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Show view should agricultural use of water, assuming that the land in question is adapted to irrigation, take precedence? What are the assumptions underlying your answers? (6) Rate of interest and payoff period.-The economic justification of most water projects, involving large capital expenditures, hinges in large measure upon the rate of interest to be charged and the number of years allowed for paying off the investment. At present, interest and pay-out practices vary among the various Federal water development agencies. These questions are important from the point of view of repayment, as well as basic eco- nomic justification. Should definite standards be established covering the interest rate and the pay-out period? If so, what should these principles or standards be? Should they be applied retroactively? (7) Upstream versus downstream interests.-Consider- able conflict has arisen in many river basins between the upstream and the downstream interests. In the West, those in the upper portions of river basins have been more interested in land reclamation and irrigation; upstream flood control; and upstream forest, range, and agricultural land conservation. Those in the lower portions of the basins have been more concerned with river navigation and flood control by means of dams, reservoirs, levees, diversion channels, and the like. These seemingly con- flicting interests have to be reconciled in both engineering plans and budgets. The problem is partly one of making comparisons of the economic value of water used, con- trolled, or handled in one way as compared to other ways. These differences in treatment appear to persist in spite of the fact that the natural unity of the whole basin is a widely recognized principle. Can economic analysis be utilized to reduce the con- flict between upstream and downstream interests and to point toward integrated and balanced total basin programs before wasteful projects, whatever they are, become crys- tallized? If so, please explain how. (8) Hydroelectric power policy.-Certain policies have evolved with respect to the marketing of hydroelectric power from Federal river basin projects. These policies generally include the sale of power at the lowest possible rates consistent with the recovery of operating and fixed charges, including amortization of costs allocated to power over a fixed period with interest; construction and opera- tion of basic transmission facilities by the Federal Govern- ment where necessary to assure resale of the power on a basis contributing to more widespread use of electricity for regional development and higher standards of living; and preference to public bodies and cooperatives, as dis- tributing agencies to implement this objective. In con- nection with certain projects, however, these policies are modified, either by change in allocation, use of interest, or otherwise, to provide excess power revenues for other basin purposes. Should these policies be reexamined? What changes in them would you suggest? Where power revenues are in excess of those necessary to return properly allocated costs, should the rates be reduced in order to stimulate increased consumption of electricity? Should considera- tion be given to establishing especially low rates for hydro- electric power to encourage its use as an alternative to power generated from nonreimbursable resources such as oil and natural gas? To what extent should sale of power from Federal projects at low rates provide a com- petitive influence on rates charged by the private power industry? Where necessary to implement its power policy should the agency responsible for marketing the power be authorized to construct steam-generating stations? (9) Can benefits be assessed and paid for equitably?- Federal Government policy and practice with regard to reimbursability on the part of similar groups of benefi- ciaries are not now consistent. Irrigation farmers receiv- ing water from Federal projects are required to repay the costs allocated to irrigation to the extent of their ability. Farmers on flood plains receiving protection from Federal flood control projects or those benefiting by drainage projects, as a general rule, are not required to pay any- thing for such protection. In each case, the value of the farm land and the annual income of the farmers over a period of years are increased because of the Federal project. Partly this question involves the issue of identifying local and individual responsibilities for Federal expenditures from which they benefit and the ways and means of levy- ing the necessary charges. One way of making it possible for local beneficiaries to defray a suitable portion of the costs is by means of local water user or conservancy dis- tricts authorized by State law to appraise certain benefits and levy charges. How may these inconsistencies be eliminated ? Can you list other means of assessing local benefits received so that specific charges could be levied against them? Please indicate which means you believe to be most desirable. (10) How should benefits be estimated?-Federal prac- tices in estimating benefits from water development proj- ects vary considerably from agency to agency For in- stance, in justifying irrigation projects, various indirect benefits are taken into account including the estimated increase in income resulting from increased general busi' ness associated with the new irrigation crop production. In the case of justification of many power projects, or the power portion of multiple-purpose programs, the estimate of benefits is much more narrow. In most instances, the increase in industrial production which may be attribut- able to the increased power supply is not considered. Is it desirable to continue such diversified methods of estimating benefits? If it is not desirable, what sugges- tions would you have for altering the estimating methods so that benefits from water used for irrigation may be compared with the benefits from water used for power? Particularly how may the indirect or the secondary and subsequent beneficial effects be taken into account? (11) Food surpluses and new land.-There has been a good deal of criticism to the effect that it is unsound to spend large sums to irrigate and bring into production new land or to increase the production from old land by this method when we already are forced to pay hundreds of millions of dollars to farmers in the form of price supports, particularly when some of the new land will probably be used for crops such as potatoes which already have to be dumped or destroyed as surplus. How may long-range requirement goals, which will necessitate increased production of most agricultural crops, be reconciled with such short-range phenomena as the potato surplus? What bearing does this have upon water policies and agriculture? (12) Consideration of long-range need for agricultural production.-For the long range there undoubtedly will be a need for additional agricultural production. This need may be met in a number of ways, including land reclamation by irrigation, drainage, or clearing; increased use of fertilizers and farm machinery; improvements in seed and various agricultural practices; increased imports; and other ways. Several of these methods directly involve water use or control; the others are competing alternatives. At present we have no systematic way of determining the economic desirability of increasing agricultural production by one as compared to another method. What suggestions can you make for improving our prac- tice in this regard, so as to make possible economic com- parisons of benefits and costs of increasing agricultural production by different means? What general considera- 911609-5C 311 |