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<br />O~Z~l' HH
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<br />FRYINGPAN-ARKANSAS PROJECT
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<br />70. If the '\falue for the regulation of winter water is estimated at
<br />$1.25 per acre-foot, which is comparable to current costs for like
<br />services, an additional return of $3,700,000 or more can be expected
<br />from irrigation over the repayment period. The actual value remains
<br />to' be determined. The value of this service must be an amount
<br />substantially less than $3,60 per acre-foot, which is the value at the
<br />Pueblo Reservoir established for a new supplemental water supply.
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<br />BENEFITS
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<br />71. The economic justification of any project can be tested by a
<br />benefit-cost ratio which measures the benefits obtainable contrasted
<br />with the attendant Federal costs of bringing about those benefits,
<br />The net Federal project investment consists of the total construction
<br />cost plus interest at the rate of 2}f percent during construction less
<br />the present worth of the hundredth-year terminal salvage value of
<br />principal project works. That investment is translated into .an annual
<br />equivalent by amortization over 100 years at 2?~ percent. The annual
<br />project investment cost is obtained by adding to the annual equivalent
<br />the adjusted annual operation, maintenance, and replacement expense.
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<br />An';,ual benefits:
<br />Irrigation_____ __ _ _ __ _ _ _ _ _ _ _ _ __ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ ____
<br />Power___________________________________________________
<br />Municipal w:ater_____ _ _ _ _ ____ _ _ __ _ _ __ __ _ _ __ ___ _ _ _ __ __ _ _ _ __
<br />Flood control_ __ ____ _ ___ _ _ ___ _ _ _ _ _ _ _ _ _ _ _ __ _ _ __ __ _ ___ ___ __
<br />Sediment controL _ __ __ _ _"_ _ _ __ _ _"_ _ _ _ _ _ _ __ ___ _ _ _ _ _ __ _ __ __
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<br />$3,339,000
<br />4,064,000
<br />1,662,000
<br />583,000
<br />141,000
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<br />Total annual benefits___________________________________ 9,789,000
<br />Annual costs:
<br />Project investment-______________________________________ 4,165,000
<br />Adjusted operation, maintenance, and replacement______c---- 1,403,000
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<br />Total annual costs______________________________________ 5,568,000
<br />Benefit-cost ratio: 1.76 to 1.00.
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<br />, 72. The preceding calculation includes direct and indirect benefits
<br />for the initial development. It is significant that the sum of direct
<br />irrigation benefits to farmers of $1;065,000, direct power benefits of,
<br />$2,375,000, anql benefits to municipal water, flood control, and sedi.
<br />ment control is sufficient to support the annual project costs. '
<br />73. The report on the Oolorado River storage prolect and partici-
<br />pating projects presents a plan for a system of regu atory reservoirs
<br />that would permit maximum development of the upper Oolorado River
<br />& ~in water resources for beneficial consumptive uses and assure the
<br />required deliveries ot water at Lee Ferry to meet the requirements of
<br />theOolorado River Oompact; If it is assumed that the Oolorado
<br />;River sto~age project ,,:ill be constructed,. and if iti~ considered pr~per
<br />III analyzmg tb,e Gunmson-ArFllnsas proJect to assllffi an approprlllte
<br />share of the eost of the Oolorado River storage project, then the
<br />assignable annual eost to the Gunnison-Arkansas projeet is estimated
<br />at $2,35 per acre-foot of eonsumptive use of water. The net effect,
<br />so far as the Gunnison .Arkansas project is concerned, would be to
<br />alter slightly the economic justification, The annual cost would in';
<br />crease from $5,q68,000 to $5,731,000, and the benefit-cost ratio would
<br />be reduced slightly from 1.76:1.00 to 1.71:1.00.
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