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SUBSTANTIATING MATERIALS t;Une between fields and aJ.so the time required for each farm operation. The class 2 and 3 lands are separated by lands of lower class which would of necessity be included in farm units. Thus the investment in land, the taxes on land, and fencing costs would be higher than if the farm were compact. Estimated annual payments of about 85 cents an acre on reimbursable costs of the Vallecito Reservoir would add to farm costs under with-project conditions. Irrigation Repayment Budgets prepared for representative farms for both without and with project conditions were compared to derive the estimated ability of proj~ ect farmers to pay project costs. In each budget net farm income was determined by deducting anticipated expenses from gross income for an average year. Payment capacitYI or the amount available for water charges, ;l.s the residuaJ. after deducting a family living allowance for the farm family. A famUy living allowance of $2,800, which was used in the with- projeot bUdget, is about the minimum that would meet the Bureau of Recla- mation objective of providing tlle same level of living for farm families as is enjoyed by persons in other occupations. All costs in the farm bud- gets are based on a price index level of 250 for prices received and 265 for prioes paid (1910-14=100). SUIllIIlary data. from the two budgets and the differenoe between the two ptojacted for the entire project area of 3,100 acres are tabulated on the following page. The with-project budget shows an annuaJ. payment capacity for proj- ect water of $1.70 an acre. This would be only slightly more than haJ.f enough to pay project costs for operation, maintenance, and replacement and would permit no repayment of costs of constructing the project works. Financial analysis Benefit-Cost AnalySis The economic justifica.tion,of developing the Pine River project extension was determined through a comparison of project benefits from a National standpoint with the Federal oosts of development. Comparisons were made for a 100-year period. Both benefits and costs were computed at average annual equivalent values at 2.5 percent interest. Benefits.--Irrigation benefits f~om the extension development are expected to average about $73,100 annually over the 100-year period of analysis which includes the lO-year development periOd. About $27,900 of the total represents direct benefits measured by the increase in nettaw,m income that would be reaJ.ized from the extension. Approximately $35,300 represents indirect benefits measured by the increased profits of busi- nesses handJ.ing, processing, and marketing products from the extension area and of enterprises supplying goods and services to the farms within the area. The remaining $9,900 would be public benefits realized from 16