The study seeks to develop a method of measuring the employment generation benefits from a federal water resource investment in a depressed area, to relate such benefits to the social cost and economic benefit-cost ratio, and to analyze the sensitivity of employment generation benefits to various types and locations of water project investment within areas designated as depressed regions. The Upper Licking River project in the Appalachian portion of Kentucky was chosen as the study area. The study carefully examines the sensitivity of a variety of assumptions about the character of the location in which projects are constructed, the composition of the demands for labor and materials in various types of engineering alternatives and various patterns of response by otherwise unemployed factors of production. (Author).