The right hand side two-thirds of the user interface screen contains reports on the costs and benefits of the blowing and drifting snow solutions checked in the snow fence design section. The first section contains the graphs of the net present value of the costs and benefits over the practice life. The second section contains ranges for the annual payments per acre for the practice life in real dollar terms. The third section has details on the cost and benefits for each solution. These outputs allow for an analysis of the cost and benefits for a blowing and drifting snow solutions and allow the user to compare among the solutions.
Multi-practice Solution
While the tool is primarily designed to compare the four blowing and drifting snow practices (living and structural snow fences, standing corn rows, grading) the analysis can be extended to solutions which incorporate two or more practices. The first step to analyzing a multi-practice solution to enter or re-evaluate the inputs. If the inputs have not been recorded already for a practice by practice solution analysis then the data can be entered specifically for the multi-practice solution. If the data has already been inputted for the practice by practice solution analysis then the user should re-evaluate the data. The idea here is that a practice may have different inputs when is is the only solution as compared to when it is used in a multi-pratice solution. If the inputs are not different between the single practice and multi-practice solutions then the user can move on to the next step. If the are different it is recommend that the user start a new analysis and save it with a similar name but indicate that it is a multi-practice analysis (structural-grading). The second step involves averaging the benefits and adding up the costs reported by each practice that make up the multi-practice solution. The benefits are averaged because the cost-benefit tool assumes that the practices are 100% effective at eliminating the blowing and drifting snow problem. The costs of the practices are added because each practice will be built has part of the multi-practice solution.
Costs vs. Benefits
Present Value
The present value is the sum of the discounted value over the practice life (T). The future values (v) are discounted to account for the opportunity cost of the investment or the preference of individuals for the present.
where is the discount rate for the agency.
Benefits
The benefits for year (t) are just the sum of the all the benefits for that year.
The present value of the benefits is
Carbon
Travel
The travel benefits are calculated from the traffic and the number of events in the blow ice section.
where is the value of travel time for auto occupants and
is for heavy commercial traffic. Both of these values are in the parameters for the agency.
Auto Travel Time
where is the traffic speed,
is the reduction in traffic speed,
is the number of blow ice events,
is the time to regain bare lane,
is the annual average daily traffic,
is the heavy commercial traffic,
is the car occupancy parameter for the agency and
is the snow problem length.
Heavy Commercial Travel Time
Crashes
Blow Ice
Drifting
Living Snow Fences
Standing Corn
Costs
The cost for year (t) are just the sum of the all the costs for that year.
The present value of the costs is
Living Snow Fence
Standing Corn Row
Structural
Grading
Net Benefits
The note benefits is just the present value of the benefits minus the present value of the cost.
When the NB is greater than zero the benefits are higher than the costs. When the NB is equal to zero the benefits and costs are equal. When the NB is less than zero the benefits are lower than the costs.
Benefit-Cost Ratio
The benefit cost ratio is just the present value of the benefits divided by the present value of the costs.
When the BCR is greater than one the benefits are higher than the costs. When the BCR is equal to one the benefits and costs are equal. When the BCR is less than one the benefits are lower than the costs.
Internal Rate of Return
The internal rate of return (IRR) is the annual rate of return for an investment. Calculation of the IRR requires the usage of a numerical algorithm that can have difficultly coverage and/or finding a single unique solution. Therefore we use the modified internal rate of return (MIRR) which can be calculated directly from the BCR.
Note that this value is in decimals so an MIRR of 0.15 is a 15% internal rate of return.