An economic analysis and evaluation of the impact of the construction and operation of a hydroelectric facility in a rural area of Virginia

In this chapter, the recreational facilities included as part of the proposed hydroelectric facility were examined and analyzed from several prospectives. From a national accounting perspective, the Recreation Ponds Area was found to have a benefit-cost ratio greater than one if the high valuation of $2025 per user-day was used to estimate benefits o At lower valuation figures, the justification of the RPA on efficiency grounds becomes more questionable. The recreation area will have a positive impact on the study region's economy through increased economic activity and resident use, however, a complete assessment of local benefits and costs was not made. It appears that the incidence of the recreation facility's benefits and costs are such to result in an income transfer from electricity users (assuming the recreation facility's costs are reflected electric rates) to its recreation facility's uses. There is no economic rationale to justify this transfer nor to lead to the conclusion that this transfer is undesirable. In terms of the "Code of Federal Regulations," there is some question as to whether the RPA is required in the hydroelectric facility because it is separate from the pump-storage reservoirs. However, it appears that the FPC has established a "rule of thumb" requiring recreational facilities in conjunction with such facilities.