Theoretical documentaion for the model of economic analysis of hydrosystem managment scenarios "Hermes"

The model HERMES, provides the main economic tools for the analysis and assessment of application costs for the various management scenarios of the hydrosystems and assesses the following indicators: Net Present Value (NPV), Benefit/Cost Ratio (B/C), Internal Rate of Return (IRR) derived from the construction and the operation of water system infrastructures. Expenditure relating to the construction/ installation, maintenance, personnel, energy consumption is calculated in the main cost centres. Receipts from (water and energy) sales or other user-specified receipts are calculated as benefits. In the model are incorporated both the permanent (eg, costs of investment) and the variable economic assets of management of a hydrosystem. The model enables the user to analyse the financial component of management scenarios aiming at locating the optimal water resources policy. This report provides the theoretical background of the model HERMES.