Cost/Benefit Analysis of the Newark Reservoir

Abstract

The objective of this paper is to update an in media res (during the course of a project) cost/benefit analysis (CBA) of the Newark Reservoir originally prepared in May 2002 during project construction four years before the reservoir came on line. Three alternatives are evaluated: (A) no reservoir, preserve land for 112- acre city park, (B) no reservoir, 112-acre site developed for 200 homes, and (C) 317 mg reservoir, preserve land for 112-acre city park. The project standing is the City of Newark with 33,600 residents in 2018. The discount rate over a 20-year assumed project life is 3%. The CBA employs the equation: Net Present Value (NPV) = Present Value Benefits (B) minus Present Value Costs (C) or NPV = B – C (Boardman 2001). The alternative with the highest NPV provides the most economic benefits to society.