Cost Allocations, Cost Shaking, Pricing and Repayment1

Abstract

The FeDruary 1966 report of the Committee on Water Resources Research, "A Ten-Year Program of Federal Water Resources Research" (p. 61) contains t h i s statement:The increasing complexity of water resource development deriving both from t h e multiple-use and the l a r g e r and more i nvolved systems maLes the matter of cost allocation increasingly more d i f f i c u l t .Simultaneously there is strong argument f o r increasing part i c i p a t i o n Ly project beneficiaries i n cost sharing through d i r e c t repayment o r purchase of products and services. There i s , however, no current research by Federal agencies e i t h e r on the technical problems of cost allocation o r the socio-economic impact of cost sharing. aspect of most works A t the time of the report there were plans f o r only a few s p e c i f i c research projects i n t h i s category and even these have been slow i n developing. Furthermore they would barely scratch t h e surface of the great body of additional knowledge and understanding t h a t appears t o be these aspects of water resource management.Despite the dearth of s p e c i f i c studies of c o s t allocation and cost sharing problems i n r e l a t i o n t o need, there is evidence i n current l i t e r a t u r e of growing concern and p o t e n t i a l f u r t h e r inquiry i n t o many matters d i r e c t l y and i n d i r e c t l v r el a t e d t o these subjects.The Bibliography on Socio-Economic Aspects of Water Resources Research presents a selected l i s t of material published primarily i n the period 1955 t o 1965.of cost a l l o c a t i o n and cost sharing in water management with a view towards i d e n t i f i c a t i o n of approaches f o r research t h a t might lead t o b e t t e r understanding and ultimate improvem n t of these important phases of water resource management. needed t o improveThe purpose of t h i s paper is t o review the s t a t e of t h e a r t COST ALLOCATIONIn Federal p r a c t i c e , a t l e a s t , and t o an increasing extent throughout the f i e l d of water management, the term "cost allocation" is used exclusively t o r e f e r t o the process of assigning t o each purpose of a multiple-purpose p r o j e c t an appropriate share of the t o t a l multiple-purpose cost and is not used t o r e f e r t o the process of determining how and by whom the costs w i l l be borne.For the l a t t e r purpose, other terms such as "cost-sliaring," "repayment," e t c . , are used.

Analyzing reimbursement mechanisms for resource development projects

“…These and similar papers examine the ramifications of different policies directed toward (1) allocation of project costs among purposes or beneficiary groups, (2) allocation of project cost responsibilities among sponsoring agencies or levels of government, and (3) how sponsoring agencies or governmental units are to be reimbursed by user groups or others. Weber [1968, pp. 37, 40] has referred to these three areas as cost allocation, cost sharing, and repayment, respectively.…”