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Consumer Surplus Under Uncertainty: An Application to Dam-Reservoir Projects

Quirk, James P. (1985) Consumer Surplus Under Uncertainty: An Application to Dam-Reservoir Projects. Social Science Working Paper, 454. California Institute of Technology , Pasadena, CA. (Unpublished)

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The use of cost-benefit analysis to evaluate the net welfare payoffs from water projects has now been an established practice for many years. One of the interesting aspects of such cost-benefit studies is that water projects involve an uncertain flow of costs and benefits, arising from the stochastic nature of streamflows. Hence a basic problem for the cost-benefit analyst is that of incorporating this uncertainty into his measures of costs and benefits. In the present paper, we examine the problem of computing an appropriate consumer surplus measure to evaluate water project benefits under uncertainty. Detailed treatment is given to the case in which a complete set of contingent claim markets exist in the economy, as well as to the case of a spot market economy.

Item Type:Report or Paper (Working Paper)
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Additional Information:Revised. Original dated to November 1982. Published as Quirk, James. "Consumer Surplus Under Uncertainty: An Application to Dam‐Reservoir Projects." Water Resources Research 21.9 (1985): 1307-1312.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:454
Record Number:CaltechAUTHORS:20170926-151703096
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81854
Deposited By: Jacquelyn Bussone
Deposited On:26 Sep 2017 22:49
Last Modified:03 Oct 2019 18:48

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