BENEFIT-COST ANALYSIS OF NORTH DAKOTA'S GARRISON DIVERSON UNIT: A CASE STUDY OF CONFLICTING INTEREST

Federal agencies are generally required to justify the economic value of proposed water resources development projects with benefit-cost analyses. Responsibility for economic analyses lies principally with the proposing agency, under broad policies and procedures guidelines. The economic evaluation of the Garrison Diversion Unit in North Dakota was used as a case study to examine the ability of federal agencies to evaluate their own projects. A consistent tendency to overestimate project benefits and underestimate project costs was found. Revised benefit-cost ratios ranged from 0.44 to 1 to 0.77 to 1, depending on the discount rate employed.