
U.S.C. 136.
(12) Federal Water Project Recreation Act, as amended, Pub. L. 8972; 16 U.S.C. 460-1(12), et seq.

(i) Public laws, executive orders, rules and
regulations, treaties, and other policy statements
of the Federal government. Table 3.4.3 lists the
Federal policies that should be considered in all
studies as basis for identifying institutionally
recognized resources or attributes. Other Federal
policies are to be considered as applicable.

(13) Fish and Wildlife Coordination Act of 1958, as amended, Pub.
L. 85-624; 16 U.S.C. 661, et seq. (Also known as the Coordination
Act.)
(14) Historic Sites of 1935, as amended, Pub. L. 74-292; 16 U.S.C.
461, et seq.

(ii) Plans and constitutions, laws, directives, resolutions, gubernatorial directives, and other policy
statements of States with jurisdiction in the planning area. Examples are State water and air
quality regulations; State historic preservation
plans; State lists of rare, threatened, or
endangered species; and State comprehensive
fish and wildlife management plans.

(15) Land and Water Conservation Fund Act, Pub. L. 88-578; 16
U.S.C. 460/-460/-11, et seq.
(16) Marine Mammal Protection Act of 1972, Pub. L. 92-522; 16
U.S.C. 1361, et seq.
(17) Marine Protection, Research and Sanctuaries Act of 1972, Pub.
L. 92-532; 33 U.S.C. 1401, et seq.
(18) Migratory Bird Conservation Act of 1928; 16 U.S.C. 715.
(19) Migratory Bird Treaty Act of 1918; 16 U.S.C. 703, et seq.
(20) National Environmental Policy Act of 1969, as amended, Pub.
L. 91-190; 42 U.S.C. 4321, et seq. (Also known as NEPA; often
incorrectly cited as the National Environmental Protection Act.)
(21) National Historic Preservation Act of 1966, as amended, Pub.
L. 89-655; 16 U.S.C. 470a, et seq.

(iii) Laws, plans, codes, ordinances, and other
policy statements of regional and local public entities with jurisdiction in the planning area. Regional
entities include river basin commissions, councils
of government, and regional planning boards.
Local entities include counties, districts, parishes,
cities, towns, and villages. Examples of these
entities' sources of institutional recognition are
regional open space plans, county lists of historic
sites, and town zoning ordinances.

(22) Native American Religious Freedom Act, Pub. L. 95-341; 42
U.S.C. 1996, et seq.
(23) Resource Conservation and Recovery Act of 1976, Pub. L. 94580; 7 U.S.C. 1010, et seq.
(24) River and Harbor Act of 1899, 33 U.S.C. 403, et seq. (Also
known as the Refuse Act of 1899.)
(25) Submerged Lands Act of 1953, Pub. L. 82-3167; 43 U.S.C.
1301, et seq.

(iv) Charters, bylaws, and formal policy statements of private groups. Examples are the
National Audubon Society Blue List of Species,
properties of the National Trust for Historic
Preservation, and properties of the Nature
Conservancy.

(26) Surface Mining Control and Reclamation Act of 1977, Pub. L.
95-89; 30 U.S.C. 1201, et seq.
(27) Toxic Substances Control Act, Pub. L. 94-469; 15 U.S.C. 2601,
et seq.
(28)
Watershed Protection and Flood Prevention Act, as
amended, Pub. L. 83-566; 16 U.S.C. 1001, et seq.
(29) Wild and Scenic Rivers Act, as amended, Pub. L. 90-542; 16
U.S.C. 1271, et seq.

111

(b) Executive orders.

(1) Likely to be affected means that an effect on
an EQ resource or attribute is reasonably possible.

(1) Executive Order, 11593, Protection and Enhancement of the
Cultural Environment, May 13, 1979 (36 FR 8921; May 15, 1971).
(2) Executive Order, 11988, Floodplain Management. May 24, 1977
(42 FR 26951; May 25, 1977).
(3) Executive Order, 11990, Protection of Wetlands. May 24, 1977
(42 FR 26961; May 25, 1977).
(4) Executive Order, 11514, Protection and Enhancement of
Environmental Quality, March 5, 1970, as amended by Executive
Order, 11991, May 24, 1977.
(5) Executive Order, 12088, Federal Compliance with Pollution
Control Standards, October 13, 1978.
(c) Other Federal policies.

(2) The cause of an effect may be one or more
alternative plans or individual measures.
(3) The relationship of the cause to the effect
may be direct, indirect, or cumulative.
(e) Information included in the planning process
Step 2 (inventory and forecast) should be adequate
for the purposes of this activity. A fully definitive body
of evidence is not required to conclude that an EQ
resource or attribute is significant and likely to be
affected. For example, it would not be necessary to
develop all of the information needed to reach a
determination of eligibility for inclusion on the
National Register of Historic Places to conclude that
a specific archeological site has a cultural attribute.

(1) Council on Environmental Quality Memorandum of August 1,
1980: Analysis of Impacts on Prime or Unique Agricultural Lands in
implementing the National Environmental Policy Act.
(2) Council on Environmental Quality Memorandum of August 10,
1980: Interagency Consultation to Avoid or Mitigate Adverse Effects
on Rivers in the Nationwide Inventory.
(3) Migratory Bird Treaties and other international agreements listed
in the Endangered Species Act of 1973, as amended, Section
2(a)(4).

(f) Future conditions may change the types of
EQ resources or attributes or create new ones that
may be significant and likely to be affected; these
should be considered in this activity. For example, a
currently eutrophic lake that is forecast to develop
into a wetland ecosystem in the without-plans
condition should be considered in this activity.
Forecasts developed in later evaluation activities
(see 3.4.7 and 3.4.8) will provide the bases for
identifying such EQ resources and attributes.

(2) Significance based on public recognition means
that some segment of the general public recognizes
the importance of an EQ resource or attribute. Public
recognition may take the form of controversy,
support, conflict, or opposition and may be
expressed formally (as in official letters) or
informally. Environmentally related customs and
traditions should also be considered. EQ resources
or attributes recognized by the public will often
change over time as public awareness and
perceptions change.

(g) Agencies should invite the public to participate in the identification of EQ resources and attributes that are significant and likely to be affected.
Agencies are encouraged to integrate the public's
participation in this activity into the means used to
meet the scoping requirements of the P&G and the
CEQ NEPA regulations (40 CFR 1501.7) to avoid
duplication of public involvement efforts.

(3) Significance based on technical recognition
means that the importance of an EQ resource or
attribute is based on scientific or technical knowledge
or judgment of critical resource characteristics.
Examples are a graveyard recognized by an
archeologist as being the focal point of a 19th century community; a rock outcropping identified by a
landscape architect as being an important scenic
element based on aesthetic rating criteria; and a
meadow identified by a wildlife biologist as the major
breeding ground for a deer herd.

(h) Appendix A provides an example documentation format for recording the results of this activity.

