The Cost Gap Method and Other Cost Allocation Methods For Multipurpose Water Projects

Four different cost allocation methods are compared which allocate the joint costs of water resource projects among its participants on the basis of separable and nonseparable costs: the egalitarian nonseparable cost (ENSC) method, the separable costs remaining benefits (SCRB) method, the minimum costs remaining savings method, and a new method, the so‐called nonseparable cost gap method, which is derived from the τ value, a game theoretical concept. All these methods, except the ENSC method, can be described with the aid of lower and upper bounds for the core of the involved cost game. For convex cost games, these three methods use the same bounds for the core and hence coincide, but their cost allocation not necessarily belongs to the core. For a second class of cost games the so‐called one‐convex cost games, all methods, except the SCRB method, coincide, and their cost allocation turns out to be the center of gravity of the core of the involved cost game.