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r . ~_. ,., ",I". ""} n <,~ I" " 2 FRYINGP AN-ARKANSAS PROJECT ".; The proposed project report, on the other hand, contemplates repayment by the water users within 69 years rather than 50 years. During the additional 19 years, the above-mentioned balance of $44,- 028,000 would be repaid, Irrigators would pay $11,818,000, and the remainder of the unpaid construction cost amounting to$32,210iOaO would be met from revenues on power and municipal water supply. As noted above, the allocation of costs to power and municipal water supply, under the proposed project, would be fully repaid with interest within 50 years after completion of all facilities, Revenues derived after the 50 years would be used to show repayment of the irrigation investment, Federal and State agencies, in commenting on the original project report, questioned (1) the high cost of a limited supply of supplemental irrigation water, (2) the ability of the water users to repay annually as much of the irrigation costs as proposed, and (3) the ultimate amount of transmountain diversion and its effect on the quality and use of Oolorado River water available to the lower basin, Notwith- standing the substantial increases in the estimated project costs and th'e greater estimate of the ability of the irrigators to repay, as shown in the revised report as compared with the original report, the com. ments of the States and Federal agencies have not been furnished on the revised report, Approximately 63 percent of the irrigation benefits of the project are of an indirect character, consisting of additional business from increased purchases, marketing, and processing activities. Without these indirect benefits the project over a period of 50 years would not show a favorable benefit-cost ratio. While this office recognizes that there are definite indirect benefits, we believe that they should not be assigned a monetary value and should not be relied upon for the primary justification of a project, It is our understanding that this is in accord with your present views, In the consideration of irrigation projects, it should be noted that, under existing law, the interest cost on the irrigation investment is not charged to the water users but is borne by the Federal Government. In the case of the Fryingpan-Arkansas project, the average annual interest cost on the irrigation investment during the first 50 years would amount to about $1,500,000, on the basis of simple interest at 2X percent, or approximately $5 per acre pel' year. ' As indicated by the comments of the Department of Agriculture on the original report, under dates of October 10, 1951, and May 23,1952, in view of the obvious high cost of importing water from the Oolorado River Basin, a separate evaluation should be made of the feasibility of importing water from the Oolorado River Basin, considered as an incremental addition rather than an integral part of the project. Furthermore, there is no evidence in the report indicating a willingness by the irrigators to repay the proposed charges for an average annual supplemental water supply of about one-half acre-foot per acre. Plans for municipal water supplies appear doubtful because of the high water rates, optimistic estimates of average water deliveries, and uncertainty of including all proposed facilities and functions in the ultimate plans. We also believe that costs of correcting damages to fish and wildlife resources caused by the building of the project should be treated as part of the construction costs and allocated to the " .' ;~~ ." .' " ::_ ,"."C "". .~; :,' ;"_ ~J~!~_ ,'<::t:'J7,;"~~.'?\;,~.~; ,',;.' ',';"'.:,i,,; 0"'" ,., ~,::,!{g}:;,:... ."'/~:XI - .,-"',,, .~