3.4.4 Develop evaluation framework activity.
(a) This activity is performed to specify the ways in
which changes in EQ resources and attributes, as
identified in the previous activity, will be measured or
otherwise described. For each EQ attribute, planners
should specify one or more indicators of quantity
and/or quality. Indicators are used to measure or
otherwise describe existing and future conditions and
the effects of alternative plans. For each indicator,
planners should specify a unit (numeric or non-numeric
term in which the indicator is measured or otherwise
described); a guideline (institutional, public, or technical
basis for determining whether an effect on an indicator
is beneficial or adverse); and a technique (procedure
for measuring or otherwise describing the indicator in
terms of its unit). Figure 3.4.4 graphically illustrates the
evaluation framework.

(4) The significance of many EQ resources and
attributes may be recognized on more than one
basis. For example, a specific bird species may be
institutionally recognized (protected by Federal and
State law), publicly recognized (of interest to a community), and technically recognized (due to its
uniqueness in the environment).
(d) At this early point in the process, a determination of whether or not an EQ resource or attribute
would be likely to be affected is to be based on some
preliminary judgments about causes (in terms of
alternative plans) and effects (in terms of EQ resources and attributes). Such preliminary judgments
are to be based on the following considerations:

112

Figure 3.4.4
Evaluation Framework

RESOURCE

ATTRIBUTE

Ecological

113
Resource #1

Cultural

Aesthetic

INDICATOR

UNIT

Indicator #1

Unit #1

Guideline #1

Technique #1

Indicator #2

Unit #2

Guideline #2

Technique #2

Indicator N

Unit N

Guideline N

Technique N

Indicator #1

Unit #1

Guideline #1

Technique #1

Indicator #2

Unit #2

Guideline #2

Technique #2

Indicator N

Unit N

Guideline N

Technique N

Indicator #1

Unit #1

Guideline #1

Technique #1

Indicator #2

Unit #2

Guideline #2

Technique #2

Indicator N

Unit N

Guideline N

Technique N

See Appendix A, Table 2 for an example

GUIDELINE

TECHNIQUE

(b) For each EQ resource attribute, planners
should specify one or more indicators. The
number of indicators specified should be sufficient
to adequately measure or otherwise describe
changes in the quantity or quality of an EQ
attribute. Since indicators are the primary factors
that will determine the amount and level of detail
of information collection, care must be exercised to
ensure that the number of indicators is not so large
that information requirements are unreasonably
demanding. See 3.2.1 for examples of indicators.
(c) For each indicator, planners should specify a
unit of measurement or description. Units will
usually be readily identifiable from the nature of an
indicator. For example, the indicator "area" could
be described in terms of the unit "acres" or "square
miles." See 3.2.1 for other examples of units.
(d) For each indicator, planners should specify a
guideline.
(1) Guidelines should be based on institutional,
public, or technical recognition. Examples of
institutional guidelines are State air and water
quality standards and the access criterion for
Federally designated wild rivers. Examples of
guidelines based on public recognition are
preservation of a locally valued natural viewscape
and the protection of a regionally popular reach of
white water river. Examples of guidelines based on
technical recognition are a minimum dissolved
oxygen concentration of five parts per million for
brown trout and the preservation of an
archeological site's association with an important
event.
(2) The decision to use a guideline based on
technical or public recognition instead of an
existing institutional guideline, or to use one
institutional guideline instead of another, should be
justified. Examples of this situation are the choice
of a more restrictive suspended solids standard
based on a recent limnological study (technical
recognition) over a less restrictive State suspended
solids standard (institutional recognition); and the
choice of a more restrictive, locally established
noise level standard over a State or federally
established standard.
(3) Planners should recognize recent and anticipated future changes in guidelines based on
changing institutional, public, and technical
concerns. The phased implementation of State
water quality standards developed pursuant to
Pub. L. 92-500 is an example of a change that
could be anticipated.
(4) Planners should also recognize that guidelines may differ for a given indicator among localities and regions. For example, air quality
standards vary among the States and often vary
for areas within a given State.

(5) Guidelines that are stated in a word or
phrase may, in some cases, be translated into a
number.
(i) For example, the guideline "protection of a
popular reach of white water river" could be
restated in terms of the physical dimension of the
reach, such as "two miles," that provides a specific
working definition of "protection''.
(ii) Examples of words that may provide a basis
for a guideline are enhancement, improvement,
preservation, protection, conservation, maintenance, creation, restoration, repair, and rehabilitation.
(6) Guidelines may be expressed as a single
level (example: habitat suitability index of 1.0); as a
range between two levels (example: pH between
6.5 and 8.0 for fish); or as a threshold level (example: total dissolved solids not greater than 500 parts
per million).
(7) In cases where several seemingly conflicting
guidelines have been proposed, planners should attempt to specify a single guideline by determining
the specific reasons why each proposed guideline is
desirable.
(i) For example, the Blue River has an indicator
"water flow," which is described in "cubic feet per
second (cfs)" units; a local agricultural cooperative
that uses the river for irrigation water proposes a
guideline of "X cfs;" a homeowners association that
enjoys the view of the river proposes a guideline of
"Y cfs;" and a fisheries biologist proposes a "Z cfs"
based on the needs of the river's anadromous fish
populations.
(ii) In this example the "Y cfs" guideline would be
appropriate for the rivers visual aesthetic attribute
but would not be used for its ecological or cultural
attributes. Similarly, the "Z cfs" guideline would be
appropriate for the river's fishery ecological attribute. The "X cfs" guideline would not be appropriate for EQ evaluation since it is not related to an EQ
attribute.
(e) For each indicator, planners should specify a
technique for measuring or otherwise describing
current and future conditions of the indicator in
terms of the indicator's specified unit. Table 3.4.4
lists examples of techniques currently used in water
resources planning. Regardless of the technique
used to measure or otherwise describe an indicator
agencies should ensure the professional and scientific integrity of techniques and their resultant analyses, as required by the CEQ NEPA regulations (40
CFR 1502.24).
(f) Although the parts of the evaluation framework are presented in a specific order, planners
may, after first selecting indicators, select units,
guidelines, and techniques in any sequence.

114

Table 3.4.4—Example Techniques

Technique
Habitat Evaluation
Procedures (HEP).

Document reference
U.S. Dept. of the Interior, Fish and
Wildlife Service. Habitat
Evaluation Procedures.
Washington, DC 20240, March
1980. ESM 102.

Availability
Chief, Div. of
Ecological Services,
Fish and Wildlife
Service, U.S. Dept. of
the Interior,
Washington, DC
20240, (202)343-4764

Indicator
measured
Habitat quality
and quantity.

Team Leader, WELUT,
Project Impact
Evaluation Team, Div.
of Ecological Services,
Fish and Wildlife
Service, U.S. Dept. of
the Interior, Creekside
One, 2625 Redwing
Road, Fort Collins, CO
80526, (303)223-2040

Current uses
Nationwide,
Major Corps, BR,
and SCS water
projects.

Also applicable to
BLM and USFS
projects and
projects licensed
by FERC and
NRC.

Habitat Evaluation
System (HES).

