FINANCING FEDERAL WATER DEVELOPEMNT PROJECTS AND SHARING THE COSTS1

ABSTRACT: The Federal Government's interest and involvement in water resource development in discussed in the context of project financing and cost sharing. After drawing a clear distinction between the two issues - who puts up the money, and who repays over time - the authors survey a number of Federal acts from which have evolved nearly 200 separate cost-sharing rules. Selected cost sharing and financing issues discussed include consistency in policies, rehabilitation of urban water supply systems, multipurpose water quality projects, and ground water management. Two proposals for cost/finance sharing reform introduced in the 96th Congress are discussed in detail and their impacts compared with current policy. The joint venture approach (Administration proposal) results in an effective composite cost share which changes significantly but not drastically (from 19 to 35 percent non-Federal share for a hypothetical project). The block grant approach (Domenici-Moynihan proposal) would alter the regional distribution of Federal water developement funding from the South and West to the Northwest and North Central States.     

A MODEL FOR ACHIEVING CONSISTENCY FOR COST SHARING IN WATER RESOURCE PROGRAMS1

ABSTRACT: Three basic principles of responsibility have influenced the Federal/non-Federal cost sharing rates for water resources programs (1) full payment by beneficiaries (2) exclusive Federal assumption of costs and (3) joint Federal/non-Federal sharing. The efforts to determine appropriate cost sharing rates have resulted in several hundred complex arrangements involving contributions, user charges and direct sales based on many variations of payment terms. This basic present value model was developed to determine the non-Federal cost shares which are expected to be paid for 32 different functional purposes emanating from Federal water resources programs and projects for both implementation and OMR stages. The model introduces the concept of a composite (implementation plus OMR) cost share as a focus developing appropriate cost sharing rates for the private, public and mixed outputs produced through public water resources investments. The model can be used as a focus for policy decisions on cost sharing which seek to achieve consistent and equitable cost shares for purposes provided while maintaining an efficient allocation of resources within water programs.     

TEACHING WATER RESOURCES POLICY TO UNWERSITY SCIENCE AND ENGINEERING STUDENTS: OPPORTUNITIES AND CHALLENGES1

ABSTRACT: Effectively teaching water resources policy to university science and engineering students is both important and difficult. Most careers in the water resources field require an understanding of the comprehensive governmental regulatory structure affecting water use. Also, few science and engineering curricula encourage their students to take policy courses. Successful approaches to teaching water resources policy might include epistemological comparisons, case studies, issue maps, and interactive simulations. Obstacles to the effective teaching of this subject include students' insufficient preparation and student disdain and cynicism. These obstacles may be mitigated by requiring a prerequisite, developing a glossary of policy-related terms, and introducing the course through lectures emphasizing realistic views of the water resources management field and the nature of the American political system.     

THE CONTINUING EVOLUTION OF AN AUSTRALIAN WATER RESOURCES POLICY1

ABSTRACT: Australia's extremely limited water resources highlight the need for policy guidelines for management. During the 1970s, there was the gradual evolution of a national water resources policy, facilitated by a nationally agreed statement of objectives and culminating in a federal policy statement presented in 1979. However, the Australian constitution gives major responsibility for water resources to the states. Further, the federal policy statement seems to assume that each state has a water resources policy and that it accords with the nationally agreed objectives. This is not the case, and the practical management of Australia's water resources falls short of the principles set out in the policy document. The River Murray, the nation's major water resource, provides ample evidence of this fact. With very limited water resources, Australia urgently needs to reduce the disparity between principle and practice in their management.     

WICKED WATER PROBLEMS: SOCIOLOGY AND LOCAL WATER ORGANIZATIONS IN ADDRESSING WATER RESOURCES POLICY1

ABSTRACT: Water policy problems are wicked, not in an ethically deplorable sense, but in the sense that they present us with especially difficult challenges of becoming more effective in our interdisciplinary collaboration, of integrating two very different types of knowledge, of working across several socio‐political units of analysis simultaneously, and of better organizing water as a common property resource. Sociology, as a discipline, does not have a particularly rich history of successful interdisciplinary collaboration on water resources research and teaching, but it potentially has a most useful contribution to make by focusing on the analysis of local common property resource organizations that operate in the interface between individual resource users and State‐Federal entities. These organizations (e.g., water user associations, mutual companies, irrigation districts, acequias, conservancy districts) have been the orphans of water policy discourse but their operations are critical to undertaking more effective 21st century social analysis, research work, and action programs. Sociologists who work to better comprehend the operations of, and constraints upon, these organizations build a sociology that can better collaborate with other water‐related disciplines in addressing the challenges posed by the wickedness of our water problems.     

