Reallocation of Federal Multipurpose Reservoirs: Principles, Policy, and Practice

Abstract

Most federal reservoirs in operation throughout the United States serve multiple purposes, typically, flood control, hydropower, navigation, recreation, water quality, irrigation, and municipal water supply. In the decades since many of these projects were first constructed, social preferences for how they should be operated and the purposes they should serve have changed, in some cases substantially. Changes in demand, expressed as society’s willingness to pay for services provided, may prompt reallocation, ordinarily defined as a change in reservoir operating rules and operational priorities. Reservoir storage is a convenient measure of operational priorities and project costs carried by the various purposes served. Assuming project storage to be in most cases fixed by original design, significant questions of fairness and economic efficiency arise with respect to the redistribution of benefits and costs after reallocation. Fairness questions center on distribution of costs and benefits, while efficiency considerations center on net economic surplus or net benefits aggregated across project uses. A case study in reallocation of a multipurpose federal reservoir reveals substantial discrepancies between benefits and costs evaluated in accordance with the full set of federal planning principles and abbreviated procedures historically used when the scope and scale of reallocation become large.