An economic analysis was performed of seven alternatives for increasing the capacity of the transmission system delivering water to San Francisco. Some of the alternatives are capital intensive and others are operating cost intensive. A real (uninflated) interest rate of 2 percent was utilized as the discount rate in present worth calculations in conjunction with real (uninflated) estimates of capital and annual costs. The best apparent alternative is one that has a relatively high capital cost, no energy costs, and the lowest levels of other operating and maintenance costs.