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<br />FRYINGPAN"ARKANSAS PROJECT
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<br />includes) as a part of the construction cost to be repaid, interest,
<br />during construction on power and municipal water investments, In the
<br />economic analysis the power benefits are calculated on the basis of
<br />the value of power in the area and an analysis by functions is included.
<br />The estimated cost of the Fryingpan-Arkansas project is $172,-
<br />898,000 at January 1953 price levels, If the allocations are revised_
<br />to incorporate the increased costs and the repayment plan is set up
<br />on the alternative basis hereinbefore suggested, with an interest,
<br />rate estimated at 2,5 percent, return of irrigation costs which exceed
<br />those that can be repaid by the water users themselves could be accom~
<br />plished in an overall period of 69 years or 17 additional years after
<br />the power investment is returned and 6 years after the municipal
<br />water investment is returned.
<br />The revised economic analysis indicates that the benefits from con-
<br />struction of the project would exceed the costs in a ratio of 1A8 to
<br />1.00 and that, the inclusion of all functions is justified.
<br />Supplemental water supplies, both for irrigation and for municipal
<br />use, are sorely needed in the Arkansas River Basin. Serious losses.
<br />occm annually in crop production on presently irrigated farmland
<br />while" the need for additional and better quality municipal water'
<br />is fast becoming critical. Protection is needed against floods which
<br />result in extensive damages in the upper Arkansas Valley. Also, there
<br />is a need in the area for the electric energy from the project and normaL
<br />uses for electricity would expand rapidly if not restricted by a limited
<br />supply.
<br />This project and the report as herein modified conform to my pro-
<br />gram. Therefore, I transmit, pursuant to section 9 (a) of the Reclama--
<br />tion Project Act of 1939, this report which incorporates the report
<br />of the previous Secretary of the Interior and the comments of the
<br />affected States and Federal agencies as my report on the Fryingpan-
<br />Arkansas proj ect.
<br />I shall appreciate receiving advice concerning the relationship of
<br />this project to your program before I transmit the report to the
<br />Congress in accordance with the provisions of the Reclamation Project
<br />Act of 1939. ' ,
<br />Sincerely yours,
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<br />DOUGLAS McKAY,
<br />Secretary of the Interior.
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