THEORY AND REALITY IN ALLOCATING FEDERAL RESOURCES TO WATER RESOURCES DEVELOPMENT1

ABSTRACT: Federal spending on water resource development projects exceeds $10 billion annually. This paper examines the economic theory and practice on which the Federal water resource development plans are based. Existing theoretical and applied problems result in overinvestment. These include 1) no standard of value for the tradeoff of environmental objectives with economic objectives; 2) benefits based on “willingness to pay,” but beneficiaries pay only a fraction of a project's costs; 3) beneficiaries “shop around” among program purposes in order to reduce their commitments; and 4) benefit/cost (B/C) analyses are based on a discount rate, which is consistently below the Federal borrowing rate. Furthermore, the Government Accounting Office (GAO) frequently finds that the agency regulations are inadequate and result in inconsistent and questionable benefit computations. The President has proposed a series of water policy reforms, to reduce some of the apparent overinvestment in water resource development, but fundmental corrective action rests with the members of Congress.     

COST SHARING IN TRANSITION: THE CASE OF PLAN 6, CENTRAL ARIZONA PROJECT1

ABSTRACT: In the past, development of Federal water resource projects depended heavily or exclusively on Federal financing of construction costs. However, pressures on the Federal budget, environmental issues, and the notion that there are economic efficiency gains when beneficiaries of Federal water resource projects increase their cost share are causing changes. The case of the Central Arizona Project Plan 6 is a noteworthy example of the transition to more non-Federal participation in water resource development. This is because the non-Federal financing is to be provided for a project already under construction. The negotiation and terms of the Plan 6 financing agreement between the Department of the Interior and multiple interests in Arizona are used as an example of how Federal water project cost sharing is in a state of transition. The negotiation process is described, a financial analysis is provided, and the terms of the agreement and policy issues that were deliberated in the Executive Branch of the Federal Government are discussed.     

AUBURN DAM: A CASE STUDY OF WATER POLICY AND ECONOMICS1

ABSTRACT: This paper provides a critical analysis of the Bureau of Reclamation's Auburn-Folsom South project in California. While this massive $1.5 billion project is temporarily halted for redesign for earthquake hazard, it is timely to examine its justification on economic grounds. The key finding is that several major benefit categories, irrigation and recreation, have been grossly overstated. In addition, the Bureau failed entirely to estimate the cost of use on the free-flowing American River, or a probability-weighted estimate of catastrophic loss. Revised estimates indicate that the project is not economically justified. In addition, the project has unattractive distributive effects. The implications of this case study for current revisions in U.S. water policy are explored. The Auburn study basically provides support for the U.S. Water Resource Council's draft manual of procedures for evaluating federal water resource projects.     

COST ANALYSIS OF WATER AND WASTE WATER TREATMENT PROCESSES IN DEVELOPING COUNTRIES1

ABSTRACT: Mathematical modeling techniques are used to develop predictive equations for cost of water and waste water treatment processes in developing countries utilizing socioeconomic, environmental, and technological indicators. Predictive equations are developed for each of the three regions (Africa, Asia, and Latin America) for construction, operation, and maintenance costs of slow sand filter, rapid sand filter, stabilization lagoon, aerated lagoon, activated sludge, and trickling filter. Data analysis indicated that cost of water treatment processes is a function of technological indicator (percentage of imported materials), population, and the design capacity. The variables which gave the best correlation for waste water treatment cost were population, design flow, and the percentage of imported waste water disposal materials.     

