441 



Committee ^- established a Subcommittee on Benefits and Costs "for 

 the purpose of formulating- mutually acceptable principles and pro- 

 cedures for determining benefits and costs of water resources proj- 

 ects.'' ^^ After a year of effort (involving some 6,600 man-hours of 

 staff work and 50 meetings), the subcommittee produced a first prog- 

 ress report : the following year, it issued a second; eventually. May 25, 

 1050. on an accelerated basis, a semifinal report was completed by 

 the subcommittee and adopted by the parent committee — 



* * * as a basis for consideration by the participating ag-eneies as to appli- 

 cation in their respective fields of activity in river basin development.** 



A reason for issuing the document at this time was to provide a 

 coordinated expression of agency opinion to the President's Water 

 Resources Policy Commission, then considering the subject, as to 

 uniform evaluation of the various purposes and functions of water 

 develo]>ment projects. Purposes of the so-called Green Book ("Pro- 

 posed Practices for Economic Analysis of River Basin Projects") 

 were not to provide an arbitrary and exclusive method for determining 

 whether projects should or should not be constructed, nor even to 

 establish a relative priority among projects. On the contrary, the 

 report sought merely to establish that when quantitative data were 

 collected and analyzed, the procedures should be systematic, consistent, 

 and theoretically sound, so as to yield comparable estimates of benefits, 

 and costs. 



Tlie status of the Green Book as a general standard of agency prac- 

 tire was described in 1952 by a House subcommittee in the following 

 language: 



Assuming' that the Federal Interagency Elver Basin Committee should arrive 

 at proposed uniform standards of evaluation, there is no requirement that any 

 agency adhere to the findings of this voluntary group. It is reported at the 

 present time that the Committee is experiencing considerable difficulty in resolv- 

 ing differences among the agencies as to the evaluation of secondary or indirect 

 and intangible benefits.** 



It was notable that the participating agencies were not willing to 

 make consistent use of this framework. For example, 2 years later 

 Secretary of Agriculture Brannan complained that there was "an 

 increasing tendency in the direction of burdeninnr power investments 

 with co=ts not related to power development * * *" although he added, 

 somewhat inconsistently, that "it is a common practice to allocate the 

 costs of multiple-purpose development to the nonreimbursable func- 

 tir:ns * * *.*' Speaking for the Department of the Interior, I"^nder- 

 secretary Searles said that policies regarding the allocation of costs 

 to reimbursable and nonreimbursable purposes were governed bv eco- 

 nomic considerations which "are not subject to a mathematical for- 

 mula." 



This is one reason [he went on] why we do not believe in the ."0-year amortiza- 

 tion period but in amortizing on the basis of the service life of the project. 



■^ A volnntarv ortranizntion of rppresentatives of the Corps of Enjrinfiers, U.S. Arm.v : the 

 Depart-ments of the Interior, Agriculture, and Commerce ; and the Federal Power Com- 

 mission, formed in 104.''.. 



'-■! "Proposed Prnotiops for Economic Analysis of River Basin Projects," report to Federal 

 Interacenc.v River Basin Committee. May 1050, op. cit., p. III. 



^,* Idem. 



^ U.S. Congress. House. Committee on Puhlic Works. Economic Evaluation of Federal 

 Water Rpsonrce Development Projects, report to the * * * from the Subcommittee to 

 Stndv Civil Works. Dec. 5, 10r)2. S2d Con?., 2d sess., House Committee Print No. 24. 

 (Washington, U.S. Government Printing Office, 1952), p. 2. 



