KWRRI Research Reports


The purpose of this investigation was to study the economic effects of the construction of Dewey Reservoir in Floyd County, Kentucky. Primary emphasis was placed on determining the degree the project had shifted income to this economically underdeveloped area by determining the incomes of those receiving project benefits and those paying project costs. The income redistribution effects of all benefits and costs associated with Dewey Reservoir were evaluated by assuming that the Federal income tax structure indicates the marginal value of income to individuals in the various income brackets.

Major benefits from the Dewey Project have been: flood control, $722,166 annually and recreation, $814,720 annually. Comparing these benefits with the average annual cost of the project yields a direct benefit cost ratio of 1.58.

It was found that the flood damage reduction benefits have negative redistribution effects (-$77,670), because those receiving the benefits have incomes higher than that of the average taxpayer. The positive income redistribution benefits in decreasing order resulted from: repayment incidence ($197,860), recreation benefits ($133,720), project expenditures ($26,618), and Mississippi River benefits ($294.). Total average income redistribution benefits from Dewey have been $280,822. Adding this to the direct benefit gives a benefit-cost ratio of 1.87.

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"Review of the Economic Benefits and Costs Resulting from Dewey Reservoir" is based on research performed as part of a project entitled "The Economic Impact of Flood Control Reservoirs" (CWRR Project No. A-006-KY) sponsored by the University of Kentucky Water Resources Institute and supported in part by funds provided by the United States Department of Interior as authorized under the Water Resources Research Act of 1964, Public Law 88-379.