U.S. Army Engineer Div., Lower
Miss. Valley. A Tentative Habitat
Evaluation System (HES) for Water
Resources Planning. Vicksburg,
MS, July 1979.

Chief, Environ. Res.
Branch, U.S. Army
Engineer Division,
Lower Mississippi
Valley, P.O. Box 80,
Vicksburg, MS 39180,
(601)634-5000,
ex.5849.

Habitat quality.

Lower Mississippi
Valley area.

Instream Flow
Incremental
Methodology (IFIM).

BoVee, K.D. and T. Cochnaur,
1977. Development and
Evaluation of Weighted Criteria,
Probability-of-Use Curves for
Instream Flow Assessments:
Fisheries. Instream Flow
Information Paper No.3,
FWS/OBS-77/63, 38 pages.

Team Leader, WELUT,
Instream Flow and
Aquatic Systems
Group, Div. of
Ecological Services,
Fish and Wildlife
Service, U.S. Dept. of
the Interior, Creekside
One, 2625 Redwing
Road, Fort Collins, CO
80526, (303)223-2040

Minimum,
sustained,
augmented, and
maximum flows.

Nationwide.
Major Corps, BR
and SCS
Projects. Also
applicable to BLM
and USFS
projects and
projects licensed
by FERC and
NRC.

BoVee, K.D. and R.T. Milhous,
1978. Hydraulic Simulation in
Instream Flow Studies: Theory
and Techniques. Instream Flow
Information Paper No.5,
FWS/OBS-78/33, 131 pages.
Stainaker, C.D., 1979. The Use of
Habitat Structure Preferenda for
Maintenance of Fish Habitat. The
Ecology of Regulated Streams,
Edited by J.U. Ward and J.S.
Starrford, Plenum Publishing
Corp., pp.31-337.
Visual Resource
Contrast Rating.

U.S. Dept. of the Interior, Bureau of
Land Management. BLM Manual
Section 8431-Visual Resource
Contrast Rating. Washington, DC.
August 1978.

Bureau of Land
Management, U.S.
Dept. of the Interior,
Washington, DC
20240, (202)343-9353

Visual contrast.

Upland Visual
Resource Inventory
and Evaluation.

U.S. Dept. of the Interior, Bureau of
Land Management. BLM Manual
Section 8411-Upland Visual
Resource Inventory and
Evaluation. Washington, DC,
August 1978.

Bureau of Land
Management, U.S.
Dept. of the Interior,
Washington, DC
20240, (202)343-9353.

Scenic quality.

115

Comments

Information/a
nalysis base
fully
developed
only for the
lower
Mississippi
Valley area.

Table 3.4.4—Example Techniques—Continued

Technique

Document reference

Availability

Indicator
measured

Current uses

Comments

Procedure To
Establish Priorities
in Landscape
Architecture.

U.S. Dept. of Agriculture, Soil
Conservation Service. Technical
Release No. 65, Procedure to
Establish Priorities in Landscape
Architecture. Washington, DC,
October 1978.

Soil Conservation
Service, U.S. Dept. of
Agriculture,
Washington, DC
20250, (202)447-7443.

Landscape
resource
quality.

Primarily used for
SCS studies.

Developed
for
nationwide
use.

Visual Management
System.

U.S. Dept. of Agriculture, Forest
Service. National Forest
Landscape Management, Vol.2,
Chapter 1, The Visual
Management System.
Washington, DC, April 1974.

Forest Service, U.S.
Dept. of Agriculture,
Washington, DC
20250, (202)447-7754.

Scenic variety
classes and
sensitivity
levels.

Primarily used for
Forest Service
studies.

Developed
primarily for
the
northwestern
U.S.; criteria
should be
adapted for
other
regions.

(1) Planners should recognize that indicators, units,
guidelines, and techniques are highly interdependent and that the specification of one influences
the specification of the others. For example, if
"dissolved oxygen" and "coliforms" are selected as
indicators of the ecological attribute of a river resource and a State's water quality standards for
dissolved oxygen and coliforms are selected as
guidelines, then the units, such as milligrams per
liter (mg/l) for dissolved oxygen and most probable
number (MPN) of coliforms, would follow.
(2) If either a unit, a guideline, or a technique
cannot be specified for an indicator, then the indicator should not be used.
(g) Appendix A provides an example documentation format for recording the results of this activity.

attribute. The existing condition is the most recent
measurement or other description of an attribute as
it existed at the latest date of the trend condition.
Trend and existing conditions of attributes should be
described in terms of the quantity and quality indicators and their related units, as specified in the
previous activity.
(b) This EQ evaluation activity is an integral part
of the planning process Step 2 (inventory and forecast). It should begin with a review of that information base to determine whether or not information
for the identified EQ resource attributes is included.
Relevant trend condition information should be collected where it is readily available. If existing condition information for an attribute (in terms of its
specified indicators) is not included in Step 2 or, if
such information is invalid or out of date, an information collection program should be developed
and implemented to provide the necessary
information.
(c) Information collection programs should produce information in accordance with the evaluation
framework developed in the previous activity, including the use of specified techniques to develop
information for each indicator in terms of its specified unit. Information collection programs should
use professionals with expertise relevant to each
EQ resource attribute for developing and analyzing
information, in accordance with the CEQ NEPA regulation requirements related to cooperating agencies (40 CFR 1501.6) and scoping (40 CFR 1
501.7(a)(4) and (6)). Information collection programs should be initiated early enough to ensure
that required information is available when needed
for EQ evaluation. The EQ information base should
be reviewed during each stage of EQ evaluation to
progressively focus it at the proper level of detail
and completeness necessary for evaluation.

3.4.5 Inventory resources phase.
This phase is performed to collect and develop
information, within the previously defined evaluation
framework, for use in assessing the effects of alternative plans. In the first activity, the trend and existing conditions of identified EQ resource attributes
are measured or otherwise described. In the
second and third activities, future without-plans and
with-plan conditions of identified EQ resource attributes are estimated.
3.4.6 Survey existing conditions activity.
(a) This activity is performed to collect information
that measures or otherwise describes the trend and
existing conditions of the identified EQ resource
attributes. The trend condition is the recorded
historic measurement or other description of an
116

(d) Appendix A provides an example documentation format for recording the results of this activity.
3.4.7 Forecast
activity.

without-plans

body of information has been developed on the
known effects of existing water resources projects,
industrial developments, highways, etc.; many of
these include programs to monitor and record ongoing effects).

conditions

(d) General forecasting approaches that may be
considered are—

(a) This activity is performed to develop information that measures or otherwise describes the
future conditions of EQ resource attributes in the
absence of any of the alternative plans under consideration. Without-plans conditions should be estimated in terms of the same quantity and quality indicators used in the previous activity.

(1) Adoption of available forecasts developed by
other sources;
(2) Use of scenarios to estimate hypothetical futures and the likely sequences of events that might
lead to those futures;

(b) This activity is also an integral part of the
planning process Step 2 (inventory and forecast),
and should begin with a review of that information
base to determine whether or not information for
the identified EQ resource attributes is included. If
without-plans condition information for an EQ resource (in terms of its specified indicators) is not
included in Step 2 or, if such information is invalid
or out of date, a forecasting program should be
developed and implemented to provide necessary
information. The subsection on information
collection programs (3.4.6(c)) is also applicable to
forecasting programs for without-plans conditions.

