of discount in public-sector projects in India. However, this rate is used here merely to
illustrate the method. The question of the appropriate social rate of discount has been
discussed in Chapter 6 above account). On the other hand, economic development may
result form the flood-control project itself. In this case, there are considerable conceptual
difficulties in evaluating project benefits. These are connected with the question: do
flood-control schemes lead to ‘over-development’ in the flood basin? Such a question
cannot easily be answered within the framework of cost-benefit analysis itself (but see
Renshaw [4].
Secondly, this exercise has been confined to the flood-control component of the D.V.C
project; for this purpose, we took the allocation of storage capacity between different
objectives, e.g. flood control, irrigation and power, as given. This means in effect that we
accepted without question the constraints imposed on the system, viz., certain minimum
levels of power, flood-control storage and so on. On the other hand, one of the aims of
cost-benefit analysis of multi-purpose river-valley projects should be to examine the
opportunity costs of varying the levels of different constraints. This can provide means
of estimating the trade-offs between different objectives. However, the method described
for estimating the benefits of flood control may itself be regarded as a first step towards
making such comparisons possible. Thirdly, no attempt was made to estimate the
‘secondary’ benefits of flood control.
Finally, it must be stressed once more than the statistical calculations provided in this
chapter must be regarded as illustrative and preliminary rather than as providing a
blueprint for the project in question.