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<br />SUJOIARY <br /> <br />Reclamation supported the NED plan formulated using alternative <br />prices, but could not support the Twin Valleys increment because <br />that increment was unjustified when analyzed with those <br />alternative prices. However, the Project Sponsor and many of the <br />PVG members felt the recharge accomplishments and the economic <br />analysis of the Project Sponsor's plan were more desirable than <br />the NED plan, <br /> <br />For these reasons, they chose to continue to support the Project <br />Sponsor's plan, The Project Sponsor's plan will provide recharge <br />in the Twin Valley Conservation Association area as well as the <br />Prairie Bend area, The Project Sponsor believes the Federal <br />Government's economic analyses are not reflective of true <br />interest rates applicable to Federal investments for water <br />resources projects, The Project Sponsor proposed using a <br />2-7/8-percent interest rate developed by Ray Supalla, a <br />University of Nebraska Professor of Resource Economics, <br /> <br />For the NED plan analysis, the interest rate used is the fiscal <br />year 1989 plan formulation and evaluation rate of 8-7/8 percent. <br />In response to the Project Sponsor's wishes, the NED and PrOject <br />Sponsor's plans are analyz~d using 2-7/8- and B-7/8-percent <br />interest rates, The NED plan's 2-7/8-interest rate analysis is <br />displayed with the Project Sponsor's plan analyzed at 2-7/8- and <br />8-7/8~interest rates, Both plans were analyzed using commodity <br />prices developed in accordance with the Economic and <br />Environmental Principles and Guidelines for Water and Related <br />Land Resources Implementation Studies (P&G) prices and on <br />proposed alternative commodity prices. Both plans were not <br />economically feasible using the prescribed P&G commodity prices <br />provided by the Department of Agriculture, Both plans were <br />economically feasible using proposed alternative commodity <br />prices, P&G's specify that the prices of goods and services used <br />for evaluation should reflect the real exchange values expected <br />to prevail over the period of analysis, The prescribed <br />P&G prices exhibit unusually large price fluctuations over the <br />last 10 years, Formulations of long-term projects should not be <br />based on such short-term conditions. The proposed alternative <br />procedures displayed in this report are based on 20 years of <br />normalized prices, These proposed alternative prices adjust for <br />inflation and remove the short-term variability. <br /> <br />A no action alternative or future without condition is also <br />displayed in this report, The future without condition serves as <br />a basis of comparison for the two development plans and shows <br />what will happen if no actions are taken at this time. The <br />future without condition analysis shows that habitat and <br />irrigation will be less in the future if no action is taken, <br /> <br />S-2 <br /> <br /> <br />