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Introduction 



Substantial federal investments in public power and irrigation 

 projects in the Columbia Basin were initiated by a social policy 

 intended to benefit rural communities and small farmers. Today, 

 while some sectors of the agricultural economy have benefitted 

 handsomely from federally subsidized power and water, the Basin's 

 rural communities are economically and environmentally distressed 

 as a consequence of the unmitigated external costs of irrigated 

 agriculture. Unemployment and poverty levels are high, ground and 

 surface water supplies depleted and contaminated. Now that the 

 capacities of the hydroelectric system are exceeded by the energy 

 demands arising from expansion in the region's urban areas, 

 hydropower opportunity must be added to the external costs of 

 irrigated agriculture. Irrigation imposes hydropower opportunity 

 costs in two ways: first, under some circumstances, water now has 

 a higher economic value in hydropower production than in 

 agricultural production; second, irrigation's inefficiencies impose 

 depletions and diversions upon the water management system which 

 are technologically unnecessary. 



Through its energy pricing and programmatic investment policies BPA 

 has the capacity to mitigate and remedy these costs, abating water 

 quality contamination, providing employment opportunity and 

 recapturing water from irrigation for hydropower production and the 

 fishery. But BPA's current policies exacerbate rather than 

 remediate these externalities, and require reorientation. 



It is nearly 60 years since the Roosevelt administration initiated 

 the system of federal subsidy which forms the basis of the Basin's 

 agricultural economy. From a position of abundant natural and 

 public resources, the Basin has been reduced to a state of 

 environmental degradation and socioeconomic distress in its small 

 irrigation-dependent communities. Salmon species face extinction, 

 and the region's economic advantages in the Columbia River system's 

 hydroelectric resources are fiscally threatened. 



The challenge facing federal policy makers on the Basin today is to 

 devise a means of restoring natural resources, preserving what 

 remains of the region's economic advantages provided by the public 

 power resources administered by the Bonneville Power 

 Administration, and protecting the interests of the small farmers 

 and agricultural workers who were, after all, the intended 

 beneficiaries of public investment in irrigated agriculture and 

 public power in the Columbia River Basin by the New Deal. 



In the following testimony we describe two irrigation subsidy 

 programs — the Irrigation Discount and Water Wise — which now 

 cost BPA roughly $15,000,000 annually. In their current 

 configuration neither progam produces any discernible benefit to 

 rural communities or the environment, the benefits being captured 

 mainly by larger corporate farms owned by outside investors. Public 



