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Show prevailing means of assigning cost burden for irri- gation development seem desirable. If repayment is permitted from the interest component for proj- ects with power developments attached, it is likely that many of the best remaining potential irrigation projects will not be developed, since they do not have directly associated power facilities. In the Columbia Basin only two of those proposed are estimated to be able to pay out under this system- the Canby and The Dalles Projects in Oregon. If the interest component is not to be used, other possibilities of obtaining the most desirable irriga- tion development would be: increase in power rates to cover irrigation costs, or modification of the present policy of reimbursability on irrigation con- struction costs. Increase in power rates.-Although the increase in power rates necessary to cover all foreseeable irrigation costs in the Columbia region would be relatively small,11 some objections to this alternative method may be noted. There is an element of dis- crimination in it for power users in the Columbia area, compared with power users in areas where irrigation, is not one of the purposes of development; benefit-cost ratios are not always the most reliable guides, high investment per irrigated farm being an important factor; the measure might be impracti- cable in other basins because of high power produc- tion costs3 or for other reasons. In reply to such objections, and in areas where high rates would not result, it may be countered that power users receive other benefits from Federal expenditures, both direct and intangible, to develop their region. Many power users, moreover, are indirect beneficiaries of the irrigation features. Modification of reimbursability.-All water development projects, including irrigation, navi- gation, and flood control, must now meet the re- quirements of a favorable benefit-cost ratio or they are not considered feasible. For flood control proj- ects with determinable local benefits, it is existing policy tha.t a nonreimbursable expenditure by the Federal Government is justified if the general benefits, to whomsoever they may accrue, exceed the costs.12 For navigation the general benefits ac- 11 Roughly estimated to be $1.36 per kilowatt-year on about 1 Yz million acres of irrigated land, and 12 million kilowatts installed capacity on existing, authorized, and recommended Federal projects. The estimated rate is $21.21 per kilowatt-year without subsidy requirements, and $22.57 with such requirements. u The Corps of Engineers reports that, in practice, on a national basis a significant share of local flood control cruing from a project like the authorized 9-foot channel to Lewiston, Idaho, are also considered to warrant nonreimbursable Federal expenditures be- cause of widespread benefits in promoting inter- state commerce. Flood control projects with de- terminable local benefits, on the other hand, re- quire proportionate local contributions to the first costs of the projects. In the case of an irrigation project, it is existing policy that the entire irrigation construction cost be returned to the Treasury al- though no interest repayment is required. Gen- erally, nonreimbursable benefits are not included in reimbursement calculations on irrigation projects. This inconsistency in Federal policy and law places irrigation projects in the position of meeting pro- visions which obscure the total benefits accruing from a project. The basin account and the use of interest on the pooled power investments to make the required re- turn of irrigation construction costs are considered an arrangement consonant with existing law and policy, and they offset the inconsistency of basic leg- islation on general benefits. The only suitable al- ternative to the use of the basin account and in- terest component, therefore, is thought to be a change in basic provisions, placing all water de- velopment projects on the same footing. This is included in the multipurpose program account, as recommended by the Commission. Summary The Columbia situation seems to warrant a change in Federal policy as it concerns the reim- bursability of irrigation development costs. In keeping with the principle of the multipurpose program account, it is recommended that for the Columbia, as elsewhere: (1) Payment for all water developments be required from all beneficiaries, consonant with their ability to pay their share of benefits. For irrigation water users, as for power users, this might take the form of regular water rates, without contract obligation for repayment of capital costs. (2) Since existing Federal policy con- templates the nonreimbursability of some water development costs where the development is in the national interest, regardless of sources of repay- ment, it would be consistent with that policy to make nonreimbursable irrigation costs beyond the total capital costs are reimbursable (30-50 percent). These are mainly levee projects. Reservoirs for flood con- trol are not included. (See chapter 6.) 44 |