Textbook on economics of water management and hydraulic construction

Abstract

When investigating and refining problems of determining the economic efficiency of alternatives of hydraulic construction, selecting optimal types and designs of structures and equipment, developing methods of technical and economic calculations, and deriving calculation formulas, the authors used both the basic recommendations of "Standard Procedure for Determining Economic Efficienty of Investments and New Technology" and their own investigations in the area of economics of water management and hydropower engineering.The authors correctly point out the following characteristics of economic investigations and calculations in the area of hydraulic construction: the need for comparison of nonsimukaneous expenditures during construction and operation of water management projects, consideration of related investments, the need for distribution of expenditures between participants of the water management complex, the need to compare planned hydroelectric power stations with thermal electric power stations, and also the fact that during the period of operation of hydraulic complexes the costs of production are generally quite negligible in comparison with investments for their const.ruction. On the basis of this the authors conclude that in hydraulic construction the problem of proper consideration of the effect of investments on cost and cost of production is of great significance (p. 11).Recognizing the value of using modern computers and mathematical methods when solving many complex engineering and economic problems for conditions corresponding to prescribed optimization requirements, the authors of the book validly note that "...this can be accomplished only if the effect of all acting factors can be represented in the form of definite analytic, graphic, or probability relations," which in a number of cases are difficult to establish. For example, the "effect of geological and topographic factors which must be taken into account when solving the problem of the optimal scheme of energy utilization of a stretch of the river and the representation of which in any form suitable for input into a computer, represents enormous difficukies" (pp. 14-15).Examining the economic indexes in the area of water management and water power, the authors use as basic indexes the size of the investments in individual structures and for the complex, the annual expenses for operating individual structures, and for the entire complex which determines the production cost of the product and the economically founded selling cost (p. 16). In this case it is correctly noted that "an economically profitable water management project should, due to the quantity 8c, which is the cost of production equated by the authors to its selling price (rate), completely compensate all expenses for operating the project and, furthermore, yield the necessary profit (p. 19).