CIVIL ENGINEERING 365 ALL ABOUT CIVIL ENGINEERING



AbstractWater storage reservoirs can be either sustainable or exhaustible. In the absence of sediment management, reservoir storage is an exhaustible resource with long-term consequences. Previous economic planning of reservoirs essentially guaranteed non-sustainable solutions. This paper describes a new economic paradigm for economic assessments of new and existing reservoirs. The new economic paradigm provides a framework for comprehensive accounting of economic benefits and costs over a sufficiently long period of analysis, including cost estimates for dam decommissioning and lost benefits where sediments are not sustainably managed. A case study applies this framework to a hypothetical western US reservoir to quantitatively compare the status quo (i.e., no sediment management) with a selection of sediment management alternatives. Results indicate that sustainable sediment management can be less expensive than the consequences of ignoring sedimentation (e.g., eventual dam decommissioning and replacing lost storage capacity). Additional work shows that beginning sediment management within a decade of reservoir construction prevents the most severe impacts of sedimentation. An investigation of alternative discounting approaches indicates that the approach employed can have a significant impact on economic results.IntroductionLarge dams and reservoirs interrupt the continuity of sediment transport through river systems, causing sediments to accumulate. Over time, sediment accumulation diminishes a reservoir’s capacity to store water, thereby limiting its service life (Randle et al. 2021). Reservoir sedimentation also has significant impacts both up- and downstream of the reservoir pool. The more than 92,000 dams (USACE 2021) in the United States national inventory were not designed to preserve water storage capacity indefinitely. Without sediment management, many reservoirs will see their function substantially impaired long before they have completely filled with sediment (Morris 2020). In the absence of sediment management, reservoir storage is an exhaustible resource with long-term consequences. For these reservoirs, dam decommissioning will be the unavoidable result (Palmieri et al. 2001), especially for high hazard dams (Randle et al. 2021). Doing nothing and leaving the dam in place with a fully sedimented reservoir is not a realistic option for high hazard dams because of the effect of sediment abrasion on spillways. Furthermore, the cessation of reservoir-dependent economic benefits leaves no revenue stream to offset the costs of maintenance and repairs, or to address future dam safety deficiencies.Reservoirs need to be evaluated for determination of either eventual decommissioning or sustainable sediment management. Dams may be decommissioned for several reasons, including problems with structural safety, economics, reservoir sedimentation, and river restoration. The dam decommissioning alternative leaves future generations with fewer, and increasingly more expensive, reservoir storage options to meet their water demands. However, there are some cases where dam removal might lead to significant benefits from ecosystem and river restoration. The removal of two large dams on the Elwha River, Washington, generated an estimated $3–$6 billion nationally (Loomis 1996).Ensuring fairness between current and future generations is called intergenerational equity, and it is the core tenet of sustainable development (Annandale 2013). The concept of intergenerational equity is derived from the Brundtland (1987) definition of sustainability: the ability to meet the needs and aspirations of the present without compromising the ability of future generations to do so.In the case of reservoirs, sustainability means balancing sediment inflows and outflows across a dam while maximizing its long-term benefits (Morris and Fan 2010). Sustainable management can be achieved by any of several well-established alternatives for removing reservoir sediments and achieving sediment transport continuity. Sediment management alternatives are divided into four main categories: (1) reducing sediment yield from the upstream watershed, (2) routing sediment-laden flows around or through the reservoir, (3) removing deposited sediment from the reservoir, and (4) adaptive strategies to respond to capacity loss without sediment manipulation (Annandale et al. 2016; Kondolf et al. 2014; Morris 2020; Morris and Fan 2010). Sedimentation problems and specific management techniques vary widely from one site to another; nonetheless, these alternatives can mitigate many types of sediment-related problems both upstream and downstream of dams. Uncontrolled sedimentation may block dam outlet gates or reservoir water intakes, reduce recreation surface area, and shorten the useful reservoir life, while sediment management prolongs reservoir benefits, extending economic production and social well-being (Bekchanov et al. 2017).Sediment management strategies should extend the useful life of the reservoir and maximize net benefits. Evaluation of these strategies should include hydraulic and sedimentation analyses to model physical attributes, and economic analysis to model benefits and costs (Niu and Shah 2021; Yang 2006). Reservoir planning and economic studies commonly employ exponential discounting and either a 50- or 100-year period of analysis (POA) (Morris and Fan 2010). Exponential discounting gives less weight to benefits and costs that occur farther into the future. The value of future benefits and costs can be significantly diminished through exponential discounting, either with high discount rates or over a sufficiently long POA.Historical economic analyses never considered certain important costs, such as up- and downstream damages, and dam decommissioning; nor did they consider depleted benefits from decreased water supply, recreation area, and hydropower flexibility. Although engineers specializing in sedimentation conceptually understood that reservoirs were not sustainable, numerical modeling did not exist during the period of rapid dam construction in the mid-20th century; if they had existed, numerical models could have simulated reservoir sedimentation impacts over time. In addition, methods to develop costs from sedimentation consequences, especially dam decommissioning, had not been developed. Because of exponential discounting and a 50- or 100-year timeframe of