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Show The Economic Aspect A full and detailed analysis of the anticipated economic effects of a program or project is essen- tial for proper evaluation. For individual proj- ects this analysis should always be made within the context of a total program for regional de- velopment, since the economic value of any par- ticular project will depend upon its relationship to other projects within the program and the over-all effects on the economy of the region and the Nation- Such a program will affect the pro- duction of goods and services within the region and therefore will affect prices, employment, de- mand for goods and services, purchasing power, living standards, and general welfare. The iden- tifiable economic effects of a specific project, in- sofar as they can be related to the private econ- omy, can be estimated in terms of the benefits and costs involved. However, we believe that eco- nomic analysis is most realistic, most valuable, and least tenuous when applied on a program basis. The normal effect of any program and most projects is to improve the economic position of those persons and groups who can take advantage of the facilities and services provided. They will receive increases in real income or wealth. Estimates of benefits should add together the ex- pected gains to all beneficiaries, beginning with those most immediately affected and going as far as available information will allow and simi- larly deducting costs and losses. This is known as the net contribution to national income basis for evaluation. Practically, however, benefits can never be traced to their ultimate incidence; hence, only primary and immediate secondary benefits can be measured adequately. In estimating such bene- fits the impact of the program or project should be separated, as much as possible, from the in- fluence of other forces altering the position of the people concerned. Improvement in the economic position of an individual or group may take several forms: an increase in sales resulting in greater gross income, reduced costs of production, avoidance of a loss or damage, an increase in property values, a better-paying job, lower cost of consumers' goods or services, and improved investment opportuni- ties. These gains, it should be noted, are all private gains accruing to individuals from the investment of public funds. Within reasonable limits they can be estimated, and the costs of se- curing them calculated, by benefit-cost analysis. But such calculations have nothing to do with public benefits accruing from a program. These public benefits are not, as sometimes erroneously supposed, a mere summation of private gains; rather, they are a distinct and additional value arising from the processes of social cooperation for the attainment of common goals. While measurement of private gains poses technical problems, it is essential for an under- standing of the potential effects upon the private sector of the economy. One multiple-purpose project may benefit only a limited group; another a wide area. One may have only a slight expan- sionary effect; another may lay the foundation for important new industries and provide many new outlets for investment and better jobs. These secondary and expansionary benefits are not necessarily reflected fully in the size of the primary benefits conferred. They must be ana- lyzed carefully, even if an exact measure is not possible, since they must necessarily be weighed heavily in judging the relative desirability of various alternatives. The Public Aspect There are many types of public objectives and gains which defy analysis in commercial terms. For example, market price valuation can give quite misleading results when applied to public measures designed to stop resources deterioration and to strengthen the resources base of the coun- try. Market prices reflect scarcity values; thus, if half our forests were burned, the remainder would be worth more money than the existing forests because of the very sharp rise in prices of forest products that would take place. A commercial property has dollar value ac- cording to scarcity; a Nation's resources have security value if they are so plentiful as to be |