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<br />" <br /> <br />-2- <br /> <br />threatens to weaken the nation in an ar-ea wher-e it must be stl"'Ong if it is to <br /> <br />meet the needs of the futur-e. The present healthy economy has been sub- <br /> <br />stantlally abetted thl"'Ough investments by the Federal Government in water <br /> <br />and related land resource development. These federal efforts must be con- <br /> <br />ttnued. Although the general effect of utilization of the "Principles and <br /> <br />Guidelines" will be to display a wider range of alternattves fl"'Om which to <br /> <br />choose, ther-e are certain portions of the "Principles and Standards" which,' <br /> <br />If adopted, will lessen the federal effort in water r-esources development and <br /> <br />will be detrimental to the entire country. <br /> <br />DISCOUNT RATE <br /> <br />Section IV D of the "Principles" pl"'Ovides that the discount rate to be <br /> <br />used In the formulation and evaluation of water resources pl"'Ojects will be <br /> <br />, "The average rate of r-eturn on private investment In physical assets, Includ- <br /> <br />, I <br /> <br />b19 all specific taxes on capital or the earnings of capital and excluding the <br /> <br />rate of general Inflation, weighted by the pl"'Oportlon of private investment in <br /> <br />each major sector." <br /> <br />The "Standards" (9 IV D.) set the rate to be 7 percent. This is a sub- <br /> <br />'stantlal increase fl"'Om the 5 3/8 pel"'Cent pr-esently r-equir-ed by Senate Docu- <br /> <br />ment 97. Utiltzatlon of the opportunity cost concept may necessitate the planner <br /> <br />to scope pl"'Ojects that have low capital investment but may r-equir-e incr-eased <br /> <br />maintenance and operation costs that extend Into the futur-e. Since benefits <br /> <br />fl"'Om storage pl"'Ojects are generally projected to occur in stages, large multi- <br /> <br />" <br />" <br />~ ' <br /> <br />purpose storage pl"'Ojects would pl"'Obably have to be reduced in scope and some <br /> <br />" <br />~ <br />~ <br />