Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

agricultural or industrial development plans in the other cases 31 .In general, one can make a distinction between potential and actual demand (or water consumption). Thepotential demand (or water resource needs) will correspond to the maximum requirement, which will betaken into account for that investment. For example, for civil purposes it may be evaluated on the basis ofthe water requirements for the same use (generally expressed on a daily and seasonal basis) arising out ofthe comparison with any situation which will be as close as possible to the one facing the project and havea good service level. For irrigation purposes, it may be estimated on the basis of specific agronomicstudies or, even in this case, by analogy. The actual demand is the demand which is actually fulfilled by theinvestment in question and which corresponds to the expected consumption. The actual starting demandis represented by the actual consumption before the intervention.Figure 3.3 Chart of the analysis of the water demandIdentification of requirementsDefinition of usersContext analysis(reconnaissances, historical analyses, fieldstudies, etc.)Tariff policiesRegulatory frameworkPrice and income elasticity of demandDefinition and evaluation ofrequirements(Potential demand)Definition and evaluation ofconsumption(Actual demand)Forecast estimated for theproject life cycleCoverageEnvironmental sustainabilityanalysisCheckMarket pricesShadow pricesAvailabilityDirect socio-economic benefitsIndirect socio-economic benefitsA first obvious evaluation criterion of the investment depends upon the extent to which the actualdemand may be close to the potential demand. It is necessary to consider also the environmental andeconomic sustainability of the investment (Water Framework Directive 2000/60/EC). The demand theinvestment can actually satisfy corresponds to the supply, net of any technical resource loss and release.Whenever the project may imply the use of water (surface or subsurface) resources, the actual availabilityof the resource flows required will be clearly shown by appropriate hydrological studies.If the project involves the treatment and discharge of sewage, it is necessary to analyse the capacity of thebody intended to receive the load of polluting and nourishing substances, in a way compatible withenvironmental protection (Directive 2000/60/EC).31The time structure of the short-term demand (daily, seasonal, etc.) will be considered only for the technical design of the infrastructures.96