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Show inquiries. We are particularly anxious to know of special water problems affecting your State which should be included in our inquiries. It is entirely possible that through the good offices of Mr. Frank Bane, and otherwise, we may be in process of hearing from, specialized agencies of your State govern- ment. But the Commission is desirous that you as head of the State should know something of our plans and of our great desire to have our work made of benefit to the people of your State. With assurances of my high regard, I am Yours very sincerely, Morris L. Cooke, Chairman. Enclosure. EXHIBIT C The President's Water Resources Policy Commission questions relating to water resources policies (1) Multiple-purpose projects-economic justifica- tion.-To determine the economic justification of a project such as a multiple-purpose dam and reservoir, the follow- ing general principles have been suggested: (a) total benefits, to whomever they may accrue, should be greater than total casts; (b) the benefit-cost ratio of any single purpose for which development is undertaken should be greater than the ratio for any alternative means of achieving the same purpose; (c) existing projects should be enlarged dn respect to any and all purposes to the extent that incremental benefits exceed incremental costs. Are these .general principles adequate for the determina- tion of the economic justification of a project? If not, what changes would you suggest? (2) Reimbursable and nonreimbursable costs.-With regard to water development projects in this country, ex- penditures for certain purposes (e. g., power) have come to be thought of as reimbursable by the beneficiaries or users, expenditures for certain purposes partially reim- bursable (e. g., irrigation), and expenditures for certain other purposes nonreimbursable or to be paid for out of the Federal Treasury (e. g., flood control and navigation). Recently, proposals have been made to add to the number of nonreimbursable purposes to which allocations of costs may be made by including such purposes as national de- fense, general welfare, recreation, improvement in public transportation^ sediment control, and public health. Obviously, the more of the cost that can be written off to nonreimbursable elements, the less has to be repaid by particular beneficiaries. What economic and social principles should govern in this matter? Would you favor permitting allocations to additional nonreimbursable purposes in considering costs to be borne by beneficiaries or users of water development projects? If so, which nonreimbursable items would you recommend be added, and why? How would you deter- mine the valu_e to be placed upon each? (3) Use of surpluses to pay subsidies.-At present all Federal irrigation projects are subsidized to the extent that interest on project investment is not included in the annual costs which must be balanced by estimates of bene- fits. Further-more, in accordance with ability-to-pay determination, s, most users of water for irrigation pay less than the amount allocated to that purpose on an interest- free basis, th« balance of the allocated irrigation costs being defrayed, so far as possible, from surplus revenues yielded by power sales over and above the costs allocated to power at the multiple-purpose dam and reservoir proj- ects. Complicating this matter is the opinion of the Solicitor of the Department of the Interior permitting the interest component on the power investment, which is collected through power revenues, to be applied toward the repayment of the irrigation costs. Should direct interpurpose transfers or subsidies of this kind be continued? Or should surpluses collected from any group of users be either eliminated by reduction in rates or covered into the Federal Treasury with necessary subsidies paid from the Federal Treasury? What steps should be taken to identify clearly the nature and amount of such transfers? Should the interest component be treated differently from other elements of cost? If so, why and in what way? (4) National versus regional interests.-The preceding question, along with many others, leads into the issue of national versus regional interests in river basin projects and programs. Without sacrificing growth, it is desir- able to promote greater balance and stability nationally. It is also desirable to promote balance and stability in the major regions of the country. Conflicts between national and regional economic judgments arise with regard to water development projects and programs as with other government activities. As an example, in terms of na- tional economic considerations and the national pattern of location of economic activities, it may be preferable to obtain additional agricultural output from new land reclaimed by drainage or from more intensive cultivation of those areas already mature and highly productive in agriculture, rather than by irrigation of arid land in the less developed areas. Likewise, it may be preferable from a national economic viewpoint to locate additional in- dustrial operations in the already congested but highly productive areas in the East and Midwest. From a re- gional point of view, however, having in mind the desirability of encouraging industrial and high-value agricultural growth in certain parts of the country whose economies suffer from the lack of such development, it may be most important to locate such activities in these less developed parts of the country, such as the West and South. Economic stability in such regions and the in- crease in economic welfare may depend largely upon additional activities of this kind. In addition to economic reasons for increasing regional stability and growth there may be compelling social, military security, and other reasons. What considerations should be uppermost in reconciling or compromising national with regional concerns, par- ticularly as they relate to water development projects and programs? How may these interests, which frequently seem to conflict, be reconciled? In what ways may the desirability of decentralization for social, national security, and other noneconomic reasons be taken into account? What principles should control the balancing of regional and national interests? (5) Irrigation versus industrial demand for water.- In many river basins competition for limited supplies of water is developing between major potental uses. More specifically, in areas in which irrigation has been recog- nized as having a primary claim on available water, after domestic water supply, newer industries in the metallur- gical and chemical fields, and especially proposals to supplement our waning petroleum reserves with large syn- thetic liquid fuel production, are presenting demands for water which could only be met at the expense of expansion of irrigation. What principles might be invoked to resolve or com- promise this conflict? What determining conditions do you expect to be different in the future as compared to the past? What social or economic standards might be set up as guides for periodic and systematic reappraisals of the relative values of such competing claimants on a given supply of water? From this long range point of 310 |