LINEAR PROGRAMMING USE FOR EVALUATING WATER RESOURCES AND COST AND BENEFIT ALLOCATION1

ABSTRACT A linear programming model for a river basin was developed to include almost all water-related economic activity both for consumers and producers. The model was so designated that the entire basin or basin sub-division could be analyzed. The model included seven sectors, nine objective function criteria, and three river-flow levels. Economic basis for conflicts among sectors over incidence of cost allocation and level of economic activity can be traced to some chosen objective. The disposal of untreated household waste water, particularly from the rural household, directly into the river was consistent with maximizing net benefits and minimizing costs. The optimum resource allocation, water-treatment plants, farms and industry activities would change with flow level. For each of the three industries analyzed separately, paper, wool and tanning, public treatment of industrial waste water was the optimal treatment process in one or more of the solutions. Lake shoreline was the dominant feature determining lake-resource valuation. Implied capital value varied from $126 per shoreline foot to over $250 depending on discount rate. Implied prices on lake surface ranged from $42 to $147 per acre. Strong economic forces encouraged small lot sizes for vacation cottages.     

THE NATIONAL WATER COMMISSION REVISITED1

ABSTRACT: In 1973 the National Water Commission concluded its five-year study of national water policy by issuing a massive report containing over 200 recommendations for improvements in the way the Nation deals with its water resources. The Carter Administration is now engaged in another water policy review which incorporates many of the policies espoused by the National Water Commission. In this paper, presented at the 13th American Water Resources Conference in Tucson in November of 1977, the author describes the work of the National Water Commission and the actions taken on its recommendations.     

INCOMMENSURABLES AND TRADEOFFS IN WATER RESOURCES PLANNING1

ABSTRACT: Society has many objectives, many of which are not commensurable. This incommensurability problem is generally referred to as the multiple objective problem and leads to the notion of tradeoffs. Various approaches to calculating tradeoffs in water resource development have been advocated by several authors. Many have made errors in the context of the conceptural model presented in this paper. It is argued the correct framework for tradeoff analysis is the neoclassical economic model. The relevant tradeoffs, then, are really price ratios. These, in turn, must be calculated in such a manner as to allow comparison of product mixes where the expenditure on resources is the same. This is where several authors have erred. An empirical example which illustrates the correct application of the model is presented.     

OF DOGS AND TAILS: WATER POLICY AND SOCIAL POLICY IN ARIZONA1

ABSTRACT: The general relationship between water policy and social policy in the Western United States is examined by utilizing the example of the Arizona Groundwater Management Act. Too often, this is a relationship which goes largely unexamined, at least in any explicit way. In areas of perceived or real water scarcity, it is often the case that the setting of water policy severely constrains the social policy. Too many fundamental social policy issues are left to unstated assumptions through such a procedure. But, this paper asks, should not the social policy lead, and the water policy follow? In other words, in this relationship, which is the dog, and which is the tail?     

ENERGY,ENVIRONMENTAL, AND ECONOMIC IMPLICATIONS OF SOME RECENT ALBERTA WATER RESOURCES PROJECTS1

ABSTRACT: Most of us are aware, or feel we are aware, of the impacts of major water resources projects on our lives. “Dam-lovers” note the life-saving flood-risk reduction and recreational benefits of a proposed reservoir, while “dam-haters” bemoan the future drowning out of the wildlife habitat of its river valley, and the recreational disbenefits to stream (as opposed to lake) fishermen. Water supply projects can often be given such a revered status, assuming the “obvious” tenet that water, air, food, and shelter are basic requirements of decent living, that the economic viability of the project may not even be assessed. Water resources planners are supposed to impartially weigh the environmental and economic benefits, and especially now, the energy implications of all proposed water projects, but many times the partial views of political or public advocates may be hard to ignore. The assumptions used in the planning of four recent water projects in the Province of Alberta will be presented and some revisions suggested which materially affect their Benefit/Cost ratios. In one project that is still in the public hearing stage, the economic analysis will be revealed, indicating that the original B/C ratio of about 1.6:1 might be more realistically placed at 0.6:1. In another project just completed, the apparent lack of an economic or energy analysis that has resulted in a perpetual and unnecessary energy load on the province, will be described.     