(3) Use of expert group judgment approaches,
such as Delphi and nominal group, in which the
views of relevant professionals about future conditions are systematically elicited and analyzed; and,

(c) Without-plans conditions are the most probable conditions based on consideration of the following:

(e) Forecasting approaches should be
compatible with the measurement and description
techniques specified in the evaluation framework.

(1) Trend and existing conditions information, as
developed in the previous activity;

(1) For example, if the Habitat Evaluation
Procedure (HEP; U.S. Fish and Wildlife Service,
1980) is used in the previous activity to describe
the existing condition of a particular habitat, the
forecasting approach(es) used to estimate the
without-plans condition of the habitat must produce
information that can be used in the HEP analysis.

(4) Use of extrapolation approaches, such as
trend analysis and simple modeling, which rely on
historic trend information to estimate the future.
(5) Use of analogy and comparative analyses, in
which the effects of actions similar to those expected in the without-plans condition, on the specified
indicators, in similar environmental settings are
used to estimate future conditions.

(2) Other available related forecasts (for example, local land use plans, population projections,
plans of commercial and industrial developers);
(3) Established institutional objectives and constraints and customs and traditions related to the
resource (for example, State historic presentation
plans, management goals for wildlife refuges,
zoning ordinances, local agricultural practices);

(2) In most cases it is not possible to directly
forecast change in an indicator. It will usually be
necessary to forecast changes in factors that influence the indicator. Influencing factors may include
changes in the uses and conditions of related land,
water, and air. For example, given the indicator
"stream water temperature," it may be necessary
to forecast changes in streamside vegetation,
upstream water uses, and other influencing factors
in order to derive the information needed to apply
the technique specified in the evaluation
framework for measuring changes in the indicator
(stream water temperature).

(4) Direct, indirect, and cumulative effects of all
reasonably foreseeable actions of people
expected to occur in the absence of any of the
study's alternate plans (for example, effects of a
habitat management program, a water supply
project, or an on farm drainage action);
(5) Direct, indirect, and cumulative effects of natural occurrences, such as natural succession or
the passage of time (for example, an existing
abandoned farmland might be shown to succeed
to a grassland, a shrub land, and finally to a
woodland over the period of analysis; a public
building may be forecast to be of historic interest in
the futures); and

(f) Forecasts should estimate future conditions
over the entire period of analysis; but if this is not
realistic or reasonable, planners should develop a
forecast of the longest possible duration and give
their reasons for not estimating to the end of the
period. Conversely, the period of analysis should
not constrain longer-term forecasts if they can be

(6) Known effects of comparable past actions on
the same or similar resources. (A considerable
117

realistically and reasonably made and if they are
needed to describe irreversible or irretrievable
commitments of resources or the relationship of
short term uses of man's environment to long-term
productivity, as required by NEPA and the CEQ
NEPA regulations (40 CFR 1502.16).

3.4.9 Assess effects phase.
This phase is performed to identify and describe
effects of alternative plans on EQ resource attributes. In the first activity, without-plans conditions
and with-plan conditions are compared to identify
differences between them. In the second activity
identified differences (effects are described in
terms of duration, location, and magnitude. In the
third activity, the significance of these effects is determined.

(g) A without-plans condition should be expressed for several specified future dates, hereinafter called forecast dates. A sufficient number of
forecast dates should be selected to permit adequate description of future changes in the
indicator. However, the number of forecast dates
should not be so large that an unreasonable
information burden is created. A proper balance
between adequate description and information
demands should be achieved. Without-plans
conditions should not be expressed as an average
or median over the period of analysis if such
expressions would obscure future changes in an
indicator.

3.4.10 Identify effects activity.
(a) This activity is performed to identify differences between the without-plans and with-plan estimates for each indicator. An effect is shown to
occur whenever without-plans and with-plan estimates of an indicator are different at one or more
of the forecast dates.

(h) A without-plans condition should be the most
probable future condition for an indicator.

(b) If all of the specified indicators for a particular
EQ attribute of a resource are shown to be unaffected by each of the alternative plans (that is,
each indicator's without-plans and with-plan estimates are the same for all forecast dates), the unaffected attribute should be eliminated from EQ
evaluation. The attribute should be reintroduced
into EQ evaluation if it is likely to be affected by a
new alternative plan.

(i) Appendix A provides an example documentation format for recording the results of this activity.
3.4.8 Forecast with-plan conditions activity.
(a) This activity is performed to develop information that measures or otherwise describes the
future conditions of EQ resource attributes under
each of the alternative plans being considered.
With-plan conditions should be estimated for each
alternative plan in terms of the same quantity and
quality indicators used in the previous activity.

(c) Appendix A provides an example documentation format for recording the results of this activity.
3.4.11 Describe effects activity.
(a) This activity is performed to describe each
effect identified in the previous activity. Effects
should be described in terms of their duration, location, and magnitude.

(b) The bases for estimating with-plan conditions
include those used in forecasting without-plans
conditions: Trend and existing conditions, related
forecasts, institutional objectives and constraints
effects of other actions, the effects of natural occurrences, and the known effects of comparable
past actions (see 3.4.7(c)).

(b) Duration is the time at which, or over which,
an effect is expected to occur. It should be described for the forecast dates and may be summarized in terms of a time period beginning at a specific time, such as "20 years beginning in 1990."
Duration will usually be continued to a span of time
within the period of analysis, but some effects,
such as the loss of a distinctive land-form, may
exceed the period of analysis (see 3.4.7(f) and
3.4.7(d)).

(c) Approaches that should be considered for
forecasting with plan conditions include those used
in forecasting without-plans conditions: adoption,
scenario writing, expert judgment techniques, extrapolation techniques, and analogy and comparative analyses. (See 3.4.7 (d) and (e)).

(c) Location is the place at which an effect is expected to occur. It should be described in terms of
an identifiable geographic location, such as "between river miles 57 and 63." The location of an
effect should be described as specifically as possible without revealing the location of sensitive resources such as archaeological sites and
endangered species habitats that could be
jeopardized by wide distribution of the information.

