| The question of whether hydro-electric or irrigation dam projects are an efficient, long-term option in managing public water resources is increasingly controversial. Although dams serve many functions, they also drastically change the hydrological landscape, leading to significant environmental and social impacts. Therefore, sound investigation and objective analysis are needed to identify real cost and estimate future benefits. However, dam feasibility studies are usually limited for many reasons, and analyses and results do not necessarily reflect real impacts. Several issues impede a realistic Cost-Benefit Analysis (CBA) of dam projects, including (1) the complexity of factors, (2) the influence of temporal factors on future benefits and cost, and (3) the existence of uncertainty. Consequently, these factors often lead to estimates that are overly optimistic. This study aims to address these issues by identifying the potential effects of dam, estimating their monetary value, and discounting cost and benefits to present time values. Furthermore, sensitivity analysis is applied to recognize the potential effects of uncertainty. In this case study, the Net Present Value (NPV), using a 6 percent discount rate, of the Mei-Nong Dam (MND) in Taiwan is estimated to be a negative 15.778 billion New Taiwan Dollar (NTD). Further analysis indicates that the Internal Rate of Return (IRR), the interest rate at which the cost of a public investment results in a positive benefit, is estimated at 3.49% which is lower than interest rate (6%) in 1992. These results suggest that the project is undesirable and should not be carried out. |