analysis, planning studies for new dams did not acknowledge that without sediment management reservoirs would eventually have to be decommissioned, nor did they consider future dam decommissioning methods or costs. The standard economic methodology did not provide decisionmakers with any incentive to consider sustainable sediment management. With 92,000 dams already in the national inventory, replacing all these dams at alternate locations is not possible and the consequences of lost reservoir benefits to future generations has not been considered. Therefore, the call for comprehensive economic evaluations of reservoirs with and without sediment management represents a new paradigm compared to traditional and long-standing economic practices.The purpose of this paper is to introduce this new economic paradigm for new and existing water storage reservoirs. This new economic paradigm encourages policy makers to consider comprehensive economic evaluation and intergenerational equity to make water resources projects truly sustainable. This comprehensive analysis has a period of analysis and spatial area large enough to consider the following sediment-related effects: •Diminishing benefits related to reduced storage capacity and recreation surface area over time;•costs associated with sedimentation of dam and reservoir facilities;•costs associated with the upstream sedimentation impacts to property, infrastructure, and habitat;•costs associated with downstream channel degradation impacts to property, infrastructure, and habitat; and•costs and benefits associated with dam decommissioning.The remaining sections of this paper discuss historical aspects of the economic assessment of water resource projects and the proposed paradigm for future assessments. A case study illustrates application of the new paradigm and shows that sustainability is economically feasible, by incorporating sediment management into dam design and reservoir operations.How We Got HereFormal applications of benefit-cost analysis (BCA) for federal water projects were first included in the Flood Control Act of 1936 (Ackerman 2008). This act permitted the US Army Corps of Engineers to participate in projects “if the benefits to whomsoever they may accrue are in excess of the estimated costs, and if the lives and security of people are not otherwise adversely affected” (Hufschmidt 1985). This act encouraged the application of a uniform set of principles and standards to monetize all benefits and costs for public investments. The first accepted guidelines for water resource projects emerged in 1950 with the publication of the Proposed Practices for Economic Analysis of River Basin Projects, known as the Green Book (Hufschmidt 1985; Jeuland 2020). According to the Green Book, water resource investments should be valued by applying market prices, adjusting or estimating the value of benefits and costs in monetary terms, and efficiently describing intangible effects. The benefit-cost-ratio (BCR) would be the output of this evaluation. A detailed history of the development and application of BCA for the period 1933–1985 can be found in Hufschmidt (1985). In North America and Europe, interest in the economic analysis of large dams peaked in the 1950s (Whittington and Smith 2020). BCA has been the World Bank’s dominant decision support system for project appraisal since the 1970s (Chutubtim 2001).In 1983, President Ronald Reagan approved new economic and environmental principles and guidelines, mostly based on national economic development and environmental quality (Hufschmidt 1985). The Water Resource Development Act of 2007 called for revisions to the 1983 principles. These revisions were released in 2013 and finalized in 2014. The new Principles, Requirements, and Guidelines (PR&Gs) replaced the 1983 principles and guidelines, and constitutes the current comprehensive policy and guidance for federal investments in water resources. According to the PR&Gs, agencies are required to consider three key considerations in alternatives evaluation: (1) the interrelated environmental, economic, and social impacts, considered without hierarchy; (2) not all impacts can be monetized, and qualitative impacts should be given equal weight; and (3) there could be more than one alternative that reasonably maximizes the public benefits relative to costs (PR&Gs 2014). Furthermore, Agency Specific Procedures to analyze investment in water resource projects is part of long-term actions (Office of Management and Budget 2021). These economic policies and guidances did not specifically require nor preclude that sediment-related impacts be evaluated. We find no evidence that the costs and diminishing benefits associated with sedimentation were considered in the decision-making process.Three elements of a BCA that significantly influence results are the POA, the selection of costs and benefits to be evaluated, and the discounting approach and rate (the time value of money). Policy- and decision-makers weigh these elements differently, depending on how they perceive each and what they believe is most important. The following sections present the historical evolution of these elements and investigate their deficiencies.Period of AnalysisReservoir planning and economic studies are evaluated over a specified future time period that is called POA. In the planning phase of a new water storage project a BCA is conducted that evaluates a selection of benefits and costs over this POA. It typically covers either 50 or 100 years (Morris and Fan 2010). The concept that infrastructure will serve its purpose for a finite period is called design life (Annandale et al. 2016). If well maintained, dam structures may last centuries. However, sedimentation will impact the operations of dam and reservoir facilities long before the reservoir completely fills with sediment. Decommissioning of high hazard dams will often be necessary after reservoir operations become significantly impaired (Randle et al. 2021).The reservoir storage reduction due to sedimentation is a relatively slow process (Huffaker and Hotchkiss 2006) and produces a low rate of benefit loss (Coker et al. 2009). Sedimentation impacts along the upstream channel, and degradation impacts along the downstream channel, tend to be experienced more rapidly, but the economics of those impacts have not been considered. Therefore, traditional applications of BCA in water project planning do not comprehensively account for the costs of