An analysis of the economic guidelines used by federal agencies to justify hydroelectric projects. An alternative method of generating the power is chosen-- not necessarily the least-cost alternative--and its costs are referred to as the "benefits" of the proposed dam. Bureaus do not have to estimate the alternative costs by the same methods and are specifically directed to use a 3-1/8 percent interest rate for project funds but "likely" rates for the alternative. If the "benefit"/cost ratio is more than one to one, the project is justified. Many hydro projects have failed to repay their costs. The Grand Canyon dam controversy is probably the first time a federal water resource agency has had to defend its procedures against the reforms long advocated by outside economists. There is little hope of change until the Executive Branch of government takes available steps to control its water agencies, or the taxpayers organize an effective lobby to protect their interests in public works appropriations. (See also P-3505, P-3546, P-3548.) 8 pp.
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