Abstract
The topic of this study is the risk inherent in ex ante user charge schemes when they are used to finance projects where costs are to be incurred well into the future and the user generation is discrete and ends before all costs have been incurred. In such cases all parameters must be forecast at the point at which the user charge is struck. Examples are the proposed high-level nuclear fuel waste disposal facility in Canada and the USA. The risk that inter and infra generational equity will not be achieved because of inadequate accumulation of funds is considered to be the primary risk. We identify the essential parameters of a user charge formula, including choices regarding forecasting of costs, discounting and rate choices, and the method of dealing with expectation changes and forecast errors, and examine how they are related to the risk. Criteria for risk minimisation in formula structuring and practical risk management principles are developed.
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© 1994 Springer Science+Business Media Dordrecht
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Eckel, L., Fisher, K. (1994). Risk in Ex Ante User Charge Schemes. In: Hipel, K.W., Fang, L. (eds) Stochastic and Statistical Methods in Hydrology and Environmental Engineering. Water Science and Technology Library, vol 10/2. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-3081-5_6
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DOI: https://doi.org/10.1007/978-94-017-3081-5_6
Publisher Name: Springer, Dordrecht
Print ISBN: 978-90-481-4380-1
Online ISBN: 978-94-017-3081-5
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