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Cost-Effectiveness Analysis and a Border Region: A Critical Analysis

Prepared for the International Society of Ecological Economics Biennial Conference, Montreal July 11-14, 2004. Cost-Effectiveness Analysis and a Border Region: A Critical Analysis. Dr. James F. Booker Siena College New York, U.S.A. or. How can an ugly duckling be made respectable?.

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Cost-Effectiveness Analysis and a Border Region: A Critical Analysis

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  1. Prepared for the International Society of Ecological Economics Biennial Conference, Montreal July 11-14, 2004. Cost-Effectiveness Analysis and a Border Region: A Critical Analysis Dr. James F. Booker Siena College New York, U.S.A.

  2. or How can an ugly duckling be made respectable?

  3. source: U.S. Department of Interior

  4. source: Los Alamos National Laboratory

  5. Outline • Institutional background • Physical setting • Uncovering techniques to bias a cost-effectiveness analysis • Cost-effectiveness applied effectively

  6. Background • U.S. obligation to deliver Colorado River flows to Mexico (Mexican Water Treaty of 1944). • Obligation to count only decent quality water (Minute No. 242, 1973).

  7. Source: Harding, et al., 1995

  8. The U.S. strategy for meeting Minute 242:Colorado River Basin Salinity Control Act (1974) • Construct “bypass” for agricultural drainage • accomplished quickly and still in operation • restored one part of the Colorado River Delta, the Cienega de Santa Clara. • Construct the Yuma Desalting Plant to desalt the drainage water • first operated in 1990 after 14 years of construction. • cost of $258 million • shut down almost immediately due to high costs and technical difficulties.

  9. Cienega de Santa Clara map. Diane Sylvain

  10. What’s Wrong with the Bypass? • U.S. cannot receive credit for the water under the 1944 Treaty with Mexico. • Desalting plant would produce water near the quality of Colorado River water for delivery to Mexico – thus allowing more water use in the U.S.

  11. Current Context • 4th year of severe drought in the Colorado River Basin Lake Powell (Living Rivers) • 50% of basin storage depleted Lake Mead (NASA Earth Observatory)

  12. The main point: Yuma Desalting Plant is a water supply project .

  13. source: Los Alamos National Laboratory

  14. source: Cohen and Henges-Jeck

  15. How an ugly duckling can be made respectable.. source: U.S. Bureau of Reclamation

  16. How to manipulate cost-effectiveness analyses: • Use sunk costs to justify more costs. • Combine the ugly duckling and the swan. • Leave out relevant (though perhaps non-quantifiable) costs.

  17. U.S. Department of Interior Analysis (2003)

  18. U.S. Department of Interior Analysis (2002)

  19. U.S. Department of Interior Analysis (2002)

  20. An alternative cost-effectiveness analysis

  21. Conclusions • Ecological economists should be prepared to do cost benefit and cost-effectiveness analyses in order to influence policy. • When done correctly, building on neoclassical approaches will identify the ugly ducklings.

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