sedimentation, and consequently conclude that additional capital costs to manage sedimentation are not economically justified (Kondolf et al. 2014). The design life approach analyzes reservoir benefits and costs over a certain time period and does not treat water storage as a resource in perpetuity (Johndrow et al. 2006). The historical approach neglected the loss of water storage over time, the eventual cost of dam decommissioning, and damages from upstream sedimentation and downstream erosion. A reason for this historical approach might be that the present value of annual costs is seldom significant beyond 50 years because they are heavily discounted. However, reservoir storage sites are an exhaustible resource, so the design life approach will likely leave future generations with few and expensive options to consider. At the end of reservoir life, and eventual dam decommissioning, a replacement project would be expected to at least maintain the historical benefits that were provided by the previous reservoir. The replacement dam and reservoir project will require a new economic analysis and justification. However, new reservoir sites will not be as plentiful and will impose greater engineering and permitting challenges. For example, in the 1970s the Denver Board of Water Commissioners proposed building Two Forks Dam to help meet the water supply needs of the Denver metropolitan area. After 20 years of planning, the permit to construct the dam was denied by the US Environmental Protection Agency (USEPA 1990).Considered Benefits and CostsDams are built mainly to provide an irrigation and municipal water supply; flood risk reduction; recreation, fish and wildlife benefits; hydropower; and river navigation. However, they entail huge investment costs, such as planning and design, construction, land purchase, and resettlement, and involve other important factors, such as social and environmental impacts. The latter can be estimated using different methods, such as found in Chutubtim (2001), Dunning and Durden (2009), Durden and Johnson (2013), and Zerbe and Scott (2015). Knowing as much as possible about the costs and the benefits leads to better decisions (Ackerman 2008). Historically, economic analyses did not fully capture all the temporal, spatial, environmental, and social dimensions of dam construction projects. The positive and negative externalities, such as upstream and downstream environmental damages, infrastructure and land use changes, water quality, and flood stage, received very little attention. Given what is known today, economic assessments of water projects should be modified to consider all anticipated costs and benefits. Without such considerations, any analysis is incomplete and therefore faulty (Hotchkiss and Bollman 1996).Discounting Approach and RateDiscounting is a mathematical procedure employed to make costs and benefits, which occur at different points in time, temporally equivalent. Discounting for temporal equivalence can be achieved using a variety of different approaches, referred to collectively throughout this paper as a discounting approach. The choice of discounting approach and discount rate have a high impact on the net present value (NPV) and the BCR of projects with a significant difference in the timing of costs and benefits. Projects like dams, which require large initial capital outlays and benefits distributed across the lifetime of the project, are greatly affected by the discounting approach and rate (Congressional Research Service 2016; National Center for Environmental Economics 2014).To reflect any serious responsibility to future generations, the discount rate must be quite low (Ackerman 2008; Weitzman 1998), but not zero. Zero discounting means current generations should reduce their incomes to benefit future generations (Harpman and Piper 2014), or sacrifice the current generations’ (the poorest generation) well-being (Pearce et al. 2003) relative to future generations. A recently proposed solution to this problem is to use a discount rate that declines with time to raise the weight attached to the welfare and well-being of future generations (Groom et al. 2005). In recent years new discounting approaches have attracted attention, but there is no agreement among economists regarding their use in water resource economic assessments (Harpman and Piper 2014).New Economic ParadigmEnsuring that water storage is preserved to meet the demands of future generations, while reducing upstream and downstream impacts, requires a focus on managing sediment, in order to maintain reservoir storage capacity over time. Sediment management can be applied at both new and existing reservoirs. The need for sediment management has become urgent because most reservoirs are approaching the end of their sediment design life (Annandale 2013). Sediment design life is measured as the number of years from construction to exhaustion of dead storage (i.e., water below the lowest dam outlet). The reservoir may continue to operate for some years or decades after the sediment design life but will eventually have to be decommissioned. The reservoir life is the years from construction to decommissioning.Maintaining the remaining reservoir storage capacity may be possible but recovering storage capacity lost to decades of sedimentation may not be feasible for large reservoirs. This section describes how reservoir sediment management strategies can be objectively evaluated from an economic standpoint, and how, with a comprehensive accounting of costs, sustainability might be the preferred economic alternative. To determine whether reservoir sediment management is economic, the sediment management cost should be compared to the cost of continued sedimentation and eventual dam decommissioning.Life Cycle ApproachDeveloping and retaining enough reservoir storage space to satisfy water demand over the very long term requires abandoning the conventional design-life approach to dam design and adopting a life-cycle management approach. A major difference between the life-cycle management approach and the design-life approach is the use of sediment management to preserve reservoir storage capacity over time (Annandale et al. 2016). The life cycle approach offers a framework for sustainably maintaining project benefits across generations (Palmieri et al. 2003). When sedimentation is controlled, dams can have useful lives exceeding any other type of engineered infrastructure (Morris et al. 2008), to