The work provides improved economic principles and methodology for water resources planning. A basic utility objective function is proposed, which can be quantified except for special cases where income redistribution is relevant. A stochastic approach is developed to provide a quantitative utility function of uncertainty, based upon social valuation of risk inferred from insurance and other fields. The analysis of risk and theory of opportunity costs is used to derive an approach to government discount rate, and to consideration of taxation in comparisons of projects with alternatives. In the field of hydroelectric power, it is shown that these principles will approximately halve traditional benefit-cost ratios. A special study of flood control provides a new approach to the optimal degree of protection, and to flood plain management, through consideration of project-induced investment in flood hazard areas. Essential principles are given for an economic evaluation of the benefits of pollution control and a method for optimizing planning including water quality objectives. (Author)