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<br />I <br />, <br /> <br />11"12'1 <br />(., !. <br /> <br />.' <br /> <br />period of analysis--approxiruately 25 years into the future. Net income <br /> <br />for the representative farm at this economic midpoint is developed for <br /> <br />two scenarios: with the project (i.e., fully-irrigated) and without the <br /> <br />project. The difference in net incomes is computed and then divided by <br /> <br />the number of acre-feet of water needed to fully irrigate the representative <br /> <br />farm. In the 1966 study this future economic benefit per acre-foot of <br /> <br />water amounted to $20.47. (Thus, the present repayment capacity of $11.42 <br /> <br />per acre-foot is 56% of the future economic benefit of $20.47 per acre-foot.) <br /> <br />This derivation is' the basis for the escimate of $1 631 500 .in irrigation <br /> <br />benefits for the Narrows project in the 1966 study. <br /> <br />The difference between these two estimates of the value of'project <br /> <br />water is primarily due to the increased crop yields which are projected <br /> <br />for the future. But increased crop yields are due to increased inputs <br /> <br />of energy. fertilizer, labor, water and information (which includes <br /> <br />research and dissemination of better farming methods). Since the amount <br /> <br />of project water supplied to the representative farm is the same in the <br /> <br />'. <br /> <br />repayment analysis and the economic benefit analysis, it must be concluded <br /> <br />that the projected increased yields are due to inputs other than water, <br /> <br />and thus these benefits should not be credited to the Narrows project. <br />----.~..~--- --..- ~.. - ---. <br /> <br />Therefore, the repayment capacity of $11.42 per acre-foot of water more <br /> <br />accurately reflects the value of project water in the 1966 study. <br /> <br />Using the Bureau's estimate of present repayment capacity instead <br /> <br />of future economic benefit due to non-project inputs reduces the Bureau's <br /> <br />estimate of irrigation benefits by 44% in the 1966 study. Until details <br /> <br />are available the Bureau's estimate of.$4.1 million in net annual irrigation <br /> <br />benefits must therefore be regarded as significantly exaggerated. <br /> <br />-3- <br />