Document Details

Economic Analysis Guidebook

California Department of Water Resources (DWR) | December 2nd, 2016


Because of its considerable water management partnerships with the federal government, the Department of Water Resources (DWR) has a policy that all economic analyses conducted for its internal use on programs and projects be fundamentally consistent with the federal Economics and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G), which was adopted by the US Water Resources Council on March 10, 1983. The P&G set forth principles “…intended to ensure proper and consistent planning by federal agencies in the formulation and evaluation of water and related land resources implementation studies…” and guidelines that “…establish standards and procedures for use by federal agencies in formulating and evaluating alternative plans for water and related land resources implementation studies.”

It is also DWR policy to adopt, maintain, and periodically update its own Economics Analysis Guidebook, which is consistent with the P&G but can also incorporate innovative methods and tools when appropriate. This policy is necessary because (a) the P&G has not been updated for more than 20 years, (b) federal and State economic analyses sometimes have different regional analysis perspectives, and (c) water management projects and programs have become more complex.

The Economics Analysis Guidebook (Guidebook) was developed to assist DWR economists in performing economic analyses and, more importantly, to explain economics concepts, methods, and tools to non-economist staff, program managers, and management within DWR.

This Guidebook should be used in conjunction with the federal P&G in the preparation of project feasibility and socioeconomic impact analyses. If DWR is partnering with a federal agency during the preparation of a feasibility study, then the P&G will have precedence over this Guidebook in determining the federal National Economic Development Plan. However, this Guidebook may help DWR identify a “Locally Preferred Plan” that is preferable from a State or local perspective rather than a National Economic Development Plan, which otherwise might have been implemented with strict adherence to the P&G.

The Economics Analysis Guidebook discusses the following topics:

• Federal and State Economic Analysis Guidelines
• Economic Analysis Methods
• Ecosystem Valuation Methods
• Economic Analysis Models
• Economic Analysis and the Federal Planning Process
• Financial Analysis

Keywords

economic analysis, planning and management