meet current and future generations’ water demands. The authors are not aware of any previous study that comprehensively compares these two approaches for new and existing reservoirs.Economic Evaluation for New ProjectsJohndrow et al. (2006) estimated that an annual investment of between $10–$20 billion would be required for the construction of replacement dams and reservoirs to recover current worldwide reservoir storage loss due to sedimentation, without additional storage creation. Replacing lost reservoir storage capacity by constructing new dams would be challenging due to high land prices and a lack of favorable sites. Even when technically feasible sites exist for new dams, they may not be feasible from an economic, social, political, or environmental standpoint. Even before the major dam-building decades in the US, Brown (1946) recognized that major reservoirs are irreplaceable when he said:If the contemplated public and private reservoir construction programs are carried out, we shall have utilized by the end of this generation a very substantial portion of all the major reservoir sites … We cannot discover new reserves, as we will of oil. Nor we can grow new resources, as we can of forests. To whatever degree we conserve the capacity of the reservoirs built on these sites, to just that degree shall we conserve this indispensable base of our national strength and prosperity.Reservoir sediment management can be considered for new and some existing dams, although (for example) retrofitting low-level outlets for sediment management is more expensive than incorporating such outlets in the initial design and construction. The preserved benefits from sustainable sediment management can offset the additional costs, as will be demonstrated in the case study portion of this paper. In the absence of sediment management, those economic benefits that are dependent on reservoir capacity are progressively reduced as sedimentation increases. These lost benefits should be accounted for in an objective economic analysis (Song et al. 2021).Unsustainable reservoir sedimentation not only causes storage capacity loss, but also leads to upstream and downstream environmental, social, cultural, and economic impacts. Upstream and within the reservoir, sediment accumulation will eventually bury dam and reservoir facilities, reduce recreation use, and impact upstream property through increased flood stage and groundwater levels (George et al. 2016). The downstream sediment deficit results in the erosion of the stream channel beds and banks, disrupts natural ecosystems and channel substrate compositions, threatens riverine infrastructure, and leads to coastal delta and beach erosion (Kondolf et al. 2014). Thus, the footprint defined for economic evaluation should reach far enough up- and downstream to capture all sedimentation or sediment-deficit impacts comprehensively.For new reservoirs, implementing adequate spatial and temporal scales is essential. Objective economic analysis requires a long view of future effects as well as a broad assessment of impacts. Comprehensive accounting of benefits and costs over a sufficiently long POA will yield a BCR that fairly evaluates sustainable development. Such an analysis could indicate whether sustainable sediment management is economically justified, given the cost of sedimentation impacts and eventual dam decommissioning.Economic Evaluation for Existing ProjectsFor an existing dam and reservoir, there are two categories of alternatives: sustainable sediment management that maintains the remaining storage capacity indefinitely, and non-sustainable sedimentation that requires eventual dam decommissioning. An objective economic comparison of these alternatives requires a comprehensive accounting of all cost and benefits that can be compared by NPV. NPV requires the same inputs as BCA, but outputs a metric useful for identifying maximum net benefits. In the absence of sediment management, economic benefits dependent on reservoir capacity are progressively reduced as sedimentation increases. These lost benefits should be accounted for in an objective economic analysis (Song et al. 2021).BCA is especially useful in determining the economic feasibility of an action alternative in comparison to a no action alternative—For example, determining the economic feasibility of a new dam construction project, where no action means not constructing the project. However, when considering sedimentation of existing reservoirs, no action eventually results in the decommissioning of the dam and lost project benefits. NPV provides a more intuitive and meaningful metric for comparing alternatives for existing projects, allowing decision makers to identify the alternative that maximizes net economic benefits.Discounting ApproachesExponential (classic) discounting is the approach traditionally used by economists and engineers. When exponential discounting is employed, costs and benefits occurring several decades into the future, even dam decommissioning cost, have reduced influence on the initial investment decision. Projects can be economically justified without sediment management, but this can lead to intergenerational inequity. Several new discounting approaches have been described in recent years. Fig. 1 illustrates the temporal differences across a selection of discounting approaches over a 150-year period. Arguably, the new discounting approaches may better represent future economic uncertainty, regional and intergenerational equity, and sustainability considerations (Harpman and Piper 2014). As a group, these new discounting approaches may be better suited than the exponential discounting approach for the analysis of long-lived infrastructure and environmental investments. Many of these new discounting approaches result in declining discount rates (DDRs) over time. DDRs may be more appropriate than constant discounting for reservoir economic assessment, climate change issues, or other projects with intergenerational dimensions (National Center for Environmental Economics 2014). DDRs have also been used by World Bank Group projects (Annandale et al. 2016).Among the nine discounting approaches depicted in Fig. 1, three are investigated in the case study section: exponential, hyperbolic, and inter-generational. The equations expressing these discounting approaches, as well as a brief description of each, are provided subsequently.Exponential discounting: (1) where wt is the discount factor