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<br />framework that would evaluate quantitatively or qualitatively all <br />of the beneficial and adverse effects of water projects, both <br />tangible and intangible. However, under the proposal the use of <br />this framework would be restricted and the conditions under which <br />the framework would be fully utilized remain vague and uncertain. <br />In the course of the development of the Council's proposed <br />principles and standards, the objective "to enhance social well- <br />being" has been deleted from the specified objectives of water <br />and land resource planning. It is recognized that the proposal <br />still provides for a display of the effects on social factors; <br />but it is ~ Mexico's ~ that contributions to the security of <br />life, health, property and the national security should remain <br />direct objectives of water and land resource planning. <br />The Water Resources Council proposal contemplates the use <br />of "opportunity cost" for the discount rate in the evaluation of <br />federal water projects. The opportunity cost is defined as the <br />real rate of return on private investment in physical assets. <br />This discount rate is found to be 10.4% currently. Apparently in <br />the interest of compromise the Council proposes to use a discount <br />rate of 7% in the formulation and evaluation of water projects <br />for the next 5 years; presumably the rate would be increased to <br />about 10% at the end of that time. <br />The opportunity cost discount rate reflects the time <br />preference for benefits of private investors and individual <br />consumers as contrasted to society's time preference which <br />would be reflected by a much lower discount rate. The oppor- <br />tunity cost discount rate is almost by definition shortsighted. <br />-2- <br />