(d) The subsection on information collection programs (3.4.6(c)) and forecasting without-plans
conditions over the entire period of analysis
(3.4.7(f)) are also applicable to with-plan
conditions. With plan conditions should be
estimated for the same forecast dates used for the
without-plan conditions (see 3.4.7(g)).
(e) Appendix A provides an example documentation format for recording the results of this activity.
118

(d) Magnitude is the size of the difference between an indicator's without-plans and with-plan
estimates for a particular forecast date. If an
indicator is measured in cardinal units (that is, the
units can be added, subtracted, multiplied, and
divided), magnitude should be expressed as the
numeric difference between the without-plans and
with-plan estimates for each forecast date. If an
indicator's unit is based on some other type of
numeric scale or is descriptive (such as an ordinal
scale of "great diversity, moderate diversity, low
diversity,") magnitude should be expressed in
either a numeric or descriptive form suitable for
accurately describing the difference for each
forecast date.

recognition of an effect is local concern over the
potential decline of a trout fishery caused by an
alternative plan.
(d) Significance based on technical recognition
means that the importance of an effect is based on
technical or scientific criteria related to critical resource characteristics. Examples are maintenance
of permanent low flow in a previously intermittent
stream that leads to a year-round fishery, and reduction in the number of a certain type of
archeological site that contains information related
to a particular historic period to the extent that
currently numerous sites would become scarce.
(e) If none of the effects on a particular EQ attribute is significant, the attribute should be eliminated from EQ evaluation. The attribute should be
reintroduced into EQ evaluation if it is likely to be
affected by a new alternative plan.

(e) Other characteristics of effects may be described if the description is relevant and useful to
decisionmaking. Such characteristics could include
reversibility, retrievability, and the relationship to
long-term productivity.
(f) Appendix A provides an example documentation format for recording the results of this activity.

(f) Appendix A provides an example documentation format for recording the results of this activity. Attributes and resources that are not significantly affected should be documented as required by
the CEQ NEPA regulations (40 CFR 1501.7(a)(3)).

3.4.12 Determine significant effects activity.

3.4.13 Appraise effects phase.
(a) This activity is performed to identify which of
the previously described effects are significant; that
is, that are institutionally, publicly, or technically
recognized as important to people, and should
therefore be taken into account in decisionmaking.
Focusing on significant issues is required by the
CEQ NEPA regulations (40 CFR 1500.1(b),
1501.7(a)(2) and (3), and 1 502.2(b)).
(b) Significance based on institutional recognition
means that the importance of the effect is
acknowledged in the laws, adopted plans, and
other policy statements of public agencies and
private groups. See 3.4.3(c)(1) for examples of
sources of institutional recognition. Institutional
recognition of an effect is often explicit in the form
of specific criteria for determining whether an
effect is significant. Examples are the criteria in
the CEQ NEPA regulation (40 CFR 1508.27),
Executive Order 11990 concerning the protection
of wetlands, and the regulations of the Advisory
Council on Historic Preservation covering the
protection of historic and cultural properties (36
CFR Part 800).
(c) Significance based on public recognition
means that some segment of the general public
recognizes the importance of the effect. Public
recognition may take the form of controversy,
support, conflict, or opposition; it may be
expressed formally (as in official letters) or
informally. Environmentally related customs and
traditions should also be considered in determining
sources of public recognition. An example of public

This phase is performed to identify the
desirability of significant effects on EQ resources,
individually and collectively, for each alternative
plan. In thefirst activity, significant effects on
indicators and EQ attributes should be appraised
as either "beneficial" or "adverse." In the second
activity, each alternative plan's overall net effect on
EQ should bejudged as "net beneficial," "net
adverse," or "no net effect."
3.4.14 Appraise significant effects activity.
(a) This activity is performed to appraise each alternative plan's individual significant effects on
each significant EQ resource attribute as either
beneficial or adverse. The activity should be performed in two steps. In the first step, the desirability
of effects on indicators is appraised according to
guidelines. In the second step, the effects on EQ
attributes are appraised.
(b) First, the effects on indicators should be appraised as either beneficial or adverse according
to the following criteria:
(1) An effect is beneficial if, for a given indicator,
the with-plan condition more closely approaches
or attains the indicator's guideline than its
without-plans condition. For example, the Julian
City archaeological site has been identified as an
EQ resource with an indicator "sense of
association with a significant event" for its cultural
119

attribute. The indicators guideline has been
specified as "presentation of the site's sense of
association." If, for a given forecast date, the site's
without-plans condition shows that the association
would be lost as a result of planned residential
development, but its with-plan condition for Plan X
shows that the association would be preserved as
a result of Federal land acquisition included in the
plan, the effect of Plan X would be classified as
beneficial. See Figure 3.4.14-1 for a graphic
illustration of this example.

proaches or attains the indicator's guideline than
its with-plan condition. For example, the Gradey
Swamp habitat has been identified as an EQ resource with an indicator "habitat suitability" for its
ecological attribute. The indicator's guideline has
been specified as "habitat suitability index of 1.0."
An adverse effect would occur if, for a given forecast date, the habitat's without-plans condition
showed a habitat suitability index of 0.7 and its
with-plan condition for Plan Y showed a habitat
suitability index of 0.5. See Figure 3.4.14-2 for a
graphic illustration of this example.

(2) An effect is adverse if, for a given indicator,
the without-plans condition more closely ap-

120

Figure 3.4.14-1
Example of Beneficial Effect
Guideline

With Plan “X”

High
Beneficial
Effect

Moderate
Low

Without Plans

Lost

Time in Years
Figure 3.4.14-2
Example of Adverse Effect

Guideline

1.0
Without Plans

0.8
0.6

Adverse Effect

0.4
With Plan “X”

0.2
0.0

Time in Years
Figure 3.4.14-3
Example of Beneficial & Adverse Effects
Guideline

500
Beneficial Effect
400
300

Adverse
Effect

Without Plans

200
100

With Plan “Z”

0

Time in Years

121

(3) If the relationship between an indicator's without-plans and with-plan condition changes over the
period of analysis so that an effect would be beneficial part of the time and adverse at other times, the
different desirabilities should be shown as identified
for each of the forecast dates. For example, a levee
to be constructed as a part of Plan Z would initially
destroy 200 acres of streamside riparian habitat.
However, with the habitat management program
included in the plan, the habitat would be restored
and an additional 100 acres would be changed to
become riparian habitat. See Figure 3.4.14-3 for a
graphic illustration of this example.

be adversely affected by human activities, such as
recreation, attracted to the area Conversely, an
improvement in the productivity of a habit would not
necessarily be beneficial unless an adequate
amount of habitat would be available.
(iv) Whether effects on the indicators, the attribute, or the resource would fulfill or violate a public
law, executive order, or other source of institutional
recognition. See 3.4.3(c)(1) for examples of sources
of institutional recognition.
(v) Whether effects on the indicators, the attribute, or the resource would be supported or otherwise viewed as beneficial by the public, or would be
opposed or otherwise viewed as adverse by the
public.

(c) Second, the effects on each EQ attribute should
be appraised as either beneficial or adverse based
on the judgment of professionals with expertise
relevant to each attribute.

(vi) Whether effects on the indicators, the attribute, or the resource would be critical based on
scientific or technical knowledge or judgment.

(1) The following should be considered in judging
the desirability of an effect on an EQ attribute:

(vii) Other considerations that may have a
material bearing on decisionmaking. Such other
considerations should be clearly described.

(i) The duration, location, magnitude, and other
relevant characteristics of effects on the attribute's
indicators as previously identified (see 3.4.11).

(2) Agencies may use various approaches, such
as weighting, scaling or ranking, to consider these
factors in judging effects on EQ attributes. Approaches used should be documented.

