Methods for apportioning the cost of a water resource project

Abstract

Numerous ad hoc methods are used to apportion the costs of a water resource project among participants and/or purposes. Unfortunately these procedures do not always work, i.e., they lead to unfair assignment of costs. Accepted criteria for efficiency/financial analysis used in the water resources field are expressed in axiomatic form. These criteria are compared to accepted axioms of fairness from cooperative n ‐person game theory. Similarities between the two approaches are identified. The minimum costs, remaining savings (MCRS) method is proposed as an improved method of financial analysis. The MCRS method can be viewed as a generalization of the presently used separable costs, remaining benefits method.