Orestimba Creek Feasibility Study - Stanislaus County

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Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 Table 7-1: Total Annual Benefits and Costs by Alternative October 2011 Prices ($1,000’s), 4% Interest Rate Based on a 50-year Period of Analysis FRM Costs/Benefits ITEM Tentatively Recommended NED Plan (Alt 2) Plan (Alt 3) Investment Costs: First Costs 35,219 44,056 Less Cult Res (281) (353) Less Sunk PED costs 0 0 Interest During Construction 2,141 2,679 Total 37,079 46,382 Annual Cost: Interest and Amortization 1,726 2,159 OMRR&R 164 180 Subtotal 1,890 2,339 Annual Benefits: 3,128 3,128 Net Annual FRM Benefits 1,238 789 FRM Benefit-Cost Ratio 1.66 1.34 The NED Plan is Alternative 2, the stand-alone Chevron Levee at the optimized elevation of 112.75 feet. The NED and it has an annual net benefit of $1.2 million and a Benefit-to-Cost Ratio (BCR) of 1.6. The Tentatively Recommended Plan is Alternative 3, the stand-alone Chevron Levee at an elevation of 114.8ft. The Recommended Plan has net annual benefits of $0.8 million and a BCR of 1.3 7.2.3.1 Net Benefits and BCR sensitivity to uncertainty The table below summarizes the Net Benefits and BCR ranges for each of the final array of alternatives. The low annual benefit represents the 75% confidence (that benefits will exceed the indicated value), the mid represents the 50% and the high annual benefit represents the 25% confidence level. The low annual cost represents the 25% confidence (that costs will be less than the indicated value), the mid annual cost represents the 50% confidence and the high cost represents the 75% confidence. Net Benefit and BCR mean values and ranges were calculated in a Monte-Carlo simulation using a triangular distribution in the annual benefits and the annual costs. The mean Net Benefit and BCR represent the mean result from this Monte Carlo 46
Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012 simulation. The low to high range represent the 90% confident interval (5%-95%), given our inputs. The ranges in annual benefits, annual net benefits and BCR’s include risk and uncertainty (R&U) in Hydrology, Hydraulics and Economics. The 50% annual benefit is very close to the annual benefit as calculated without R&U. The 75% confidence is more conservative and assumes that R&U is weighted on the low side (minus depths, minus structure value, add foundation heights, etc.). The 25% confidence annual benefit is more liberal and assumes R&U is weighted on the high side (add flow, add depths, add structure value, subtract foundation heights, etc.). In other words, we are most confident that Net Benefits and BCR will exceed the low values and become less confident as you move toward the high values, with the best estimate being the mean values. R&U analysis on the Orestimba Creek Feasibility Study is in accordance with ER-1105-2-101 and EM-1110-2-1619. 47
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Orestimba Creek Feasibility Study - Stanislaus County

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