or weight at time (t); r is the (constant) discount rate; and t is a time period index.Discounting future benefits or costs by a fixed rate, for each unit of time, is the basis of exponential discounting. However, as mentioned earlier it can be problematic and inappropriate for investments that are to be judged over longer periods of time, because future generations will bear costs (or benefits) from actions of previous generations (Guerriero and Pacelli 2020).More generally, the rate at which people discount future benefits and costs declines as the length of the delay increases (Redden 2007). Hyperbolic discounting is an alternative discounting approach that decreases the rate of discounting as the delay occurs further in the future. Hyperbolic discounting will generally discount future benefits and costs more than exponential discounting for short delays, and less than exponential discounting for long delays (Redden 2007).Hyperbolic discounting: (2) where wt is the discount factor or weight at time (t).The parameter h>0 controls the effect of time perception, and k>0 influences the degree to which the hyperbolic discount factor differs from exponential discounting (Harpman and Piper 2014).Preferences can change over time, and this characteristic makes it difficult for analysts to assess whether current generations’ preferences reflect those of communities that are not born yet (Guerriero and Pacelli 2020). An alternate method of incorporating intergenerational impact is to consider the timespan of future generations. Intergenerational discounting accomplishes this by requiring two different discount rates and an assumed generation timespan (Harpman and Piper 2014; Sumaila and Walters 2005).Intergenerational discounting: (3) Wt=(11+r)t+(11+rfg)(11+ra)t−1G[1−Δt1−Δ]where wt is the discount factor or weight at time (t); ra is the present generation annual discount rate; rfg is the future generation annual discount rate; G is the assumed generation timespan; and t is a time period index, and(4) Δ  is  (11+r)/(11+rfg)Decommissioning FundSan Clemente Dam near Carmel, CA filled with sediment and was decommissioned in 2015 due to dam safety and environmental concerns and lack of project benefits. The dam was completed in 1921 and by 2008 was providing less than 5% of its original storage capacity, at which time California American Water (dam owner) had to ask the California Public Utilities Commission for a rate increase to pay its share of the dam removal cost ($49 million). The current generation (notably rate payers) paid for the entire dam decommissioning cost but received little or none of the water storage benefits (California Public Utilities Commission 2012).For existing reservoirs, some actions will have to be taken. In 2017, the Federal Advisory Committee on Water Information and its Subcommittee on Sedimentation approved a resolution on Reservoir Sustainability (ACWI 2021). This resolution asked all Federal agencies to “develop long-term reservoir sediment-management plans for the reservoirs that they own or manage by 2030. These management plans should include either the implementation of sustainable sediment-management practices or eventual retirement of the reservoir.” In 2018, the US Society on Dams adopted a similar resolution for owners of all dams and reservoirs (USSD 2018).One mechanism for financing eventual dam decommissioning is through a decommissioning fund. Such a fund would have a maturation date equal to the expected dam decommissioning year, based on the sedimentation rate and other assumptions. Annual contributions to the fund would be paid by project beneficiaries and would be calculated as the cost of decommissioning (in present dollars) amortized over the remaining years of dam life. The decommissioning fund will approximate the cost of decommissioning in the year of dam removal. This fund could also serve to offset the cost of any emergency actions required as the dam and reservoir age.For example, federal water projects are authorized for specific project beneficiaries who are responsible for a portion of project repayment through a cost allocation framework based on the “beneficiary pays” principle (Congressional Research Service 2020). Some portions of the project benefits (e.g., flood risk reduction, recreation, and fish and wildlife habitat) are often assigned to the American public. This framework could be extended to dam decommissioning fund annual contributions. Establishment of a dam decommissioning fund could help achieve intergenerational equity to prevent future generations from having to pay for dam decommissioning when they receive little or no project benefits.The concept of a dam decommissioning fund is similar to that used in natural resources extraction practices. The Surface Mining Control and Reclamation Act of 1977 (SMCRA) provides that, as a prerequisite for obtaining a coal mining permit, a permittee must post a reclamation bond to ensure that the regulatory authority has sufficient funds to reclaim the site in case the permittee fails to complete the approved reclamation plan (US Department of the Interior 2021).An additional consideration is the comparison of the annualized cost of sustainable sediment management to the annual contribution required to a decommissioning fund. If the comparison indicates that the sustainable sediment management cost less than decommissioning fund contributions, this bolsters the economic case for sediment management. This comparison also presents an additional way to conceptually present objective economic analysis to key decision-makers.Case StudyThere are only a few widely available numerical models that can assist in the economic analysis of reservoirs. These models simulate how different parameters affect reservoir operations and forecast the consequences of different reservoir sediment management alternatives. The most widely used is RESCON (Efthymiou et al. 2017); a more recent model was developed by Niu and Shah (2021) to optimize for storage capacity while maximizing lifetime net benefits. A new model was developed to support this paper, the reservoir sedimentation economics model (RSEM) (Randle et al., unpublished report).RSEM was applied to evaluate the economics of a new and an existing reservoir for two general scenarios (without and with sediment management), while comprehensively accounting for all benefits and costs (upstream, downstream, and within the reservoir). The model computes net present