specific cost only, the separable cost – remaining benefits (SCRB) technique is
identical to the alternative justifiable cost (AJC) approach in computation and
results. However, for the purposes of defining separable costs, the SCRB method
requires a number of scenarios to be worked out, though they are never intended to
be built. This exercise can be expensive. (see also Table 19.1).
19.5.8 Use of Facilities Method
This method relies on the fact that the joint costs should be apportioned among the
various functions depending on their amount of use of the joint facilities. There are
usually two approaches for assessing the use for each purpose. They are:
(1) the capacity approach and
(2) the water-released approach.
In the ‘capacity approach’, the joint cost is shared in the ratio of storage assigned
to different purposes, whether or not those storages are actually used. Two or more
purposes may make use of the same reservoir capacity alternately or simultaneously.
For instance, a part of flood waters as stored may be used for irrigation purposes.
This storage would then be included both for flood control and irrigation. Similarly,
power storage may be utilized for irrigation, after the water has passed through the
power house.
In the ‘water-released approach’, the joint cost is shared in the ratio of total
quantity of water released for each purpose. For example, a part of flood waters as
stored may be utilized for irrigation or to maintain the minimum depth for navigation
or to produce secondary power. The total quantity of water in a flood season may be
greater than the capacity of the storage space for the purpose. Thus, an estimate has
to be made of the total quantity of water that may have to be held back in order to
ensure flood protection to damage centres downstream keeping in view the average
flow conditions downstream of the reservoir. Similarly, a portion of water released
from the power house may be utilized for irrigation, in addition to that for exclusive
storage for irrigation. The total quantity of water likely to be released in the interest
of each purpose has, therefore, to be estimated. The joint cost is then shared pro-rata
to the total volume of water released for each use or purpose.
19.5.9 Vendibility Method
The vendibility theory assumes that the products of a multi-purpose project are sold
in an entirely free competitive market. The method assumes that the revenues from
all benefits of a multi-purpose project shall at least be equal to the total cost of the
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19 Cost Allocation for Infrastructure Implementation
identical to the alternative justifiable cost (AJC) approach in computation and
results. However, for the purposes of defining separable costs, the SCRB method
requires a number of scenarios to be worked out, though they are never intended to
be built. This exercise can be expensive. (see also Table 19.1).
19.5.8 Use of Facilities Method
This method relies on the fact that the joint costs should be apportioned among the
various functions depending on their amount of use of the joint facilities. There are
usually two approaches for assessing the use for each purpose. They are:
(1) the capacity approach and
(2) the water-released approach.
In the ‘capacity approach’, the joint cost is shared in the ratio of storage assigned
to different purposes, whether or not those storages are actually used. Two or more
purposes may make use of the same reservoir capacity alternately or simultaneously.
For instance, a part of flood waters as stored may be used for irrigation purposes.
This storage would then be included both for flood control and irrigation. Similarly,
power storage may be utilized for irrigation, after the water has passed through the
power house.
In the ‘water-released approach’, the joint cost is shared in the ratio of total
quantity of water released for each purpose. For example, a part of flood waters as
stored may be utilized for irrigation or to maintain the minimum depth for navigation
or to produce secondary power. The total quantity of water in a flood season may be
greater than the capacity of the storage space for the purpose. Thus, an estimate has
to be made of the total quantity of water that may have to be held back in order to
ensure flood protection to damage centres downstream keeping in view the average
flow conditions downstream of the reservoir. Similarly, a portion of water released
from the power house may be utilized for irrigation, in addition to that for exclusive
storage for irrigation. The total quantity of water likely to be released in the interest
of each purpose has, therefore, to be estimated. The joint cost is then shared pro-rata
to the total volume of water released for each use or purpose.
19.5.9 Vendibility Method
The vendibility theory assumes that the products of a multi-purpose project are sold
in an entirely free competitive market. The method assumes that the revenues from
all benefits of a multi-purpose project shall at least be equal to the total cost of the
548
19 Cost Allocation for Infrastructure Implementation