(ii) The appraisal of effects on the attribute's indicators (beneficial or adverse), as identified in the
previous step (see paragraph (b) of this section).
(iii) The relationships among the attribute's quantity
and quality characteristics, as expressed in effects
on the attribute's indicators. For example, the
acreage (quantity) of a particular habitat may be
beneficially increased with an alternative plan, but
the habitat's productivity (quality) could

(d) Appendix A provides example documentation
formats for recording the results of this activity. A
table should be prepared in accordance with the
format illustrated in Table 3.4.14 for each candidate
plan and provided to the agency decisionmaker for
judgment of net EQ effects.

Table 3.4.14—Significant EQ Effects

[Alternative plan “X”]
Significant resources
Resource No. 1.
Resource No. 2.
Resource No. 3.
Resource N.

Effects on EQ attributes:
Ecological, Cultural, and Aesthetic
For each attribute of a resource, enter
“beneficial” or “adverse”, and briefly state the
rationale for each entry. For example:
“Adverse, effect would violate State water
quality standards”, and “Beneficial, effect
would stabilize ecosystem trophic
relationships”.

3.4.15 Judge net EQ effects activity.
(a) This activity is performed to describe the net
(overall) EQ effect of each alternative plan. Net
effect should be described as “net beneficial EQ
effect," "net adverse EQ effect," or "no net EQ
effect" according to the following criteria:

Notes
Briefly enter any other information that may be
relevant to the judgment of net EQ effect of
the plan, such as notes concerning mitigation,
incomplete or unavailable information, etc.

EQ resources outweigh the plan's combined
adverse effects on EQ resources.
(2) A net adverse EQ effect occurs when, in the
judgment of the agency decisionmaker, an
alternative plan's combined adverse effects on EQ
resources outweigh the plan's combined beneficial
effects on EQ resources.

(1) A net beneficial EQ effect occurs when, in the
judgment of the agency decisionmaker, an
alternative plan's combined beneficial effects on

(3) No net EQ effect occurs when, in the judgment of the agency decisionmaker, an alternative
122

plan's combined beneficial effects on EQ
resources equal the plans combined adverse
effects on EQ resources.

Reasons for the change should be properly
documented.
(c) Planners should assist agency decisionmakers by presenting information bearing
on the judgment of net EQ effect in a manner that
aids the judgment process. As a minimum, the
tables used to document the previous activity, as
illustrated in Table 3.4.14, should be provided to
the decisionmaker prior to his or her judgment of
net EQ effect.

(b) The agency decisionmaker is responsible for
judging which of these types of net EQ effects best
reflects the desirability of an alternative plan's
overall effect on environmental quality. This
judgment should be based on a thorough
consideration of significant effects on significant
EQ resources. In making a judgment of net EQ
effect, the agency decisionmaker is acting on
behalf of the public and should therefore consider
public views related to the judgment. The
decisionmaker may change a judgment on the net
EQ effect of an alternative plan if the change is a
reevaluation of existing information or if relevant
new information is brought to his or her attention.

(d) The net EQ effect of each alternative plan
should be expressed in a clear and complete
narrative statement that identifies the type of net
EQ effect expected and, as specifically as
practical, the reasons that provided the basis for
the judgment.

123

This page is intentionally left blank.

124

Appendix A—Example Documentation Formats
Note.—This appendix is provided for background
information.
(a) Introduction. (1) This appendix provides
examples of tables that can be used to
record the results of EQ evaluation activities.
The tables and the activities are as follows:

(b) Table examples. In addition to format guidance,
this appendix presents examples of how the results
of EQ evaluation activities could be recorded in the
table format. The examples are presented as an
aid to follow through the EQ evaluation process.
The examples are based on the following
hypothetical water resources planning situation:
(1) An alternative plan, designated Plan A, was
formulated for the Pine Valley area to address the
following problems and opportunities:
(i) Periodic flooding of a portion of the town of Pine
Valley due to overtopping of the natural stream
banks of Pine Creek.
(ii) The existing stream channel is eroding badly,
endangering an Indian winter camp site (Pine
Valley Village).
(iii) Pine Valley is noted for its natural beauty, and
many people visit the area to view the valley and its
surroundings.
(iv) Pine Valley is a major deer fawning area for the
Pine Mountain deer herd.
(2) Plan A, which consists of a two-mile long levee,
was formulated to protect the town from flooding,
and the Indian village site from being destroyed by
stream bank erosion. However, construction of the
levee would require removal of stream side riparian
vegetation along the right bank of Pine Creek. This
vegetation comprises most of the fawning area for
the Pine Mountain deer herd.
(3) Figure 1 presents a map of this planning setting.

(i) Table 1—identify resources activity (3.4.3).
(ii) Table 2—Develop evaluation framework activity
(3.4.4).
(iii) Table 3—Survey existing conditions activity
(3.4.6).
(iv) Table 4—forecast without-plans conditions
activity
(3.4.7).
(v) Table 5— forecast with-plan conditions activity
(3.4.8).
(vi) Table 6 Identify effects activity (3.4.10).
(vii) Table 7—Describe effects activity (3.4.11).
(viii) Table 8—Determine significant effects activity
(3.4.12).
(ix) Table 9—Appraise significant effects activity
(3.4.14(b)), appraisal of effects on indicators.
(x) Table 10—Appraise significant effects activity
(3.4.14(c)), appraisal of effects on attributes.
(2) The tables are intended for use as working
documents; if developed for a given EQ
evaluation, they could be included as an
appendix to an agency's planning document or
EIS (see 40 CFR 1502.10(k) and 1502.18).
(3) See 3.4.9(d) for a discussion of other
documentation formats that may be used to
record the results of EQ evaluation.

125

126

Appendix A—Table 1. Identification of EQ Resources to be Evaluated.

EQ Attributes

Significance

Resources

Ecological

Cultural

Aesthetic

R1
Pine Valley Meadow

Deer fawning
area

—

—

—

Indian Winter
Camp

—

—

—

View of
Meadow &
Winter Camp
(Site)

Institutional
Recognition

Public
Recognition

Technical
Recognition

—

—

Included in
State List of
Historic Sites
—

—

Major
Fawning
Area for Pine
Mt. Deer
Herd
—

Public
Acknowledged
Desirability of
Meadow &
Winter Camp

Likely To
Be
Affected
(yes/no)

Resource
To Be
Evaluated
(yes/no)

yes

yes

yes

yes

yes

yes

Notes

—

127

R2
Pine Creek (river
miles 169-171)

Trout
Spawning
Habitat

—

—

—

—

40% of
Suitable
Spawning
Gravels
Located in
This Reach
of Pine
Creek

yes

yes

R3
Pine Valley Overlook
Area

—

—

View Site For
Pine Valley

—

—

—

no

no

R4
Town Of Pine Creek
(area of flooding)

—

—

—

—

Acknowledged
As A Problem
That Needs
Resolution

—

yes

no

To Be
Evaluated
in NED

Appendix A—Table 2. Evaluation Framework.

