Chapter 6, cont. Financing Local Water Management Options Implementing and maintaining many of the options discussed in the Bulletin will require a large commitment of funds. Historically, local water agencies relied on several methods for long-term debt financing, including general obligation bonds, revenue bonds, and assessment bonds. Innovative long-term debt financing strategies, such as bond pools, are being increasingly used.
Financial costs are different from economic costs.
Thus, the objective of financial feasibility studies is to solve cash flow problems. In contrast, economic costs reflect the costs of committing resources needed to construct, operate, and maintain an option for its life, to whomever they may accrue. Economic feasibility studies are used to compare the relative merit of options, to determine the most economically efficient size or configuration of an option, and to allocate costs among beneficiaries. It is possible for options to be financially feasible and economically unjustified, or vice versa. For example, even though an agency can generate the funds to pay for an option, this does not necessarily mean that the option is economically the best of available options.