OCR Text |
Show projects in other than the order indicated by their benefit-cost ratios. Benefits should be evaluated in monetary terms wher- ever practicable and all intangible benefits should be considered in the formulation of the project. The various types of benefits should be evaluated on a common basis to facilitate ascertaining the scope of de- velopment to realize each function. The preliminary planning prior to congressional author- ization should be carried forward to such an extent and with only sufficient detail to ascertain the scope of the project and to determine a reasonable estimate of cost. The estimate of cost should contain sufficient allowance for contingencies to cover factors which are not fully investigated, and the aspects of which may change when more detailed investigations are made at a later date in the formulation of definite project plans. The scope of the project should be sufficient in its engineering and eco- nomic features to accomplish adequately the purposes for which the project is formulated. 3. Project reimbursement.-Two general conclusions with respect to the reimbursement of costs may be drawn from the review of constructed projects: (a) Reimbursement requirements should be estab- lished on a uniform basis for all functions and types of water resource development; and (b) The costs of water resource developments should be distributed as equitably as possible in relation to benefits, having full regard for practical considerations of cost collection. The lack of uniformity in reimbursement requirements arises from differences in the acts providing for Federal development of different types of projects. No require- ment is placed upon the return of any cost incurred for commercial navigation purposes, or for flood protection provided by storage reservoirs, whereas in the case of local flood-protection facilities, beneficiaries pay costs of operation and maintenance and also capital costs for lands, easements, and rights-of-way. Reclamation law requires the return of all construction costs for irrigation facilities, without interest, and of costs for operation and main- tenance. The same provisions apply to power develop- ments made under Reclamation law, although it is also required that rates for power from these developments include an interest charge. Federal power investments associated with flood control and navigation are required to be returned with interest, in addition to costs of opera- tion and maintenance. The lack of uniformity has had several undesirable con- sequences. It has imposed unequal payment burdens in return for comparable benefits or for benefits of com- parable magnitude. It prejudices continuation of de- velopments having high reimbursement requirements in favor of those with low requirements and results in un- balanced water resource development. In a few in- stances, also, as in the case of the Pine Flat Reservoir in California, it has promoted local efforts to have construc- tion done by one Federal agency rather than another and developed competition between the agencies involved. Illustration of the first point above is provided by development in the Boise Valley, Idaho. The Anderson Ranch Reservoir, the last feature of the Boise project to be constructed, provides a supplemental supply of water needed for presently irrigated lands, particularly during years of exceptionally low stream flow. The supplemental supply may be considered essentially as insurance against losses in such years. Payment by the water users for this insurance is required. Many of the same lands are also subject to losses in other years by reason of floods which either would inundate the lands or cause damage to head- works of canals serving them. Insurance against these losses is to be provided by a flood-control reservoir. For this insurance, however, no payment is required. The increasing difficulties and costs presented by pro- posed and prospective irrigation projects make it impos- sible in most cases to meet the requirement of full return of construction costs under present law. Without modi- fication of that law, therefore, the development of irri- gation projects is being held up and will continue to be deferred, while developments with no greater or even less benefit in relation to cost go forward by reason of their less stringent reimbursement requirements. Apportionment of the project payment burden in ac- cordance with benefits cannot be questioned as a desirable goal. Such apportionment should be recognized as an objective and the closest practicable approach to it should be sought. Steps taken in that direction, however, must give full consideration to practical difficulties involved. The application of rigid requirements might well mean that benefits would be withheld from the many because the few could not meet payment obligations established. The towns, cities and entire nonfarm economies which have grown up in irrigated communities which without irrigation would be unpopulated desert exemplify a type of benefit beyond that to the water user. Similar, though less obvious, benefits accompany increased production made possible by other types of water resource develop- ment. Beyond the local area, similar benefits add to the economy of the region and the Nation. This general incidence of benefits is well understood and accepted. The amount of the benefits accruing to each level or group, however, is not understood and is extremely difficult to measure in a manner which is widely acceptable. Even an acceptable measurement of total benefits to all levels or groups which is applicable to all types of water resource development has yet to be agreed upon. Benefits not readily measured in dollars, but nevertheless real and requiring consideration, further com- plicate an acceptable determination of benefit distribution. Beyond difficulties of determining an acceptable dis- tribution of benefits lie greater difficulties in securing- payments in proportion to the benefits. Assignment of the costs to be borne by the taxpayers at large in return, for widespread national benefits is, of course, the easiest of the several assignments which might be made, because it can be done by the Congress through the recognition of a part of the cost as nonreimbursable. In return for regional benefits, payments by users of federally generated power have provided a relatively sim- ple means in some instances of securing contributions from people of the region, although new provisions for the pool- ing of costs of power and other water resource development; would be essential in most basins. Payments from direct beneficiaries are comparatively easy to obtain where, as in the case of irrigation, the direct beneficiaries form a com- pact group and where, through the withholding of water, a means of compulsion is available. In other instances, how- 411 |