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. . reservoir will no longer serve this purpose once the Rocky Ford Ditch is combined with the Highline Ditch. The future use of Totten Reser- voir remains with the MVI. Potential uses could be to deed the reser- voir to the Colorado Division of Wildlife for recreational purposes, or for the MVI to release water from Totten Reservoir into McElmo Creek to serve residents in McElmo Canyon, several miles downstream. FINANCIAL AND.ECONOMIC ANALYSIS The economic benefits of CRWQIP studies are derived from improve- ments in water quality since salinity levels in the Colorado River have economic impacts in the Lower Basin States. The economic losses to ag- ricultural and municipal water users attributable to river salinity are b valued at $513,000 per mg/L as of 1982. The McElmo Creek Unit would 5'1,;;12, '_<- lower salinity at Imperial Dam by about 2.6 mg/L resulting in an eco- _ \:~3-:>: nomic benefit of $1,335,000. The annual cost effectiveness (calculated /V \~~~ by dividing the annual costs by 2.6 mg/L) would be $739,000 per mg/L. ~; The annual cost is derived from the total capital costs of $23.167 mil- lion (construction cost of $22.475 million and interest during con- A ( struction of $3.034 million less the investigation costs of $2.342 million) amortized over 50 years at a discount rate of 8.125 percent. The financial analysis of the McElmo Creek Unit assumes that costs would be allocated according to the Colorado River Salinity Control Act (Public Law 93-320, 88 Statute 226). The Act requires that 75 percent of the cost of the project and interest be non-reimbursable and 25 per- cent be reimbursable and allocated to the states of the Upper and Lower Colorado River Basin. The non-reimbursable portion totalling $16,856 million would be paid from general tax revenues. An Advisory Council will determine how the reimbursable cost will be shared between the two basins, but according to the Act, no more than IS percent will be allocated to the Upper Basin. Assuming the maximum allocation, $843,000 would be allocated to the Upper Basin and $4.78 million to the Lower Basin. The Act also specifies that the reimbursable costs be paid from the respective River Basin Development Funds. Provisions are made in the case of the Upper Basin to adjust rates for Colorado River Storage Pro- ject power to ensure adequate revenues to repay reimbursable salinity costs. Based upon a 50-year repayment period without interest, the Lower Basin would make an annual payment of $95,520, and the Upper Basin would make an annual payment of $16,860. Operation, maintenance and replacement costs would be the obligation of the Montezuma Valley Irrigation Company. An incremental analysis, Table 1, of major project features follows on the next page. ,'7,'\ i Z,{- < \)C\1\ \ CONCLUSION The most cost effective plan for reducing salinity in the McElmo Creek Unit area is to line and combine sections of irrigation canals belonging to the Montezuma Valley Irrigation Company. Approxiamtely 32 miles (53 kilometers) of canal sections would be lined comprised of sections on the Upper Hermana and LQne Pine Laterals and the Highline Ditch. The Rocky Ford Ditch would be combined with the Highline Ditch 7 01,11564 Roche and Davison