value and a benefit-cost ratio for a range of discounting approaches. This paper applied RSEM to evaluate and compare costs and benefits of sediment management alternatives for the case study reservoir.A hypothetical western US reservoir, called Muddy Reservoir, is considered for the case study. Muddy Reservoir is assumed to have the primary purpose of providing irrigation water to project lands. Other beneficial uses include flood control, municipal and industrial water supply, fish and wildlife, and recreation.As emphasized earlier, a comprehensive treatment of benefits and costs is required for objective economic assessment of reservoir sediment management alternatives. All benefits and costs serving as inputs for the case study are estimated at a 2020 price level and reported in Table 3 of the Appendix. The methods for determining detailed estimates of benefits and costs are beyond the scope of this study. The interested readers can apply these available references: American Society of Professional Estimators (2012), Anchor QEA (2020), Baird et al. (2015), PR&Gs (2014), Los Angeles County Flood Control District (2013), USEPA (2000), and WEDA (2021).The exponential, hyperbolic and inter-generational discounting approaches were applied to compare economic results across the following reservoir management alternatives:Alternative 1: New dam and reservoir developed without sediment management; economic comparison metric is BCR. •Alternative 1a: Costs and lost benefits due to sedimentation are not accounted for, as per the traditional approach.•Alternative 1b: Costs and lost benefits due to sedimentation are accounted for as per new paradigm.Alternative 2: New dam and reservoir developed with sustainable sediment management; economic comparison metric is BCR. •Alternative 2a: Sluicing as sediment management technique.•Alternative 2b: Dredging as sediment management technique.Alternative 3: Existing dam and reservoir operated without sustainable sediment management; economic comparison metric is NPV.Alternative 4: Existing dam and reservoir operated with sustainable sediment management; economic comparison metric is NPV. •Alternative 4a: Sluicing as sediment management technique.•Alternative 4b: Dredging as sediment management technique.Results for Alternatives 1 and 2 are compared by BCR, as summarized in Table 1. For the case of existing Muddy Reservoir, cumulative NPV is compared for the alternative without sediment management (Alt 3) with the sediment sluicing alternative (Alt 4a) (Fig. 2), and with the sediment dredging alternative (Alt 4b) (Fig. 3). A summary comparison of results across all alternatives is presented in Table 2.Table 1. Benefit cost ratios of without and with sediment management alternatives for the new Muddy ReservoirTable 1. Benefit cost ratios of without and with sediment management alternatives for the new Muddy ReservoirAlternativePOA (years)ExponentialHyperbolicIntergenerationalAlt 1a: without sediment management (ignoring sedimentation and dam decommissioning costs)501.551.661.91001.942.523.04200300Alt 1b: without sediment management (considering sedimentation and dam decommissioning costs)501.481.581.81100a1.461.311.36200300Alt 2a: with sediment management (sluicing)501.371.471.681001.712.22.642001.823.033.663001.833.554.18Alt 2b: with sediment management (dredging)501.261.341.491001.511.842.12001.592.342.663001.62.612.91Table 2. Comparison of without sediment management and with sediment management for new and existing (30-year-old) Muddy ReservoirTable 2. Comparison of without sediment management and with sediment management for new and existing (30-year-old) Muddy ReservoirParameterResultNewExistingNewExistingBenefits and costs consideredUpstream and downstream sedimentation costs, dam decommissioning cost, sediment management cost, and reduced benefits are considered based on the case study project. These costs and benefits are modeled based on the inputs reported in Table 3Similar to new reservoirUpstream and downstream sedimentation costs, dam decommissioning cost, sediment management cost, and reduced benefits are considered based on the case study project. These costs and benefits are modeled based on the inputs reported in Table 3Similar to new reservoirBenefit-cost analysis to determine economic feasibility of constructing a new reservoir, indicated by BCR>1Economic analyses by comparison of net present value or least-cost to determine the most-economic way forwardDiscounting approachThe Exponential, Hyperbolic, Inter-generational discount approaches are considered. The base discount rate is 2.5%. All other required parameters are based on Harpman and Piper (2014)Similar to new reservoirThe Exponential, Hyperbolic, Inter-generational discount approaches are considered. The base discount rate is 2.5%. All other required parameters are based on Harpman and Piper (2014)Similar to new reservoirThe impact of discount rate is distinct for without and with sediment management alternatives. Declining discounting approaches advocate intergenerational equityReservoir lifeAfter 90 years, the reservoir’s outlet becomes too difficult to maintain due to sedimentation, forcing the dam to be decommissioned. The cost of dam decommissioning is taken into account, as are the lost project benefits. A new, replacement project could be considered under a separate economic analysis (BCR>1)At the dam age of 90 years (60 years hence) the reservoir’s outlet becomes too difficult to maintain due to sedimentation, forcing the dam to be decommissionedSedimentation is controlled by including sediment management, allowing the reservoir to have a useful life of more than 300 years. The reservoir benefits are expected to last at least several generationsSedimentation is controlled by including sediment management, allowing the reservoir to have a useful life of more than 300 years. The longer the delay in implementing sediment management, the greater reduction in benefits over long-termSediment management is effective way to extend the reservoir life. The reservoir can supply water and economic benefits not only for the present generation but also several generations in the futureTable 3. The input data values used in the case study economic assessmentTable 3. The input data values used in the case study economic assessmentParameterPresent reservoir age Top of live storage1,965.2m6,447.5ft Top limit of sedimentation1,962.9m6,440.0ft Recreation pool elevation1,959.8m6,430ft Normal water