Conclusions and Policy Implications 275 



funds are used for any undertaking — whether to subsidize achieve- 

 ment of an efficiency objective under private operation or to do so 

 more directly as a public undertaking — there will be some income 

 redistributive consequences, so long as those who benefit from the 

 public policy are in some measure different from those who bear 

 its costs. In our analysis of the co-operative arrangements proposed 

 for the Willamette River sites we treated explicitly the income 

 redistributive consequences of different approaches to development. 



Under public development, power from otherwise identical 

 facilities can be provided at lower rates than those possible under 

 private development, partly because of access to capital on more 

 favorable terms and the immunity from intergovernmental taxation 

 enjoyed by public enterprise. To the extent that a fully adequate 

 supply of power at such rates could be made available continuously, 

 such supply conditions would be favorable to industrial develop- 

 ment of the Pacific Northwest. A more rapid rate of economic 

 development for the region would be in prospect, under these 

 conditions, than if the power were developed under private 

 auspices. 



Approximately 40 per cent of this difference in cost to customers 

 between publicly and privately developed hydroelectric sources 

 would be borne by regional residents, either through increased state 

 and local taxes or increased federal tax liabilities. But approxi- 

 mately 55 per cent of the gains from the differential power rates 

 under public development would accrue to the regional residents, 

 with approximately 45 per cent going to persons residing in other 

 regions. Given this difference in the distribution of costs and gains, 

 there would be a net income transfer to the Pacific Northwest 

 associated with public development of hydroelectric sources. 



If an objective of federal development of hydroelectricity in the 

 Pacific Northwest is to stimulate more rapid economic development 

 in that region, both the income transfer to the region and the lower 

 power rates which tend to attract mobile capital would favor 

 attainment of this goal. If economic development of the Northwest 

 is an objective, however, a long-term commitment for a stable and 

 dependable rate of development is required of the Congress and 

 federal authorities so as not to defeat, by undependable conditions 

 of power supply, the developmental objectives the federal govern- 

 ment seeks to promote. 



The burden of a policy to promote rapid development of a par- 



