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<br />. <br /> <br />. <br /> <br />The procedure used to compute annual net irrigation benefits from a state <br /> <br />perspective is essentially the procedure used by the Bureau in its calculations <br /> <br />of benefits and costs fron a national economic perspective - with two important <br /> <br />modifications: <br /> <br />First, the Bureau assuoes 78,430 acre-feet of project water will be avail- <br /> <br />able at the farm headgate, while state estimates of project water are higher, as <br /> <br />just indicated. <br /> <br />Secondly, for technical reasons, the Bureau does not include the cost of <br /> <br />project water to irrigators as a cost or adverse effect to agriculture, for this is <br /> <br />not a project cost from a national perspective; nor does it include unavoidable <br /> <br />direct losses in agriculture production in the take and vicinity in its analysis of <br /> <br />irrigation benefits and costs. Such costs are included in .land acquisition costs, <br /> <br />and are not specifically identified as costs to agriculture. The state analysis <br /> <br />d~es include these direct costs and unavoidable losses, so that net irrigation <br /> <br />benefits differ somewhat froQ Bureau estimates. <br /> <br />The Colorado Department of Agriculture thoroughly examined the methods and <br /> <br />assumptions used by the Bureau in their economic analysis of irrigation benefits <br /> <br />and costs from a national perspective. With the modifications just mentioned, these <br /> <br />methods and assu~tions were judged to be reasonable and suitable for analyzing <br /> <br />the agricultural benefits and costs of the project from a state perspective. <br /> <br />We wish to point out that our analysis focused on a net benefit analysis as <br /> <br />opposed to a gross production analysis. This approach is different from that taken <br /> <br />by the Regional Landowners Group which focuses on gross figures instead. What <br /> <br />happens if gross sales are compared? <br /> <br />The Bureau estimates that 78,430 acre-feet of project water delivered to the <br /> <br />fcrm headgates will generate $17.0 million in annual agricultural sales whereas <br /> <br />the. Regional Landowners Group has argued that some $11.5 million in annual gross <br /> <br />agricultural production will be lost within the take area. This comparison is <br /> <br />misleading for several reasons. <br /> <br />- 5 - <br />