STATE LEGISLATIVE CONSTRAINTS ON THE DEVELOPMENT OF WATER RESOURCES POLICY1

ABSTRACT: Legislative constraints on the development of water resources policy fit into three broad categories-political, institutional, and informational. The political category encompasses constituency needs and preferences, satisfaction with existing water management practices and policies, and the necessity for legislators to blend political ambition with public problem solving. Constraints fitting into the institutional category include differences in legislative behavior and attitudes that stem from one's location in the legislature (e.g., senate-house, leader-follower, or committee activity), the dynamics of scheduling and organization, and the capability to manage complex issues. Informational constraints refer to the availability of information and the use to which it is put by lawmakers in formulating decisions on waterrelated issues. These constraints are approached from a behavioral perspective by examining several constituency, institutional, and information hypotheses that “explain” legislative involvement with water resources issues. The data are drawn from a recent study of water resources decision making in West Virginia. Eighty-three of the 134 members of the 1975–76 West Virginia Legislature participated in the study.     

SOCIAL WELL-BEING AND WATER RESOURCES PLANNING1

ABSTRACT: For many years, Federal water resources projects have been subjected to benefit-cost analysis to establish their economic feasibility. Several years ago social well-being was added as a consideration. This paper discusses the state-of-the-art in analyzing and evaluating aspects of social well-being. It stresses current short-falls and advocates a direction for further efforts.     

FISH AND WILDLIFE ENHANCEMENT THROUGH WATER RESOURCES DEVELOPMENT1

.Fish and wildlife enhancement through water resources development implies fish and wildlife will be enhanced or benefit directly from such development. As a matter of practicality, the opposite may be the case in that wildlife lands of prime value and stream fisheries are often lost or severely altered as a result of reservoir construction or stream channelization. Additionally, estuarine fish and wildlife can also suffer from water resources development due to reductions in volume of fresh waters reaching the estuaries and adjacent marshes. In some instances waterfowl habitat can be created by reservoir construction and with good planning waterfowl habitat and use may be enhanced. To offset losses of thousands of acres of wildlife habitat when a river system is to be totally harnessed, planners could set aside sufficiently large natural areas dedicated for use by wildlife. This, however, would be replacement rather than enhancement. Reservoir fisheries can be enhanced with good planning to include timber clearing, shoreline clearing, boat road clearing, variable level drawoff devices and tailrace escapement channels. To sum up, it is possible for some species offish and wildlife to be enhanced through water resources development but only at the expense of others, and then only through careful and integrated planning.     

A DESCRIPTIVE MODEL FOR ANALYZING PROPOSED COST SHARING RATE CHANGES1

ABSTRACT: This article offers a procedure for identifying the primary effects of financing and cost sharing rates on four basic levels: program, technical, incidence, and comprehensive impacts. A process is developed for identifying these effects based upon two alternative approaches. One method would follow the effects of rate changes through the four levels of impact, another would look in depth at the consequences of rate changes on a particular impact. For this study the information and suggested changes found in the Section 80(c) Study were used to illustrate possible impacts. The process suggested herein could be used in anticipating impacts of any major policy change.     

NEW REQUIREMENTS FOR LOCAL UNITS OF GOVERNMENT IN WATER RESOURCES PLANNING: INSIGHTS FOR IMPLEMENTATION FROM RECENT WATER RESOURCES PLANNING RESEARCH1

ABSTRACT: Recent Federal and some State legislation has enlarged the scope of permitted or required actions of local units of government in water resources management and protection. Much of the legislation encourages local units of government to introduce water resources planning measures which will be preventive instead of corrective. Extensive public works measures, environmental destruction and the threat to human life can thus be eliminated or reduced. Research has developed and tested a method for identifying the elements of a water resources protection program for small urbanizing watersheds which was technically adequate and socially acceptable to the communities implementing such programs. Research results suggest that deliberate efforts will be necessary to inform and educate local units of government as to the usefulness of the legislation; and that the program must reflect local natural resource conditions and local preferences for the method of accomplishing the protection. Successful implementation could be restrained by inertia of local units of government, a lack of tradition in such programs, and hostile existing agencies.     

THE VALUES OF GOODS AND SERVICES–IMPLICATIONS FOR A FLEXIBLE NATIONAL WATER POLICY1

ABSTRACT: This paper evolved from a concern that water resource administrators and planners do not have a consistent definition of the value of goods and services of outputs from projects and programs. A more flexible approach to planning and evaluation is presented that recognizes the interaction of production and consumption through the use of commodity demand curves. Use of the concept of consumer surplus permits measurement of the differential impacts on producers' and consumers' welfare. Quadratic programming is suggested as a consistent means of quantifying these differential impacts.