surface elevation1,942.5m6,373.0ft Top of dead storage1,937.9m6,358.0ft Original streambed elevation1,916.3m6,287.0ft Total storage volume at top of live storage25,768,500m320,950acre-ft Dead pool volume3,444,000m32,800acre-ft Mean annual reservoir inflow122,754,000m3/year99,800acre-ft/year Standard deviation of mean annual inflow6,308,670m3/year5,129acre-feet/year Reservoir length at full pool5.63km3.5mi Reservoir surface area at full pool120ha296acre Reservoir average surface width at full pool321.9m1,056ft Boat ramp/Marina #1 length from dam4.5km2.8mi Boat ramp/Marina #2 length from dam1.13km0.7mi Dam type (drop down list)—Earth—— Volume of dam material992,610m3807acre-ft Hydraulic height49.1m161ft Dam crest length across river234.7m770ft Annual storage percent loss0.51per year0.51per year Fine sediment portion (clay and silt)—70%—70% Delta topset slope factor—0.75—0.75 Delta foreset slope factor—6.0—6.0 Bottomset slope factor—0.1—0.1 Reservoir profile plotting interval—10—10 Channel sinuosity—1—1 Average bank full channel width38m125ft Average bank height0.91m3ft Average channel roughness (Manning’s n coefficient)—0.022—0.022 Portion of bed material armor-sized or coarser—15%—15% Armor layer thickness0.15m0.5ft Original channel slope reduced by a percentage to achieve a stable channel—95%—95% Water storage capacity to yield—100%—100% Proportion of consumptive uses———— Agricultural irrigation use—60%—60% M&I water use—30%—30% Fish & wildlife and other—10%—10% Agricultural irrigation use203,252$/millionm3250$/acre−ft M&I water use365,854$/millionm3450$/acre−ft Fish & wildlife and other81,301$/millionm3100$/acre−ft Flood risk reduction32,520$/millionm340$/acre−ft Average annual energy production0MWh/year0MWh/year Average energy benefit rate$0$/MWh$0$/MWh Annual hydropower benefit$0year$0year Present average annual visitor days26,000Visitor days/year26,000Visitor days/year Benefit per visitor day (NCS)45.06$/day45.06$/day Benefit dependent on all boat ramps/marinas—50%—50% Benefit reduction from loss of one boat ramp/marina—20%—20% Total construction cost—$108,000,000—$108,000,000 Annual OM&R cost—$450,000—$450,000 Five-year recurring costs—$100,000—$100,000 Increase for unlisted items—10%—10% Increase for mobilization and demobilization—5%—5% Increase for design contingencies—20%—20% Increase for procurement strategy—5%—5% Increase for overhead and profit—15%—15% Increase for construction contingencies—20%—20% Dam removal unit cost3.92$/m33$/yd3 Sediment management unit cost10.46$/m38$/yd3 River diversion cost—$6,000,000—$6,000,000 Coffer dam cost—$600,000—$600,000 Salvage benefits—0—0 Other river restoration costs—0—0 Dam decommissioning cost—$221,611,905—$221,611,905 Deposition threshold for land impacts0.91m3ft Unit land devaluation cost12,346$/ha5,000$/acre Unit highway/railroad relocation cost0$/km0$/mi Unit fish & boat passage cost0$/km/year0$/mi/year Minimum degradation threshold0.61m2ft Streambank side slope (1:z)—2—2 Streambank protection factor—3—3 Unit cost of streambank protection before additive costs98.1$/m375$/yd3 Planned sediment design life50years50years Project decommissioning age91years91years Begin forced sediment removal (years after end of sediment design life)10years10years Maximum portion of sediment inflow that will be removed in the year prior to dam decommissioning—50%—50% Forced fine/coarse sediment removal cost10.46$/m38.00$/yd3 Dam age when boat ramp/marina #1 is lost60years60years Dam age when boat ramp/marina #2 is lost91years91years Annual fine sediment removal—90%—90% Annual coarse sediment removal—75%—75% Sediment management capital cost before additives Equipment life Sediment management begins at dam age Fine sediment removal costSluicing; 0.65 $/m3Sluicing; 0.5 $/yd3Dredging; 5.23Dredging; 4.0 Coarse sediment removal costSluicing; 0.65 $/m3Sluicing; 0.5 $/yd3Dredging; 5.23Dredging; 4.0 Water used for sediment management as % of capacity—0%—0%Discussion of ResultsThe results reported in Table 1 indicate that water projects achieve a higher BCR when the costs associated with sedimentation and dam decommissioning are unaccounted for. This is demonstrated by Alt 1a having a higher BCR than Alt 1b across all periods of analysis and all discounting approaches. One implication of this result is that some existing projects that were economically justified by analyses omitting sedimentation and dam decommissioning costs might not in fact be economically viable. For example, when considering only exponential discounting, the BCR for Alt 1a is 5% higher than that for Alt 1b over a 50-year POA, and 33% higher over a 100-year POA. If a project were marginally economically justified by an analysis that ignored the costs of sedimentation and dam decommissioning (i.e., the Alt 1a framework), then that project would most likely not have attained economic justification by a comprehensive economic analysis (i.e., the Alt 1b framework).Both sediment management alternatives for a new Muddy Reservoir (Alt 2a: sluicing, and Alt 2b: dredging) have a lower BCR than the comparable without sediment management (Alt 1b) over a 50-year POA, and a greater BCR than Alt 1b over a 100-year POA, across all discounting approaches. This result is expected, as the sedimentation causes loss of storage benefits and up- and downstream damages, and costs due to sedimentation take decades to become pronounced. Moreover, the dam decommissioning cost for Alt 1b is not captured until a 91-year age. The case study results indicate that long POA is important to consider comprehensive accrued benefits and incurred costs. Short POA means we ignore impacts that happens after the analysis period, like impacts from severe sedimentation and dam decommissioning. However, some present decisions can have an irreversible nature (Padilla 2002), and these impacts are meaningful in alternatives comparison. As the BCRs in Table 1 indicate accounting for the full life cycle of a reservoir without sediment management (i.e., Alt 1b over a 100-year POA), sustainable sediment management is economically justified even for exponential discounting. Furthermore, when compared to exponential discounting, the applied hyperbolic and intergenerational discounting approaches continue to significantly increase BCR beyond 100 years.For the 30-year-old existing reservoir case study alternatives (Alt 4a and 4b) sediment management begins well before the dead storage is exhausted. The benefits and costs are discounted using the