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I I 'bblc 5, Irrigation Dewlopment Subsidy Debate Kc,' IsslIes 311d Rcsr{m'\c.\ii I Subsidy Issue I The development of Western IrngatJon prOjects was not a sound economiC policy. and national funding should have been applied to other purposes that Yielded greater economIC and SOCial benefits or that distributed economic benefits to larger groups of people I I The USSR Irrigation projects represent a general subsidy to irrigators and rural communIties In the West Irngators do not pay the full costs of water delivery provided by the irngabon projects I I Irrigators are a small segment of society that receIVe a disproportionate benefit from the USSR lrngatlon prOjects I I I The irngation sector IS prOVIded a subsidy by receMng zero-interest loans for the projects and by not paying back to the federal treasury the full reimbursement costs For almost 900A. of the irngatlon prOJects, irrigation assistance or payment relief IS provided About $7 1 billion IS allocated to the irngatlon sector. but only $3 4 bllllon IS scheduled for repayment I I I The Irrigation subsidies place large economIC benefits in the hands of individual resource users or groups. whIle society at large must bear the economIc costs The subsidy Issue IS relevant to economIC issues affecting private versus public goods I I As a result of Irrigation development. water is not available to protect fish and wildlife. and natural ecosystems have been eliminated or significantly altered I I I Response to Issue The irrigation development projects reflect the pubhc policy desires of the time; It was a national objective to develop the West and enhance local economic benefits through the federal programs that created the irrigation projects. In the West. the projects ensured greater equity toward economic prosperity. Many individuals and sectors of the economy are directly effected by subsidies. including transportation. energy. recreation. mUnicipalities. and public services. All such groups are affected by the system of existing cross subSidies. The direct subsidy benefits to irrigators are short-term, affecting mainly the first generation of project irrigators A competitive land market capitalizes expected future differences between water fees and land values The effect of a subSidy is not passed on directly to new irrigators, and increasing water cosls to Irrigators simply reduces existing net welfare levels. without serving equity objectives. A double standard is applied to the subsidy issue affecting irrigation versus recreational and environmental resources The irrigation sector does pay back at least a pornon of ItS reimbursable costs, while other sectors such as environmental resources and recreation pay little or no reimbursement back to the federal treasury, For example. billions of dollars are bemg spent on environmental resources W1th no expectation of "repayment" 10 the federal treasury, or that direct net benefits will exceed economic costs. The irrigation projects ensure that hIgh quality agricultural products are readily accessable to consumers at low cost U.S. agriculture. particularly irrigated agriculture. is the envy of the world. All of society receives direct quality of life and economic benefrts from the irrigation sector subSIdies. The irrigation projects have contributed to the creation of new fish and wildlife habitats and wetland areas. Irrigation development and crops have enhanced fish and wildlife poputations in many areas, also improving recreatJonal activities related to abundant fish and wildlife resources