WSP05384

• File Number: 8030
• Description: Section "D" General Correspondence - Other Organizations/Agencies ‎(Alpha, Not Basin Related)‎
• Date: 1/1/3000
• Author: WSWC
• Title: Statement of the Western States Water Council Water on the Proposed Principles and Standards for Planning Water and Related Land Resources
• Water Supply Pro - Doc Type: Report/Study

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,projected future benefits will be foregone. If that happens, from a hydrologic

standpoint, possible major' storage sites may be under-utilized.

Economists 'are not in agreement that the opportunity cost concept should

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be used to determine the discount rate for public i/"llfestment. At least two

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other concepts can be used in determining the proper discount rate. These are

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the social time preference concept, or the government borrowing cost concept.

, Both of these concepts have clear adVantages over the "opportunity cost"

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concept. The "government borrowing cost" concept is ~aSY to understand and

planners have ready access to empirical data necessary for its determination.

Also, a formula which would change slowly could be devised. This would

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eltmina~ a continuous re-evaluation of projects as the Interest rate changes.

:. The "social time preference" concept is much more ,reflective of the

" demoCratic process in estimating the public preference for apportioning benefits

between the present and the future. That concept also recognizes that collective

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decisions made through the political process encompass a broader range of

considerations than those examined prior to non-federal investments.

The Western States unanimously agree that use of the "opportunity cost"

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concept to set a high discount rate to effect a reduction in the amount of money

spent for the nation's water resources program is an improper utilization of the

discount rate. No other federa1 program has Its spending level set by the use of

that concept. The establishment of an Interest rate and concept on which the

interest rate is based is a policy dec;islon than can anCl should be made by Congress.

We urge that Congress exercise this prerogative by legislative action and set the

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