exponential, hyperbolic and intergenerational discounting approaches.As illustrated in Fig. 2, from analysis year 0 through year 40 (dam age 30 through 70), without sediment (Alt 3) is only marginally more economic than with sediment management sluicing (Alt 4a). By the time of dam decommissioning at age 91, however, the NPV for Alt 4a is significantly higher relative to Alt 3 across all discounting approaches. By analysis year 270, the NPV for Alt 4a under hyperbolic and intergenerational discounting substantially increases (2 to 3 times higher) relative to exponential discounting. Regardless of discounting approach, a comprehensive economic analysis for our case study reveals sediment management as the preferred economic alternative to without sediment management, although the POA needs to be long enough to account for dam decommissioning and lost project benefits.Fig. 3 shows that the sediment dredging alternative (Alt 4b) is less economic than without sediment management (Alt 3) across all discounting approaches, until dam decommissioning at age 91. However, the NPV for Alt 4b significantly increases after dam decommissioning, relative to Alt 3. As in the case of sediment sluicing, the NPV associated with dredging substantially increases over the long-term using hyperbolic and intergenerational discounting.For both new and existing reservoirs, the case study results indicate that any additional costs associated with sustainable sediment management are more than offset by the preserved economic benefits, avoided up- and downstream sedimentation costs, and avoided dam decommissioning costs. In short, sediment management was found to have a greater economic value than without sediment management, regardless of reservoir age, sediment management technique, or discounting approach. This finding may also be true for other reservoirs, but site-specific analysis would be required.For reservoirs without sediment management, a certain percentage of project benefits could be transferred each year into a dam decommissioning fund. With a constant transfer percentage, the amount of benefits transferred each year would decrease in proportion to declining water storage benefits. Thus, the first generation receiving water storage benefits would pay more than subsequent generations. The annual payment to the dam decommissioning fund was calculated based on Alt 1b (without sediment management while considering all costs and lost benefits due to sedimentation). The calculation indicates that an annual contribution to the decommissioning fund of 9% of annual project benefits would fully fund the dam decommissioning cost at the year of dam removal.As illustrated theoretically in Fig. 1, and empirically in Figs. 2 and 3, modeling results are highly sensitive to the choice of discounting approach. Exponential discounting, even when employing a historically low discount rate of 2.5%, tends to produce economic results that favor the present generation over future generations. In contrast, intergenerational and hyperbolic discounting produce a significantly greater BCR (Table 1) and NPV (Figs. 2 and 3), especially beyond analysis year 100.A comprehensive economic analysis of all costs and benefits is necessary to determine the economic viability of sediment management. Extending the life of a reservoir through sediment management increases the project benefits and helps to achieve intergenerational equity. The case study modeling results for alternatives without and with sediment management are compared in Table 2.ConclusionContinued sedimentation reduces a reservoir’s storage capacity over time, results in a finite reservoir life, and negatively impacts both upstream and downstream river reaches. Sediment management extends the useful life of reservoirs, providing continued economic production and social well-being for future generations. Lack of sediment management results in dam decommissioning and a financial burden on future generations to meet their water demands. A need exists to develop policy, legislation, and regulation to advance sustainable sediment management. This paper introduced a new economic paradigm in the evaluation of water resource projects, particularly reservoirs, to evaluate both new and existing reservoir construction and management plans. Historical analyses overlooked the near term and continuous economic impacts of sedimentation and relied on the effects of exponential discounting over insufficiently long periods of analysis to minimize or omit significant future costs. This new paradigm considers important sedimentation effects that were not considered by traditional approaches due to a lack of information and understanding. Key aspects of this new economic paradigm are: •Reservoir sediment management operations can be included at new and existing reservoirs; the timing for sediment management implementation can be informed by an economic analysis.•Reservoir sedimentation impacts are not limited to the reservoir itself. Both upstream and downstream impacts have environmental, social and economic consequences. Economic analyses should consider all benefits and costs. Moreover, any lost benefits should be accounted for.•Sediment management is economically preferred to the costs associated with sedimentation and eventual dam decommissioning, regardless of discounting approach. We suspect this outcome would be true for many water storage reservoirs. If a dam is decommissioned, replacement reservoir storage (under a separate economic analysis and justification) would be necessary to maintain past project benefits. The environmental and economic analyses for a new replacement reservoir would have to account for sustainable sedimentation management or impacts and their associated costs and reduced benefits.•As reservoir storage space is displaced with sediment, the remaining storage space is necessarily an exhaustible resource. The value of an exhaustible resource is not constant. The value of reservoir storage capacity will increase over time as the capacity is diminished by sedimentation. This, however, was not considered in this study.•For existing reservoirs, some actions will have to be taken. Present beneficiaries should pay either for sediment management or for any emergency sediment management and eventual dam decommissioning, through a decommissioning fund.•The choice of a discount rate has a significant impact on the BCR and NPV of a project. 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