Costs and Benefits of the Ullum Dam Project: An Analytical Framework and an Empirical Exploration

Abstract

In this study we present the results of a brief but extremely intensive examination of the potential costs and benefits of the projected irrigation and power dam at Ullum, in the province of San Juan, Argentina. Our investigation has led us to conclude that a methodology based on the market value of water rights is likely to provide the most accurate way of assessing the irrigation benefits of the project in question. This paper will concentrate on developing this methodology, and on providing its underlying rationale. We shall also present the results of assessing the costs and benefits of the project under a variety of alternative assumptions concerning the key variables involved. The alternatives chosen provide in each case a range which, in our judgment and on the basis of the information available to us, spans the plausible values of the variable in question. However, we should note at the outset that constraints of time and resources have not permitted us to carry our empirical investigations as far as we would like. It is possible, therefore, that further work will indicate that, in the cases of one or more variables, the range that we have chosen should be extended, narrowed, or otherwise modified.