Cost-Effectiveness Analysis and a Border Region: A Critical Analysis Dr. James F. Booker Siena College New York, U.S.A. Prepared for the International.

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Presentation transcript:

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

or How can an ugly duckling be made respectable?

source: U.S. Department of Interior

source: Los Alamos National Laboratory

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

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).

Source: Harding, et al., 1995

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.

Cienega de Santa Clara map. Diane Sylvain

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.

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

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

source: Los Alamos National Laboratory

source: Cohen and Henges-Jeck

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

How to manipulate cost-effectiveness analyses: 1.Use sunk costs to justify more costs. 2.Combine the ugly duckling and the swan. 3.Leave out relevant (though perhaps non- quantifiable) costs.

U.S. Department of Interior Analysis (2003)

U.S. Department of Interior Analysis (2002)

An alternative cost-effectiveness analysis

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.