To simplify greatly, two ways to operate the dam are: 1. Protect downstream deliveries to Egypt 2. Protect Ethiopian agriculture and reduce downstream deliveries to Egypt First Question: Using the tabled data below, calculate the overall discounted net present value (DNPV) for each of 2 countries for each of 2 ways of operating the dam. You can use a discount rate of OS (5 percent). Please show work Second Question: Please summarize which, if either dam operation plan passes the test of a Pareto Improvement discussed in class. Hint, you'll need to calculate DNPV for each of two countries and each of two policies (4 DNPV's altogether). Water Development, Use, and Sharing, Nile River, Benefits and Costs, SUS Millions/Year Year Year -110 1. Protect downstream deliveries to Egypt Ethiopia benefits from agriculture Ethiopia benefits from hydropower Ethiopian cost of dam (annual) -100 450 300 Egyptian costs from reduced Nile River water deliveries o 888 2. Protect Ethiopian ag with reduced deliveries to Egypt Ethiopia benefits from agriculture Ethiopia benefits from hydropower Ethiopian cost of dam (annual) 600 300 300 300 Egyptian costs from reduced Nile River water deliveries 200 200 200 DNPV formula Net Benefits. =(B-C) c= Egypt, Ethiopia p= protect deliveries to Egypt Ag, protect Ethiopian ag 1 = year, years, year; DNPV = E(Net Benefits.,)/(1+r)' = Nel Benefits/(1+r)' + Net Benefits/(1+r) + Net Benefits/(1+r)' + hw mission Calculate DNPV for each of 2 counries 2 policies Net Benefits To simplify greatly, two ways to operate the dam are: 1. Protect downstream deliveries to Egypt 2. Protect Ethiopian agriculture and reduce downstream deliveries to Egypt First Question: Using the tabled data below, calculate the overall discounted net present value (DNPV) for each of 2 countries for each of 2 ways of operating the dam. You can use a discount rate of OS (5 percent). Please show work Second Question: Please summarize which, if either dam operation plan passes the test of a Pareto Improvement discussed in class. Hint, you'll need to calculate DNPV for each of two countries and each of two policies (4 DNPV's altogether). Water Development, Use, and Sharing, Nile River, Benefits and Costs, SUS Millions/Year Year Year -110 1. Protect downstream deliveries to Egypt Ethiopia benefits from agriculture Ethiopia benefits from hydropower Ethiopian cost of dam (annual) -100 450 300 Egyptian costs from reduced Nile River water deliveries o 888 2. Protect Ethiopian ag with reduced deliveries to Egypt Ethiopia benefits from agriculture Ethiopia benefits from hydropower Ethiopian cost of dam (annual) 600 300 300 300 Egyptian costs from reduced Nile River water deliveries 200 200 200 DNPV formula Net Benefits. =(B-C) c= Egypt, Ethiopia p= protect deliveries to Egypt Ag, protect Ethiopian ag 1 = year, years, year; DNPV = E(Net Benefits.,)/(1+r)' = Nel Benefits/(1+r)' + Net Benefits/(1+r) + Net Benefits/(1+r)' + hw mission Calculate DNPV for each of 2 counries 2 policies Net Benefits
