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improvements in water use, the great adaptability of water users, and the fact that the most rapidly growing sectors of the economy used minor amounts of water. To assess the analytical issues raised by such findings, the National. Water Commission sponsored a study of the conceptual and empirical questions that arise when studying the role of water in regional growth (Lewis, 1973). The study found fault with a number of the theoretical models of regional growth and the empirical data available for measuring such growth, but it did not suggest that the studies finding growth to be unaffected by water availability were in error. These studies, showing water to be an unimportant variable in the growth equation, are not without critics and have spawned efforts to present countervailing data. One such critical study attempted to analyze the effects Bureau of Reclamation water resources projects had on economic development in the Southwest between 1930 and 1.970 (Cicchetti, 1975). An innovation in this study was the definition of economic subregions that overrode traditional political subdivisions. Using pooled cross-sectional and time series data, the authors estimated the coefficients for a number of Cobb-Douglas production functions. These functions related such output variables as per capita income, value of farm output, and change in subregion income to input variables associated with infrastructure investments in water supply and transportation systems and the provision of services like education, police and fire protection, and recreation. The authors concluded that water resources investments have an impact on regional economicow_t_h. However, careful and close review of the equations and coefficients shows the evidence to be uncompelling and inconsistent. More recent studies tend to override the analysis based on the impact. of Bureau of Reclamation projects. One, published at almost the same time as the analysis of the Bureau projects, failed to identify statistically significant impacts of expenditures for federal irrigation projects on any measure of regional economic growth (Fullerton, 1975). Another study, published a few years later, reached essentially the same conclusion (Young, 1978). (A study supporting the growth impact of water appeared about this time, but, it did little more than quibble with the data used by others (Stoevener, 1979)). The latest studies tend to support the findings of the original work done in the 1960'x. For example, an econometric analysis of the private investments in irrigation systems found little if any effect on rural economics (Sparling, 1986). Time and again, a careful review of empirical data leads to an acceptance of the null hypothesis, i.e., investments in water supply systems do not have a noticeable impact on a region's growth. These counter-intuitive results suggest that the process of planning and financing water resources development, particularly in cases where a major share of the project funding must be generated locally, must be rethought. If water is of limited (or insignificant) value in stimulating growth, public expenditures for the expansion of water supply infrastructure must be very carefully reviewed. In the face of competing capital needs, the opportunity costs of decision-making based on a dubious myth may be too high. - 11 -