Resources
R1
Pine Valley
Meadow

EQ
Attributes
Ecological

Cultural

Techniques
Indicators
Terrestrial Habitat
(quality & quantity
aspects)

Units
Habitat Units

Deer Fawns

Number of
Fawns

Area of Site

Acres

Representativeness

Importance
Ranking

Research Value
Importance
Ranking

128

Aesthetic

R2
Pine Creek
(etc)

Landscape Priority

Landscape
Priority Ranking

Guidelines
Not less than 19
Habitat Units

Names
HEP

Documentation References
Habitat Evaluation Procedures
(FWS-E6M 102)

State Annual Deer
Census (Pine v.
Hard)

See Bibliography #1

Preservation of
Entire Site
Preservation
(High Ranking)
Preservation
(High Ranking)

Map Plammeter

See Bibliography #2

Importance
Ranking
Technique
Importance
Ranking
Technique

See Bibliography #3

H9 Ranking

PEPLA

Procedures to Establish Priorities
in Landscape Architecture (SCSTR
#CF)

75 or more Fawns
per year

See Bibliography #4

Notes

Appendix A—Table 3. Trend and Existing Conditions.

Trend Conditions
Resources

R1
Pine Valley
Meadow

EQ Attributes

Ecological

Indicators

Trend
(Units/Date)

Trend
(Units/Date)

Trend
(Units/Date)

Existing
Condition
(Units/Date)

Habitat

22 (1950)

20 (1970)

19 (1975)

19 (1980)

Fawns

50 (1950)

50 (1970)

60 (1975)

65 (1980)

Notes
Trend Conditions Estimated
From 1950, 1970 & 1978
Surveys (Photos)
Information From Annual Census
(Pine Mt. Deer Hard)

Cultural

129
Aesthetic

R2
Pine Creek

Area of Site

6 ac. (1942)

6 ac. (1950)

6 ac. (1970)

6 ac. (1970)

Representativeness

unknown

unknown

unknown

High

Research
Value

unknown

unknown

High

High

Landscape
Priority

unknown

unknown

H8 Ranking (1978)

H8 Ranking (1980)

Indian Winter Camp Discovered in
1942

Appendix A—Table 4. Without-Plans Conditions
Without-Plans Conditions

Resources
R1
Pine
Valley
Meadow

EQ
Attributes
Ecological

Cultural

Forecast Techniques

Start
Implemen
tation
Date
(1990)

End
Implemen
tation
Date
(1995)

Forecast
Date 1
(2005)

Forecast
Date 2
(2025)

Forecast
Date 3
(2045)

Habitat

22

24

27

29

30

None

Extrapolation

Fawns

68

69

75

78

80

None

Extrapolation

Indicators

Area of
Site

6.9 ac.

6.6 ac.

5.3 ac.

3.0 ac.

2.9 ac.

High

High

High

High

High

Representativeness

130

High

High

Moderate

Low

Low

Research
Value

Locational
Changes

Less along
Eastern Side
of Winter
Camp due to
Erosion Loss
of Some
Artifacts & Part
of Site

Names

Extrapolation

Documentation
References
See
Bibliography
#5
See
Bibliography
#6
See
Bibliography
#7

Scenarios
Extrapolation

See
Bibliography
#8
See
Bibliography
#9

Aesthetic

R2 Pine
Creek

Landscape
Priority

H8

H8

H7

H6

M7

None

Scenarios

Pine County
Planning
Dept. Report Future
Landscapes
for Pine Valley
1978-2028,
Vol 2

Notes

LocalNotes
Wildlife
group is vaery
active in
Wildlife
Management
Program

Appendix A—Table 5. With-Plan Conditions for PlanA .

With-Plan Conditions

Resources
R1
Pine Valley
Meadow

EQ
Attributes
Ecological

Cultural

Forecast Techniques

Start
Implementation Date
(1990)

End
Implementation Date
(1995)

Forecast
Date 1
(2005)

Forecast
Date 2
(2025)

Forecast
Date 3
(2045)

Locational
Changes

Habitat

19

8

10

14

19

None

Model

Deer
Fawns

65

20

32

47

65

None

Model

Area of
Site

5.9 ac.

5.9 ac.

5.9 ac.

5.9 ac.

5.9 ac.

High

High

High

High

High

Indicators

131

High

R2
Pine Creek

0.1 ac. of
Camp Site &
Artifacts Lost
Due to
Erosion

Model

See
Bibliography
#10

High

High

High

High

Scenario
None

H8

L4

L4

M5

M6

None

See
Bibliography
#12

Scenario

None

Research
Value

Landscape
Priority

Documentation
References

See
Bibliography
#11

Representativeness

Aesthetic

Names

See
Bibliography
#13
See
Bibliography
#14

Scenario

See
Bibliography
#15

Notes
Riparian
Vegetation
Slowly Returned
After
Construction

Appendix A—Table 6. Identification of Effects For PlanA .

Difference Between Without-Plans and With-Plan Conditions (yes/no)

Resources
R1
Pine Valley
Meadow

E Attributes
Ecological

Cultural

Aesthetic

132

R2
Pine Creek

Indicators

Start Implementation Date
(1990)

End Implementation Date (1995)

Forecast
Date 1
(2005)

Forecast
Date 2
(2025)

Forecast
Date 3
(2045)

Effect (yes/no)

Habitat

yes

yes

yes

yes

yes

yes

Deer Fawns

yes

yes

yes

yes

yes

yes

Area of Site

no

yes

yes

yes

yes

yes

Representativeness

no

no

no

no

no

no

Research Value

no

no

no

yes

yes

yes

Landscape Priority

no

yes

yes

yes

yes

yes

Notes

Appendix A—Table 7. Descriptions of Effects For Plan A .

Effect Characteristics
Magnitude

Resources

E Attributes

R1
Pine Valley
Meadow

Ecological

Cultural

133
Aesthetic

R2
Pine Creek

Start
Implementation Date
(1990)

End
Implementation Date
(1995)

Forecast
Date 1
(2005)

Forecast
Date 2
(2025)

Forecast
Date 3
(2045)

Habitat

-3

-16

-17

-15

-11

Deer
Fawns

-3

-49

-43

-31

-15

Area of
Site

0

+0.3

+0.6

+1.4

Representativeness

No change

No change

No
change

Research
Value

No change

No change

Landscape
Priority

No change

Great
Decrease

Indicators

Duration

Location

Other Effects
Characteristics

55 years +
Long Term
(starting
1990)

—

—

+2.9

—

—

—

No
change

No
change

20 years +
Long Term
(start 2025)

No
change

Slight
Increase

Great
Increase

Moderate
Decrease

Slight
Decrease

Slight
Decrease

—

The levee would
detract from the
natural look of
the meadow
even after
revegetation

45 years +
Long Term
(starting
1995)

Notes

Appendix A—Table 8. Determinations of Effects Significance For PlanA .

