The U.S. Army Corps of Engineers is a federal agency with a mission to develop water resource projects to benefit the nation. Some of its large scale projects have been built to benefit cities, but through unintended consequences have caused economic and environmental damages. For example, its control of Mississippi River flooding has protected the City of New Orleans, but contributed to land loss in coastal Louisiana, and by some accounts, made the population more susceptible to hurricane damage. The agency has now embarked on a mission to restore some of the damaged environmental areas. This dissertation evaluates whether policies and practices used by the agency to evaluate and select plans to implement is logically flawed and could produce suboptimal project selection. The primary issue is the practice of including only implementation costs in the analysis while excluding other positive and negative economic impacts. A case study is performed using the method to evaluate a traditional economic development project for which optimal project selection has already been determined using widely accepted benefit-cost practices. The results show that the Corps' environmental project evaluation method would cause rejection of the most efficient plan. The loss of welfare that would result from using this technique is measured by comparing the welfare gain of the optimal project to the welfare gain of the suboptimal projects which could be selected using the flawed methodology. In addition, the dissertation evaluates whether suboptimal results could be produced using two other current Corps policies: selecting projects based on production efficiency, and the exclusion of environmental benefits from the discounting process. For the first policy, a simple counter example shows how clearly inferior choices may come from including only supply considerations in investment choices. For the second policy, it is demonstrated mathematically that refraining from discounting benefits while discounting costs causes a bias towards selection of plans that take longer to build, are delayed in their implantation, or a combination of the two.
| Identifer | oai:union.ndltd.org:uno.edu/oai:scholarworks.uno.edu:td-1123 |
| Date | 20 May 2011 |
| Creators | Holland, Michael |
| Publisher | ScholarWorks@UNO |
| Source Sets | University of New Orleans |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | University of New Orleans Theses and Dissertations |
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