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Benefit-cost analysis reconsidered: An evaluation of the Mid-State Project

Authors

  • Steve H. Hanke,

  • Richard A. Walker


Abstract

The Bureau of Reclamation has traditionally been accused of distorting benefit-cost analysis to serve political ends. Economists and other critics have usually believed that if only the theoretical tools of benefit-cost were sharpened sufficiently and its logic applied impartially by government analysts, the politics of water resource investment decisions could be neutralized. This study of the controversial Mid-State reclamation project serves both to point out the politically expedient elements of bureau analysis that remain after almost 30 years of refinement and criticism by economists and to act as a lesson to reformers who fail to recognize the limitations on benefit-cost analysis in replacing the inherently political choices of democratic government.

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