Significant
Resources
R1
Pine Valley
Meadow

E Attributes
Ecological

Indicators

134

Research Value

R2
Pine Creek

Technical
Recognition

Landscape Priority

Significant Effect
(yes/no)
yes

40 CFR
1508.27(b) (3)
(Ecologically
Critical Areas)

Pine Creek Wildlife
Club States the
Deer Population
will Decrease

State & Federal
Wildlife Biologists
Recognize That
the Project Will
Decrease Habitat
Below Threshold
Levels

40 CFR
1508.27(b) (8) &
(10) (Loss of
Historic Resource
and Loss of
Historic Site)

State Historic
Preservation
Officer Supports
Protecting the Site

Site & Associated
Characteristics
Saved

None

Community
Groups Support
Saving the Area
from Erosion, but
want Plantings
made on the Levee
to Compensate
For loss of
Aesthetic Values

None

Area of Site
Representativeness

Aesthetic

Public
Recognition

Habitat
Deer Fawns

Cultural

Institutional
Recognition

yes

yes
no
yes

yes

Notes

Appendix A—Table 9. Appraisals of Effects (Indicators) For PlanA .

Appraisals (beneficial/adverse)

Resources
R1
Pine Valley
Meadow

E Attributes
Ecological

Cultural

135

Aesthetic

R2
Pine Creek

Indicators

Start
Implementation Date
(1990)

End
Implementation Date
(1995)

Forecast Date
1 (2005)

Forecast Date
2 (2025)

Forecast Date
3 (2045)

Habitat

Adverse

Adverse

Adverse

Adverse

Adverse

Deer Fawns

Adverse

Adverse

Adverse

Adverse

Adverse

Area of Site

No change

Beneficial

Beneficial

Beneficial

Beneficial

Representativeness

No change

No change

No change

No change

No change

Research Value

No change

No change

No change

Beneficial

Beneficial

Landscape
Priority

No change

Adverse

Adverse

Adverse

Adverse

Notes

Appendix A—Table 10. Appraisals of Effects (EQ Attributes) for PlanA .

Appraisal Considerations

Resources
R1
Pine Valley
Meadow

E
Attributes

Appraisal
(Beneficial/Adv
erse; see
Table 9)

Quantity/
Quality
Factors

Institutional
Factors
(see Table
8)

Public
Factors
(see Table
8)

Technical
Factors
(see Table
8)

Other
Factors

Appraisal
Judgment
(also enter
in significant
EQ Effects
table)

Ecological

Major Loss of
Fawning Area

Adverse For All
Indicators

Quantity &
Quality of
Habitat &
Deer
Population
Decreased

Destruction
of Critical
Ecological
Areas

Opposed by
Pine Creek
Wildlife Club

Habitat &
Population
will Drop
Below
Threshold
Levels

—

AdverseMajor Loss of
Deer
Fawning Area

Cultural

Site Saved
From Loss Due
to Erosion
Which Would
Have Been
Irretrievable

Beneficial
Because Long
Term Losses
From Erosion
Are Prevented

The
Quantity of
the Site
(ac.) is
Saved the
Quality is
Saved

State
Historic Site
Saved

State
Historic
Preservation
Officer
Supports
Plan A

Area,
Representativeness &
Research
Value Saved

—

BeneficialSite Saved
From
Potential
Loss Due to
Erosion

Aesthetic

Site Marred By
Construction of
Levee, but
Major Erosion
Is Curtailed

A Long Term
Adverse Effect
on Aesthetics
Occurs, But
Decreases As
Vegetation
Covers Levee

Views Are
Degraded

None

Community
Groups
Want
Restrictions
Placed on
the Project

None

—

AdverseBecause
View of
Meadow As A
Whole is
Marred

136
R2 Pine
Creek

Description
(magnitude,
duration,
location; see
Table 7)

Notes
Mitigation
Recommended

Appendix B—Relationships Between NEPA Requirements for EIS Contents and These
Procedures
NEPA regulations requirements for EIS contents.
(40 CFR 1502.10-1502.18)
(a) Cover sheet. (40 CFR 1502.10(a) and 1502.11) . . . . . . . . . . . . . . . . . . . . .

Related activities in these procedures.
None.

(b) Summary. (40 CFR 1502.10(b) and 1502.12) . . . . . . . . . . . . . . . . . . . . . . .
(1) Major conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Judge net EQ effects activity.

(2) Areas of controversy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Significance of EQ resources and attributes.
Determine significant effects activity.
Appraisal of effects on EQ attributes.

(3) Issues to be resolved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Significance of EQ resources and attributes.
Determine significant effects activity.
Appraisal of effects on EQ attributes.

(c) Table of contents. (40 CFR 1502.10(c)) . . . . . . . . . . . . . . . . . . . . . . . . . . .

None.

(d) Purpose of and need for action. (40 CFR 1502.10(d) and
1502.13).
(e) Alternatives including proposed action. (40 CFR 1502.10(e) and 1502.14).
(1) Present effects in comparative form . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Explore and evaluate alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

None.

(3) Substantial treatment to each alternative considered in detail . . . . . . . . . .
(4) Include alternatives beyond agency jurisdiction . . . . . . . . . . . . . . . . . . . .
(5) Include no action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) Identify preferred alternative(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) Include mitigation measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) Affected environment. (40 CFR 1502.10(f) and 1502.15) . . . . . . . . . . . . . .
(g) Environmental consequences. (40 CFR 1502.10(g) and1502.16).
(1) Effects of alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Unavoidable adverse effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Relationship between local short-term uses of man’s
environment and maintenance and enhancement of longterm productivity.
(4) Irreversible and irretrievable commitments of resources . . . . . . . . . . . . . .
(5) Direct effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) Indirect effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) Conflicts between the recommended plan (or candidate
plans) and land use objectives.
(8) Energy requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) Natural or depletable resource requirements . . . . . . . . . . . . . . . . . . . . . .
(10) Urban quality, historic and cultural resources . . . . . . . . . . . . . . . . . . . . .
(11) Mitigation means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h) List of preparers. (40 CFR 1502.10(h) and 1502.17) . . . . . . . . . . . . . . . . . .
(i) List of agencies, organizations, and individuals to whom copies of the
statement are sent. (40 CFR 1502.10(i)).
(j) Index. (40 CFR 1502.10(j)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(k) Appendices. (40 CFR 1502.10(k) and 1502.18) . . . . . . . . . . . . . . . . . . . . .

None.
Section III, General evaluation requirements.
Section IV, EQ evaluation process.
Detailed definition-and-inventory stage.
Detailed assessment-and-appraisal stage.
None.
Forecast without-plans conditions activity.
None.
None.
Inventory resources phase.

Assess effects phase.
Appraise effects phase.
Appraise effects phase.
Duration.
Location.
Duration.
Forecast without-plans conditions activity.
Forecast with-plan conditions activity.
Forecast without-plans conditions activity.
Forecast with-plan conditions activity.
Institutional recognition.
None.
Section IV, EQ evaluation process.
Section IV, EQ evaluation process.
None.
Interdisciplinary planning.
Public involvement.
None.
Documentation.
Appendix A, Example documentation formats.