ABSTRACT

Cost allocation in the sense of apportioning joint costs of multiple-purpose projects to individual products has been of considerable significance for western water policies in the past. The problems of cost allocation have been discussed in numerous committees and commissions. Cost allocation in the sense of obtaining the total costs of a project first and then apportioning them to individual products is meaningless for obtaining the optimum product combination. Besides constituting a retrogression in analytical method, these attempts have undesirable practical effects. Usually, water development for municipal and industrial uses and for power has high benefit-cost ratios as compared with irrigation use. Cost allocations to water and to power, on the other hand, are influenced by a more complex grouping of interests. Frequently, irrigation interests are in favor of high cost allocations to municipal water and to power.